Mark Cuban, a longtime critic of Bitcoin, recently said that if the US continued to print money and the economy collapsed, it could provide a huge boost for Bitcoin. However, he is still not a fan of Bitcoin. In the past, he has acknowledged that BTC is a store of value, while still being critical of it.
His Latest Sentiments on Bitcoin
The billionaire investor made his latest sentiments on Bitcoin during an appearance on the Pomp Podcast that is hosted by Anthony Pompliano. He said that Bitcoin could be an alternative to gold, but only if the economy tanked. According to him, the economy could potentially tank due to the rate at which the US was printing money.
Is His Theory Plausible?
Recently, the IMF published a blog in which it claims the world could be headed for the worst economic recession since the Great Depression. Due to the economic downturn in the US, the Fed decided to begin printing huge amounts of money, some of which has been used to bail out business and some has been sent to struggling individuals as stimulus checks. It is also worth noting that the US national debt is the highest it has ever been in history.
When the economy tanked in the middle of March, BTC failed to live up to its hype of being the digital safe haven. This was due to a global liquidity crisis in which investors were selling liquid assets for cash. A few days later, BTC fell by 50%. Despite the initial drop in Bitcoins price, it’s important to study price action on a longer horizon. Bitcoins price has still outperformed major asset classes the last year. With this being said, Bitcoin has still come out on top in terms of managing the financial environment that Coronavirus caused. People that allocated Bitcoin to their portfolios last year, have had the ability to de-risk their allocation.
Several Hurdles Exist
During the interview, Cuban discussed past statements he has made about BTC. According to him, a major barrier to BTC adoption is the high barrier to entry. He believes that the process of adopting BTC has to be frictionless and easy to understand by everyone. The sentiment is true since up to date, only about 1% of the world own Bitcoin. In some places around the world, almost nobody has ever heard of Bitcoin. However, almost everyone knows about gold.
During the podcast, Cuban also discussed other hurdles that BTC might face. One of them is the complexity of mining Bitcoin and the halvings. He believes that these issues only create more complexity and more confusion, which diminishes confidence amongst potential investors in BTC.
He also expressed concerns about the ease of spending Bitcoin. Cuban noted that today if you want to spend BTC, you have to convert it into fiat, which means that you are still relying on fiat, even if you own BTC.
Cuban also talked about his popular banana analogy. According to him, it is still easier to trade bananas than it is to trade BTC. Besides that, he added he could still eat those bananas. In Cuban’s opinion, the fact that Bitcoin is digital is its greatest advantage. However, it is also its greatest downfall.
Cubans Bitcoin Thoughts Make Sense
Cuban does make a good point. Despite this, it is worth noting that BTC has only been around for only a decade. In that time, several companies have been working tirelessly to make it easier to use BTC and the blockchain. Historically speaking, any groundbreaking tech has had a longer adoption curve. Simply put, more merchants have to accept Bitcoin long-term. It will be extremely difficult to get this asset into the hands of people unless it’s being accepted like everyday money. In addition, people with Bitcoin do essentially depend on fiat. No matter how much Bitcoin you own, if you want to “capture your gains” you have to convert it to fiat. Without fiat, you would essentially have no monetary gain. Yes you could keep your Bitcoin invested or convert to another digital asset, but that doesn’t do much for you at this point.
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