Chamath Palihapitiya, who served as a senior executive in Facebook’s early years and is currently the CEO of VC firm Social Capital, has offered some interesting remarks about Bitcoin in this time of global economic uncertainty.
Palihapitiya was speaking to Morgan Creek partner Anthony Pompliano, himself a famous proponent of Bitcoin, in a podcast that was aired on April 2. The episode, titled “How to invest in this crisis”, covered a range of topics, including current economic problems and potential solutions, but naturally found its way to Bitcoin.
He refers to the actions taken by governments in recent times to ease financial struggles,
The only way to break the back of inflation is essentially to create some quasi form of a gold standard, but it’ll be almost impossible to do that between governments and central banks. They’ll never agree on an instrument and they’ll never agree on an exchange [rate]. But then, bottoms up, people could decide to do it [with Bitcoin].
But even with Bitcoin creeping past the borders of just the fringe, and legitimizing itself in the eyes of authorities, it could still be the case that it goes either to millions or zero, according to Palihapitiya. Saying Bitcoin is still too speculative, he suggests that the likelihood of cryptocurrencies becoming a commonly accepted means of payment will be decided by time,
If you’re going to make the case that it should replace fiat currency, one thing you have to look at is the volatility of the U.S. dollar. You can’t replace it with something that’s nine sigma more volatile. It doesn’t work…[The digital asset market] is a ghetto of day traders and speculators, right now, that’s where we are. We’re in that ghetto.
Popularly considered to be a hedge against traditional assets, many Bitcoin supporters have had to dial their enthusiasm back a bit following Bitcoin’s drop in price as the world’s economies tanked as a result of the pandemic.