The Swiss banking giant is out with some unkind words for Bitcoiners, calling it “the bubble to end all bubbles”, in an absolute old man screed that would make Clint Eastwood proud.
“The bubble to end all bubbles continues. Cryptocurrencies only have value if accepted as currencies. However, they cannot be used for the most important transaction in an economy, and cryptocurrency supply can only rise and never fall (making them a poor store of value),” global chief economist Paul Donovan wrote in a post Monday. “To date, using cryptocurrencies requires (effectively) a simultaneous asset sale and purchase of goods or services.”
While I have never been a fan of the cryptos as a currency, they are an asset class and that’s the point that many are missing. While you might not be able to buy milk and eggs with BTC now, that’s sort of the bullish argument for the asset. If I wanted to, right now, I could accept payment for iBankCoin services with Bitcoin. I only opt not to because I am slothful in that regard. The BTC would auto convert to dollars and I’d get paid immediately, as opposed to normal settlements that usually take 1-5 days using PayPal or Stripe.
BTC and other cryptos have risen too much too fast; but it’s certainly fun to watch and I’ve finally come to grips with that fact: I am a fan of asset classes and enjoy seeing how people value them. Bitcoin, Ethereum are no different than stocks in this regard.
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Since I am only interested in storing value, those were very wise words uttered by Paul Donovan:
So I am off to get me some of those Zimbabwe and Venezuelan shekels since they are accepted as currencies and used in the most important transactions in their economies and their supply does not rise.
I have been told to diversify my whole adult life, so I put a little money into a littleness of everything. The money I spent on bitcoin in 2013 and forgot about is doing well, but the silver I bought at the same time has gone down in value. All these goldbugs on the precious metals sites are shooting themselves in the foot by not opening their mind and diversifying. I can buy a whole lot more silver and gold because I didn’t put all my eggs in one basket.
“cryptocurrency supply can only rise and never fall ”
A) Can UBS name a currency inwhich the supply has fallen over a 1 year time period?
B) How many currencies have built-in mechanisms that increase the cost of supply?
Money is the biggest bubble ever. BTC and ETH are asset classes—glad to see you mention that.
I’ll pay you in bitcoin for the leatherbound edition of all three parts of your book. Deal?