The Genuine Crypto Critics Who Unintentionally Make It Stronger
Part III - Bill Gates & Jim Cramer
You are the hypothetical employee we created on June 1 for the purpose of telling a story through a person’s eyes who is determined to get to financial truths. This is the last week before you share a draft of the next investor alert for crypto with your supervisors. This week is all about crypto critics who have genuine concerns about crypto but nevertheless call it an investment. On Monday, you started with Elizabeth Warren. Yesterday, it was Christine Lagarde and Janet Yellen. Who is next?
You review your notes and recall watching Bill Gates alongside Warren Buffett and Charlie Munger. You focused more on the Berkshire duo at the time, but could it be fruitful to go back and look at Gates’s criticism more closely?
The other person you had been considering is Jim Cramer, the host of Mad Money. What are his views?
You start with Bill Gates commenting on Bitcoin:
You rewind and listen to Gates again.
It’s one of the crazier speculative things. As an asset class, you are not producing anything, and so you shouldn’t expect it to go up. It’s kind of a pure greater fool theory type investment. I would short it, if there was an easy way to do it. (emphasis added)
Greater fool theory type investment... That strikes you as a contradiction. “The whole point of the greater fool theory is to sell an asset that has no intrinsic value to somebody else. No intrinsic value → not investing.”
You find that whole statement unfortunate. “Remove the word investment, and Gates is absolutely, 100% spot on. He offsets all that brilliance by casually throwing the word investment in there. What does the public hear now? Oh, one of the greatest techies of our generation calls Bitcoin an investment!”
One word: investing. Building consensus on the definition of that pivotal word is everything.
A bit frustrated, you now switch to Jim Cramer. Did he chime in on crypto? A few clicks, and yes, of course he has:
As long as you recognize the very real possibility that the whole investment case for crypto rests on the greater fool theory, you’ve got my blessing to speculate on it. (emphasis added)
You notice how Cramer’s position is identical to Gates’s. Spot on with the greater fool theory. 100% correct on Bitcoin being speculation. “What is the word investing doing there?” you ask yourself. “What does that add to this statement? If anything, it offsets the brilliance of the whole observation.”
You also read the comments on the CNBC page, and are shocked to see this:
Cramer stressed to viewers he believes owning cryptocurrencies is totally fine as long as people view them through an investment lens, not one colored by fandom. The latter can compromise judgment, he said.
“This is backward,” you shout. “Viewing crypto through an investment lens is exactly what we should warn people about. If they understand that they are speculating, but want to engage in that speculation anyway because they have this insatiable desire to speculate, so be it. The whole problem is that they don’t know that they are speculating, they think they are investing!”
You have a couple more days to do some final research and draft the next investor alert on crypto, but it is becoming pretty clear what your main thesis will be.
