Billionaire John Paulson, famed for shorting against the US subprime housing market in 2007 shortly before the 2008 economic crash, calls Cryptocurrency a bubble. In a recent Bloomberg interview, he said:
"I would describe cryptocurrencies as a limited supply of nothing.... There is no intrinsic value"
"Cryptocurrencies basically have no value and they don't produce anything"; "It's a mirage basically"; and "I can say almost with certainty that they will come to a bad ending". All have been said by old men propping up bars countrywide, who know absolutely nothing about cryptocurrencies. They have also been said by one of the greatest investors of all time, Warren Buffet. So what is the real picture, and what is happening on the ground?
Meditation specialists The Path, founded by Dina Kaplan, like many disruptor businesses have embraced cryptocurrencies.
"We accept bitcoin for payment, and I am proud that we do! It is actually better for us because then we don't incur processing fees as we do with all credit card and PayPal transactions - if we could process all of our transactions on Crypto we would be better off in many ways! It also feels modern and important to accept this new form of currency. And, of course, there is the hope that the money's paid for a service now - could be worth much more in six months or a year!
As an individual, I have made a number of investments in cryptocurrency. At least one and probably several of these will truly take off, as we have already seen with Bitcoin and Ethereum. I think it is important to be part of the future of currency", Dina commented.
Autocoincars, an online cryptocurrency payment processor and a car advertising marketplace, has taken it further and built its USP around cryptocurrencies. Mustansar Iqbal, the founder, has this to say in relation to the currencies they've accepted since 2019:
"We believe that cryptocurrency will become more widely accepted. Our crypto transactions have increased in line with improving awareness and acceptance of crypto. The only barriers are fear and government regulations. We have already seen progress with the FCA moving to find ways to regulate cryptocurrency.
As for the fear of crypto being an unknown payment method, we are working hard to improve professional knowledge around this. As believers in the cryptocurrency revolution, our directors and many of our staff choose to invest in crypto, which enables us to develop our knowledge and become experts in the field.
As a payment processor, we take away all the risk behind the volatility of the crypto market by converting the crypto payments into GBP to pay car dealerships. Some of our partnered businesses have decided to request part-payment in crypto too so that they can invest themselves.
So, whilst cryptocurrency may still feel new and uncertain for many businesses, we see it as an exciting new market."
Whilst Warren Buffet's position set out above is not an isolated one, it is far from being universally accepted. Elon Musk's Tesla has stated that they would accept cryptocurrency, before rowing back on that statement flagging the environmental impact of mining's high electricity demand. Musk has more recently suggested another u-turn if assurance can be given on the green agenda that may satisfy investors. Note that Musk's principle public concern does not relate to intrinsic value, volatility or ability to store value. Historically, Musk has publicly supported the success of Bitcoin, in particular.
Security Elite, one of the fastest UK growing security companies and biggest disrupters within the security industry, has been one of the first in their sector to accept cryptocurrency as a form of payment and this is just another example of how they excel above and beyond other competitors.
When speaking to Aaron Franks, Director of Security Elite, he said:
"We have all sorts of customers from all walks of life and some of the HNW individuals we provide security for built that wealth from the crypto markets and therefore we accept payment for work for ease for our clients. We are quickly growing in the security sector because of these small changes we make to adapt to the changing market".
Cryptocurrency specialist investor Mike Novogratz is looking at the long term context and conceals any nervousness about Bitcoin's last quarter's 'dive', from which it has recovered, without challenging the $25,000 level of support. In an interview reported in CNBC, Novogratz stated:
"The ecosystem is so much more mature. The number of players that are moving in is so much more mature. Every single bank is working on their crypto project, how they can get bitcoin to their wealthy clients," Novogratz said. "I think a lot of clients that didn't buy it the first time will see this as an opportunity to buy it and get involved."
As with many investments, and in particular emerging products, the full picture will only become apparent over an extended period of time in a range of innovative contexts. In a recent interview with the team at Bergman Design House, a London design power-house founded by Marie Soliman and Albin Berglund, they said:
"We accept cryptocurrency as payment. As a progressive and innovative company, we see cryptocurrency as a natural financial development and evolution to be used in addition to traditional fiat money. Cryptocurrency, as a medium of exchange, is allowing us to engage with a younger audience and wider market in ways we could not have previously imagined.
Our knowledge of cryptocurrencies developed when we partnered with the incredible HOFA gallery to create a piece of NFT art. We have since invested in cryptocurrencies and accepted cryptocurrency payments. The experience of creating NFT art was a very positive one, especially the layering and motion you can add to go along with the physical piece. NFT art also facilitates artists receiving royalties, an issue in the traditional art landscape. Bergman Design House is all about opportunities and forward-thinking, and the use of cryptocurrencies really align with our values by creating wealth and opportunities for new and existing markets.
Cryptocurrencies will become a regular fixture in our daily lives- I can even envision buying my weekly groceries with crypto soon. As with any new technology, it takes time to perfect and for emergent concerns to be addressed."
Only time will tell whether Buffet's fears or Musk's hopes will come to fruition, however, in real terms cryptocurrencies are a functional and functioning reality and may be part of a broader move from standard currencies and money that seemed to start some years ago and is accelerating in a COVID-19 world.