The Big Bet

A fun development but leave emotion out it.

The corner of Twitter where I mostly hang out was buzzing yesterday about a new version of the Buffett Bet from ten years ago (Warren Buffett made a $1 million wager about equities outperforming hedge funds for ten years with the proceeds going to charity and he was right). Now Mark Yusko and his partner Anthony Pompliano want to make a similar bet, believing that their Morgan Creek Digital Asset Index (a crypto index) will outperform the S&P 500 over the next ten years.

It's drawn a lot of impassioned reactions on both sides. Nouriel Roubini appears to be one of the bigger naysayers and he's become a magnet for criticism from the Digerati (no claim of originality on making up that word). My two cents as follows;

 

My take has pretty much been that all of this leading to safer and more efficient transactions makes sense and is bound to happen but I don't think what we know and think about cryptocurrencies today will have much relevance in the future. Ten years from now the components in Morgan Creek's index (or any other indexes out there) could turnover completely a couple of times. I continue to ask, without ever having had anyone answer, why can't all of the positive attributes and life-altering benefits projected onto Bitcoin accrue to some yet to be created cryptocurrency while Bitcoin goes to zero?

If this is anywhere near as creatively destructive as proponents claim, then the odds that largest ones today could disappear entirely as they are supplanted.

I don't see how Bitcoin can come back from its latest 80% decline. There have been several 80-90% declines in the price in its history and of course, with those other declines, it came roaring back to make highs that were thousands of percent higher than the old highs. Part of what allowed such dramatic gains to occur was whole new waves of people who were yet to discover Bitcoin. These newbies liked what they saw and bought. In order for Bitcoin to make a new high this time, it would have to do so without a new wave of people who are yet to discover it. Who is left that has not heard of Bitcoin? There is no longer a discovery factor.

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