According to high-profile finance expert, businessman, and investor Glenn Hutchins, Bitcoin has never been the standout factor in the decade-young industry.
Betamax and VHS, Cash and Bitcoin
In a recent interview with the Financial Times, Glenn Hutchins made a number of statements which sparked a paradigm shift for many investors. “I just really think [people are] missing the point,” he said. “They should be talking about the companies. Bitcoin could turn out to be the winner; it also could turn out to be Betamax.”
His comparison to the Betamax tape is thought-provoking. Sony’s pioneering product owned the market for the first year of its production, enjoying little competition if any. The company’s bubble was promptly burst a year later when JVC brought out the VHS tape, which almost instantaneously gained consumers’ favor and won over the market.
In many ways, the same could take place with Bitcoin, with cryptocurrencies such as Stellar Lumens and Ripple potentially taking over the market as early as the next few years. Indeed, it would come as no surprise to those knowledgeable in the field, as the latter both exceed Bitcoin regarding transaction speeds, scalability, and low-cost transactions. Least of all would this power shift surprise Glenn Hutchins, who, not having spent a cent on Bitcoin, has invested in Ripple.
Indeed, the $5 million that he has faithfully placed in the industry has not been on any cryptocurrencies themselves, but rather early-stage digital currency companies with immense future market potential.
“I’m trying to put a chip down because, if this thing works, if this thing takes off, one of these will be Google, one of these will be Amazon, one of these will be Yahoo,” he says optimistically, referring to his investments which include a mobile payment platform called Circle, a digital cryptocurrency wallet called Abra, and a blockchain-creation company called Chain.
Hutchins believes that the future of cryptocurrency and the money that is to be made in the industry lies in the real-world applications of the blockchain, as opposed to speculating in the cryptocurrencies themselves. “It’s the biggest opportunity I’ve seen, because the two most important things are business information and value,” he says. “We can now move information around the world at the speed of light at no cost,” he continued, suggesting that the same technology can be used to transfer value in the future.
“I’m the guy who’s thinking about building companies. Not much speculating in currency,” he stated. Hutchins invested in Barry Silbert’s Digital Currency Group (DCG), which itself has invested in over 110 cryptocurrency companies.
Of those 110, Hutchins has personally invested in approximately ten based on information gathered while sitting on DCG’s board of operations. He explained the investment experience as being highly informative as it provided an overview of the whole sector.
“It’s like every cognizable company that was coming up in the Bitcoin world, I got a chance to look at and understand.”
When questioned on the possibility of Bitcoin’s being a bubble, Hutchins was not one to mince words. “It could be a bubble,” he acknowledged, referencing its potentially-fatal flaws which include the high cost of mining the digital currency.
However, he maintains that even if Satoshi’s creation were to implode, which he has not denied the possibility of, the companies in which he has invested would continue to grow. As Hutchins puts it, the underlying technology upon which Bitcoin is based may very well exist far longer than the cryptocurrency itself.