Is Crypto Worth the Hype?
Last Thursday, President Trump gave the green light to the further development of crypto currencies. The executive order encourages Federal agencies to review all regulations related to crypto and propose modification or termination.
The order also promises that the Trump Administration will “support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy.” Trump’s ‘crypto czar’ David Sacks said the order will direct a working group to “produce a regulatory framework” to help keep crypto innovation in the United States.
Is Crypto the Future?
Crypt-enthusiasts believe in the promise of digital currencies’ ability to bypass traditional financial institutions. Bill Ulivieri, owner and managing director of Cenacle Capital Management, is one of those believers. “Bitcoin solved a lot of problems in a digital age where we can…send money across the world for virtually no cost,” he told Drew Mariani. That advantage brings people into the global economy simultaneously.
Ulivieri also believes cryptocurrencies like Bitcoin align with the Church’s social justice tradition. He cited Pope Benedict XVI’s encyclical Caritas in Veritate wherein the pontiff says“economic dysfunctions always involve human costs.” On Ulivieri’s view, traditional currency overseen by financial institutions like the Federal Reserve “degrades through inflation and through the monetary printing press, the value of human labor.” Those politicians and bureaucrats can “create whatever amount of money they want” without being accountable to the public. Bitcoin, by creating digital scarcity, “theoretically can go up in value,” and is available to anyone around the world without the need for an intermediary.
Crypto Critics
Chris Temple, editor and publisher of The National Investor, is skeptical of crypto’s future. “This is not the legitimate alternative currency of the masses,” he told Drew Marini “The overwhelming majority of people who are in Bitcoin are doing it as part of the Greater Fool Theory.”
The Greater Fool theory of investing states that “during a market bubble, one can make money by buying overvalued assets and selling them for a profit later, because it will always be possible to find someone who is willing to pay a higher price,” according to Hartford Funds. In this case, crypto assets go up in value because there are ‘greater fools’ who continue to buy them.
However, Ulivieri cites the number of notable people and institutions that support Bitcoin as evidence against the Greater Fool Theory. They – people like Elon Musk, Fed Chair Jerome Powell, and chairman of MicroStrategy Michael Saylor – “believe that Bitcoin is what its value proposition is, even though it might not be all fully realized yet,” Ulivieri said.
