In mid-March, Peter Thiel talked at the New York Economic Club about cryptocurrencies. As the first outside investor of Facebook (FB), he knew a good thing when he saw it.
Thail thinks Bitcoin has a great advantage. He has a correct history.
Thair has become a controversial figure. When he became the first technology billionaire to openly support Donald Trump as president, he fell into the wrong side of the Silicon Valley elite.
As a long-term liberal, he felt that over-regulation was killing business. He believes Trump’s commitment to deregulation will resonate with voters.
He is right.
After obtaining a law degree from Stanford in 1992, Thiel served as a judicial clerk, securities attorney and derivatives trader at Credit Suisse. In 1996, he independently founded Thiel Capital.
In 1999, he co-founded PayPal (PYPL), an online payment platform for encrypting data on digital devices. In the bud of e-commerce, this is a breakthrough technology. By February 2002, PayPal became a public company. By October, eBay (EBAY) acquired it for $1.5 billion.
Then, in 2004, Thiel invested $500,000 to buy a 10.2% stake in a start-up company. Business plans connect the entire world online. Its founder was a thin Harvard student named Marc Zuckerberg.
That business is Facebook. Today, Tel is still a member of the board of directors.
As an investor, Thiel’s gift is able to see emerging trends. In the PayPal Insider Eric Jackson’s 2004 book, PayPal War, Thiel proposed a theory that liberates people from legal currency risks such as inflation and currency devaluation.
The Russian debt crisis in 1998 and the Asian infectious disease in 1997 made his views firmer. Tyer saw these two things through the lens of the corrupt central government stealing wealth from their citizens.
At least in theory, PayPal accounts can allow citizens to flee the failed currency and instead use stronger, more stable currencies. It can balance the competitive environment against the elite.
Twenty years later, investors see many of the same benefits in the cryptocurrency.
Tyre’s interest is even more nuanced. In the current form, he does not believe Bitcoin will replace the legal currency.
He recently told CNBC Bitcoin that it was too much trouble. In many ways, this is in contrast to PayPal – it is still fast, safe and widely accepted.
Thiel pointed out that the real investment behavior is Bitcoin’s potential as a value reserve: “It’s like a gold bar in a vault that never moves. This is a hedge against the collapse of the entire world.”
His views are in line with the original ideas behind Bitcoin. It was born during the 2008-09 financial crisis as a substitute for legal currency. It should be the ultimate value reserve because it is not under central control and is deliberately lacking.
All this attracts Ter.
But there is a warning. He believes that 50% to 80% of Bitcoin’s chances become worthless. And he is more optimistic about alternative coins, because in the end, long-term investors should prefer a cryptocurrency.
Related story: Why most encrypted Altcoins will be zeroed
I share the view that some coins have a longer-term investment value. However, as regulators increase their efforts to protect investors, most of the smaller digital coins may fail. This process is already in progress and may cause a great deal of collateral damage.
In my opinion, the best strategy now is to invest in companies that manufacture digital coin devices.
Most crypto currencies must be verified using sophisticated encryption techniques. Developers have adopted modified graphics cards from Nvidia (NVDA) and Advanced Micro Devices (AMD). So far this year, their shares have risen by 25.5% and 6.5% respectively.
This is a lucrative business. This also increases the profitability of other high-end graphics cards.
As for Bitcoin and cryptocurrencies, most investors should continue to shelve. In the long run, the future is gold. In the near term, be prepared for more negative headlines and lower prices