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It’s ‘Irresponsible’ For Investors Not To Have Any Bitcoin Exposure – Says Xapo CEO

Xapo CEO, Wences Casares, believes that it would be “irresponsible” for any investor not to have at least a one percent position in bitcoin as it could have a bigger impact on the world than the internet. 


Minimal Bitcoin Exposure, Maximum Gains

In an essay published by Kana and Katana back in March 2019, the Xapo chief laid down an argument for Bitcoin to take up one percent of every investment portfolio. According to Casares, a $10 million with a one percent allocation to BTC could yield close to $25 million within seven to ten years.

Casares based his analysis on his forecast that BTC could top $1 million within the stated timeframe. Conversely, if Bitcoin fails, the portfolio would only have lost the original one percent – $100,000.

Wences Casares

According to Casares:

Bitcoin offers a unique opportunity for a non-material exposure to produce a material outcome. It would be irresponsible to have an exposure to Bitcoin that one cannot afford to lose because the risk of losing the principal is very real. But it would be almost as irresponsible to not have any exposure at all.

Investment legend, Biller Miller is a popular example of Casares’ logic. In July 2017, Miller took up a one percent position on BTC. By mid-December 2017, BTC accounted for 50 percent of Miller’s total asset under management, simply because BTC/USD gained almost 700 percent in value during that period.

The 2018 bear market probably, reduced Bitcoin’s proportion with respect to the rest of Miller’s portfolio. However, with BTC price still double what it was in July 2017, Miller’s bitcoin bag is still in the green.

Bitcoin Resembles the Early Internet

For Casares, whose company stores over $10 billion in BTC for clients in Swiss ‘bunkers,’ the signs pointing towards Bitcoin’s long-term success continue to become evident as time passes. For one, the Xapo chief says Bitcoin resembles the early internet in many ways.

Casares highlighted how since the establishment of the Internet, the world has seen little of protocol developments and with more emphasis on creating companies. Bitcoin, according to the Xapo CEO represents a new paradigm-altering protocol that could have even greater ramifications than the Internet.

Coming from a purely technical standpoint, Casares does agree that there exists the possibility that Bitcoin might not necessarily fail, but become obsolete. He says companies could create solutions on a protocol level that appeal more to users than Bitcoin’s current state.

Casares has previously made expressed similar sentiments, describing Bitcoin as an intellectual experiment that could still fail.

However, Bitcoin’s leaderless open-source and borderless approach to both its tech and economics are diminishing this possibility alongside its ever-growing network effect and first-mover advantage.

Meanwhile, there is a growing unease with the policies of governments and central banks that are making BTC become an even more attractive proposition to investors as a hedge.

Forget Altcoins, BTC is the Real Deal

Casares also adds that the other over 2,000 altcoins don’t stand a chance. The Xapo CEO says Bitcoin as a protocol is already on its way to succeeding in ways altcoins can’t.

5 Altcoins with Major Events the week of April 1, 2018 (Gains Likely to Beat BTC Returns!)

Elaborating on the gulf in utility and adoption, Casares noted:

Over 60 million people own Bitcoin and over 1 million people become new owners every month. The other 1,000 cryptocurrencies [that process at least one transaction per day] have less than 5 million owners combined, so Bitcoin will add more users in the next 5 months than those 1,000 cryptocurrencies added in their combined history.

Back in August 2018, Casares declared that altcoins will eventually face a “mass extinction event.” Commentators like Matt Hougan of Bitwise and Barry Silbert of Digital Currency group also believe that most altcoins will not survive the crypto version of the dot-com bubble bursting. After which, most altcoins will go to zero.

Bitcoin’s superiority becomes even more apparent given that its value transfer dwarfs all cryptocurrencies despite having fewer BTC transactions per day than some altcoins.

Should investment portfolios consider taking up a one percent position on Bitcoin? Share your thoughts with us in the comments below.


Image via Twitter (@wences), realidadeconomica.com.ar

The Rundown

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Xapo Founder: Bitcoin Is An ‘Intellectual Experiment’, But It Can Still Succeed

When it comes to loyalty to crypto-related technology, a majority of innovators in this industry, many of which are diehard decentralists, would go to the ends of the Earth for their craft. However, in a recent Bloomberg interview, the founder of one of the crypto space’s foremost startups claimed that this innovation is nothing more than an “intellectual experiment,” throwing many industry players for a loop, so to speak.

Crypto And Bitcoin – A Complex Intellectual Experiment?

Wences Casares, the Palo Alto-based CEO of Xapo, recently sat down with Bloomberg’s Erik Schatzker at JP Morgan’s Robinhood Investors Conference to discuss his outlook on crypto, tapping into his industry expertise to insightful comments to get the minds of viewers racing.

The prominent executive, starting off his interview with a bang, claimed that Bitcoin is nothing more than an “interesting intellectual experiment,” in spite of popular sentiment that BTC, along with other crypto assets, will usurp fiat currencies and subsequently, the global financial system. As the term “experiment” implies, Casares is essentially pointing out that Bitcoin, in all its decentralized glory, may fail miserably or succeed.

Diving into the sentiment that crypto is an “experiment” in-depth, the Xapo chief executive noted that it is still worthwhile to pay attention to this industry, even if the experiment’s results aren’t optimal or according to plan. He elaborated, stating:

“If it works, it could be quite relevant. And even if it doesn’t work, I think the [information that individuals learned] from crypto is quite important.”

The Bloomberg anchor, who was evidently caught off guard by this statement, went on to pick Casares’ brain on why the CEO believes that crypto could fail.

Casares, who forayed into crypto after experiencing Argentina’s tumultuous financial perils first-hand, noted that it would be irresponsible to “not acknowledge that it could not work,” adding that as it stands, Bitcoin’s chance of failure is “non-trivial.” The industry leader added that while the technology backing Bitcoin has been undoubtedly robust, when you boil crypto down, humans, like Satoshi Nakamoto himself, are fallible.

Not only could there be flaws in Bitcoin’s code base, but Casares also explained that in the future, there could be innovations that undermine certain aspects of blockchain networks, Bitcoin included, that makes ASIC machines nothing more than expensive paperweights.

Still, maintaining a positive attitude, the Argentinian technology entrepreneur acknowledged the fact that the odds are weighing in favor of Bitcoin, rather than against it.

Bitcoin Is Like The Internet In The 90s

Likening Bitcoin and the umbrella term of “crypto” to the Internet, as the commonly used analogy goes, Casares explained that this industry is still “in the equivalent of 1992 for the Internet.” And as such, he added that the term “crypto” is often over complicated and that “blockchain” is nothing more than the world’s first autonomous computer system, implying that innovators utilizing this technology are just revving up their motors and aren’t ready to start the race, so to speak.

Taking a forward-minded approach, the long-time crypto proponent went on to consider Bitcoin’s future prospects from an optimistic point of view. Explaining a world that saw Bitcoin win, Casares noted:

“A world that Bitcoin is successful is a world that Bitcoin has become two things — it’s a non-political global standard of value and it’s a non-political global standard of settlement… So just like we have a non-political standard of weight and length, we need a non-political standard of value and we don’t have that. So a world in which Bitcoin succeeds is one when you ask for the price of Turkish lira, you get a price in bits, when you ask for the price of oil, you get a price in bits, when as for the price of the U.S. dollar, you get a price in bits.”

Stepping away from industry norms and popular sentiment yet again, Casares closed off his guest appearance by pointing out that while Bitcoin won’t replace fiat, it can change how money is fundamentally used, handled, and issued.

Featured Image from Shutterstock