Peter Thiel, co-founder of PayPal and an early investor in Facebook, is making an important distinction between the frenzy over bitcoin today and the dot.com bubble of the late 90s that left some investors high and dry.
“[Bitcoin] has all of these sort of ’99-2000 bubble like aspects, but one thing that is very different from ’99-2000 is there are almost no Wall Street analysts pushing this, and so it is so out of favor,” he told FOX Business’ Maria Bartiromo. Thiel, one of the few Silicon Valley Trump supporters, said the value of bitcoin and traditional money is determined by society and explained that both can be stable, while containing bubble like features.
“[Bitcoin] may well be a bubble and most bubbles are unstable…There is this sort of bubble like aspect to money, but it’s one that can be quite stable. So even if bitcoin is bubble like, that doesn’t necessarily rebut it in this core use case for store value,” he said.
Thiel said the cryptocurrency is too “cumbersome” to become a payment system, but does have the potential to replace gold.
“There’s about $200 billion worth of bitcoin [and] there’s $8 trillion worth of gold and many of the things that make gold attractive would also apply to bitcoin. And many of the objections people have to bitcoin, would also be objections to gold,” he said. Both bitcoin and gold are similar in that they are not backed by any government and don’t have intrinsic value.
Though there are many different popular cryptocurrencies such as Ethereum, the billionaire venture capitalist believes that bitcoin will be the one that continues to lead the pack.
“My view is that there is going to be one cryptocurrency that will be the equivalent of gold…So the one, all else being equal, that you should bet on is the biggest one…It’s most likely you bet on bitcoin,” he said.
Thiel was interviewed at The Economic Club of New York.