Evaluating Bitcoin And Other Currencies with Thomas Lee

NTE Tom | Bitcoin

 

The future is bright for digital assets and cryptocurrencies even though there is a bear market underway. Wall Street analyst and co-founder of Fundstrat Global Advisors, Thomas Lee, says keeping it simple is easier for most people, and Bitcoin is easy to understand because it’s been around for nine years. Tom observes that there hasn’t been a challenge to replace Bitcoin, but there’s going to be other successful projects out there. He shares some pros and cons of Bitcoin and other cryptocurrencies and what they do at Fundstrat.

Evaluating Bitcoin And Other Currencies with Thomas Lee

We had an amazing panel discussion and presentations by a bunch of speakers that are on the pro and the con side of how cryptocurrency is going, how the blockchain is going. I have Thomas Lee here. Tom, you are a partner at Fundstrat Global Advisors. Tell us a little bit about what you do there. You’ve been an expert for quite some time.

At Fundstrat, we are a research advisory firm. Our clients are hedge funds, institutional investors, family offices in crypto that also includes some minors and some of the exchanges. We provide research advice analytics about the markets.

You’ve been looking at the markets from the early stages because you have to be aware of that for your clients. How long have you been analyzing that?

I’ve been following a traditional market since 1993. Crypto is a newer endeavor for us. It’s something we learned about at JP Morgan in June 2012 but when Malcolm X happened, as a firm we took our attention away from it.

Everybody wants to know, “Should I invest in Bitcoin? Should I do these things?” Feel free to advise us. However, what I want to know is what should we be looking for when we’re evaluating these types of different currencies that are coming up?

Determining what's a successful project is letting time work on your behalf. Click To Tweet

The future is bright for digital assets and cryptocurrencies. Even though there is a bear market underway, I don’t think people should be bearish. If your time horizon is two years or three years, you’re not going to have a declining year over a year period. In fact, Bitcoin’s still up 50% from where it was before. Keeping it simple is easier for most people. Determining what’s a successful project is letting time work on your behalf. Bitcoin is easy to understand because it’s been around for nine years. There hasn’t been a challenge to replace Bitcoin but there’s going to be other successful projects out there.

You were saying that there are ideas that Bitcoin is so overheated, overhyped and overvalued but that’s not the case. Could you state that?

There is a lot of speculation in general in all assets. Something I did mention was that when people think cryptocurrency has too much speculation, it’s not as high as people realize. For every dollar that people use today to buy groceries or to use in purchasing a car, it’s traded 96 times on an exchange as a form of speculation, almost 100 to 1. Oil, for every gallon we burn in a car, it’s traded 30 times on a commodity exchange as a speculation. For Bitcoin, the ratio of market exchange on the chain is 2.5 to 1. There’s very little speculation in crypto.

Is that still because the volume is a little bit low? As we see that, do you think you’ll see a surge in the speculation?

Most speculation takes place between institutional investors. Hedge funds, day trade currencies, they make very exotic derivatives bets. The on-ramps for an institution to buy crypto is limited. Until we get those on-ramps, ice is backed as one of them, it’s primarily retail market.

You were on the pro side of the stage. Can you explain a little bit about just why?

Crypto is not only a big technology revolution, maybe what people call internet 3.0, but it’s being powered by a generation of people which are Millennials, anyone between eighteen and 37. There’s 2.5 billion Millennials. It’s the single largest generation ever born.

It’s crazy that our children are seeing this banking reality and they don’t get it. She had an overdraft that happened at 8:15 at night and we’re on the West Coast. That means it’s after the 8:00 PM cutoff in which she could have transferred money. She immediately transfers money and yet the bank doesn’t count it, but two checks come in overnight and they debit against it and she now have two more overdrafts. It made her angry. She’s 23 years old and she’s angry about that. We see that going on. This institutional version of thinking isn’t serving that generation’s mindset of what it should be.

It’s not meeting people’s expectations. People who deal with Amazon, there’s a mistake, Amazon apologizes, goes out of the way and gives them a credit. Banks make the burden on the customer to prove that they didn’t have fraud. I don’t know if anyone’s ever tried to dispute a charge on their credit card, but it’s very difficult.

I see a lot more use cases coming forward. When you start to see application in use, that’s when we start to see there is a tipping point and we’re turning that. What do you think is holding us back?

NTE Tom | Bitcoin
Bitcoin: Crypto is not only a big technology revolution but it’s being powered by the single largest generation ever born which are the Millennials.

 

The panel brought it up. Jessica was talking about user interfaces, UI and UX, and it’s true. From a browser experience perspective, like Augur or Steam, it’s very difficult for a novice to understand how to get into these platforms. It’s not that different than 1998 when the state of the art was just Netscape and Internet Explorer. People forget how primitive those web pages were. They were awful. Most web pages were terrible.

We had to hard code our own shopping carts and they always failed. We’re back there at this stage, but we should accelerate out of that the more adoption that happens. It’s going to be a necessity.

There’s a lot of technology channel that’s good at developing user interfaces. It’s just a matter of time.

Thank you, Tom. We appreciate your contribution on the panel and here as well. Thank you for your time. This is Tracy Hazzard from ChainXChange.

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