George Soros: Bitcoin is Propped Up by Dictators
Legendary currency trader, hedge fund titan, philanthropist George Soros, 87, delivered his yearly talk at The World Economic Forum 2018 in Davos, Switzerland. At the end of his remarks, an audience question asked the mogul his thoughts on cryptocurrencies generally and bitcoin in particular.
George Soros Believes Bitcoin’s Bubble is Maintained by Dictators
A balding moderator chose to read from an audience question. He asked Mr. Soros, “Somebody says, ‘You’re a currency speculator. What do you think of cryptocurrencies? Is bitcoin a bubble, and do you have a position in cryptocurrencies?’”
Mr. Soros grinned, looking every bit of his approaching 90 years old, and seemed to acknowledge the obvious grin spreading across the room and his face. “Well,” he laughed while scratching his head momentarily, “cryptocurrency is a misnomer, and it’s a typical bubble which is always based on some kind of misunderstanding.”
His currency speculation isn’t like most. Mr. Soros’ currency moves have damn near sacked entire economies. Just ask the Bank of England. Or most of Asia at one time or another. Currency? You can say he knows a little something, yes.
Stammering to collect his next thought, Mr. Soros clarifies, “Bitcoin is not a currency. A currency is supposed to be a stable store of value. And a currency that can fluctuate twenty five percent in a day can’t be used, for instance, to pay wages because wages could drop twenty five percent in a day. So, it’s a speculation based on a misunderstanding,” he stressed.
Bitcoin for Tax Evasion
Whether he truly understands the technology and just why its volatility could be a feature rather than a bug is beyond the scope of present reportage. But he is aping the legacy party line, “There is also a very innovative blockchain technology which can be used for positive or negative purposes,” he said almost as an afterthought.
“Currently [bitcoin] is used mostly for tax evasion and the … for the … people in the … the rulers in dictatorships to build a nest egg abroad. Recently, just now, there was a conference where instead of discussing conditions in Russia, they mainly discussed bitcoin because that’s what the rulers were interested in,” Mr. Soros explained, incredulous. Indeed, world leaders have been unusually vocal about cryptocurrency the last few weeks, and the subject is dominating much of the financial press.
“So this will have a big effect on the valuation of bitcoin. Normally when you have a parabolic curve,” he held his left hand like a karate chop, “eventually it has a very sharp break. But in this case, I think, as long as you’ve got dictatorships on the rise, you will have a different ending because the rulers in those countries are going to turn to bitcoin to build a nest egg abroad.”
It’s hard to know what in particular he is referring, but guesses include North Korea, Venezuela, Iran, and maybe even Russia. Scant evidence exists they’re actively participating in hording bitcoin, but at least one is creating its own version.
“So I expect instead of an abrupt break, another flat top over … but it’s nevertheless a bubble, typical, which is always based on a misunderstanding like the tulip mania. But the blockchain technology can be put to positive use. And we use it, actually, in helping migrants to communicate with their families and to keep their money safe,” he concluded. No follow-up questions came with regard to just how migrants are using blockchain to communicate nor secure their money.
He never did answer as to whether he has a position in cryptocurrency.
What do you think of Mr. Soros’ comments? Let us know in the comments section below.
Images courtesy of Pixabay, World Economic Forum.
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