You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.
Because of the argument that Bitcoin is a form of digital gold, many believe that Bitcoin’s total value should approximate that of all the gold in the world, which is around $12 trillion today.
Why shouldn’t we be talking about something more like 100 to 1?” The 100-to-1 was a reference in his slide to global equities being worth $115 trillion, while Bitcoin is worth a little less than $1 trillion.
Thiel underscored this later in his address when he attacked business titans including Warren Buffett, JPMorgan Chase CEO Jamie Dimon, and Blackrock CEO Larry Fink, saying, “If you have these large institutional investors, they need to be allocating some of their money to Bitcoin when they manage state pension funds in the U.S., or they get trillions of dollars in assets.
Global equities, meaning all the publicly traded companies in the world combined, are worth $115 trillion because those equities represent businesses, like Apple or Buffett’s Berkshire Hathaway, that generate trillions in annual profits.
A Bitcoin is only worth around $40,000 today because a group of people, many of whom are speculators, have decided that it is.
In that void, Thiel’s keynote address takes on added significance as he’s one of the highest-profile backers of the cryptocurrency.
He never once addressed Bitcoin’s utility as a medium of exchange.
In other words, it’s an article of faith — and one that can make you rich if you persuade enough people to buy it — rather than an object of real value.
That political point is a well-worn argument for Bitcoin by now, and it’s true that Bitcoin has been used in countries like Venezuela that have been embroiled in civil unrest and hyperinflation.
It’s also notable that Bitcoin tends to trade as a risky asset rather than a store of value, notably plunging when the war in Ukraine broke out.
Thiel seems to believe that the next significant rally in Bitcoin will require buy-in from institutional investors, but there are two major obstacles to that happening anytime soon.