INK Ultra Money: Bitcoin as a store of value

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On Monday Real Vision's Raoul Pal interviewed Galaxy Digital (GLXY) CEO Michael Novogratz. Novogratz is a former Goldman Sachs partner and hedge fund manager. The interview covers a broad range of topics ranging from the current state of markets to Novogratz's philanthropic work in the area of prison reform. The meat of the interview starts around the 30-minute mark when the discussion turns to digital currencies. 

Galaxy Digital CEO Michael Novogratz and Raoul Pal

Novogratz starts out with an admission that by end of the last year he was getting frustrated. As he explains, "We set out to build a business that was the bridge between institutions and crypto. And, it just goes slow." The pace now appears to be picking. According to Novogratz:

Since corna everything has changed, in a lot of ways. Ten smart guys I know from our world who are macro thinkers have participated in bitcoin mostly just PA [personal account]. Paul...Paul Jones was the first guy to really publicly take a long position in his fund which I think is stunningly significant. Partly because, you know, if you were holding back because you didn’t want to look stupid, Paul is arguably a top-5 hedge fund manager of all time.

The Jones reference relates to the widely circulated newsletter form the American hedge fund manager who makes the case for bitcoin as a store of value during inflationary times. Bitcoin's supply is limited by a built-in algorithm. In fact, its inflation rate was cut in half last week which promoted some speculation in the digital currency at one point pushing it back above $10,000 per bitcoin.

For investors who are interested in bitcoin as a store of value, Novogratz makes the case to start accumulating now. The rationale is straight forward. While bitcoin supply is constrained, so are purchasing channels. Novogratz explains and paraphrasing fintech entrepreneur Wences Casares:

If it was easy, the price would be much higher. If it was easy to buy, and store and you know, one of the reasons there is still the opportunity to buy it is because it ain’t easy. And let me tell you what I see day after day, is people working hard including my 80 people [at Galaxy Digital] to make it easier. And so, I’m kinda like get it now because a year from now its going to be easier to buy.

As more sophisticated investors such as Paul Jones start accumulating bitcoin, the pressure is building on traditional financial institutions and investment banks to offer a way for their customers to buy digital currency. Novogratz sees that day coming within months, not years.

I agree with Novogratz on the short window of opportunity to accumulate bitcoin and other digital currencies before institutions have more entry points. That is why INK is providing links to a Canadian crypto currency trading platform called Coinberry. Founded in 2017 and based in Toronto, Coinberry is a financial-technology company focused on blockchain and digital currency solutions and provides a platform for Canadian residents to buy and sell digital assets like bitcoin. They are federally registered with (FINTRAC) as a Money Service Business (MSB) and they have in place Know-Your-Customer and Anti-Money Laundering policies.

Importantly, their platform has the option of funding via electronic funds transfer. You can link your bank account to them, but it is not required. Account setup is fairly smooth. You will be required to provide a picture of your drivers license or passport using your phone or computer camera. That step likely will turn off a lot of people, but the Coinberry requirements are no different than most other reputable digital platforms. The sign-up process also gets to the heart of the hard-to-buy factor that Novogratz believes provides opportunity in the space now. Once major financial institutions start offering vehicles to buy bitcoin and other digital currencies, demand could increase while supply remains constrained. Moreover, if you persevere through the process, Coinberry rewards new users with a small trading credit.

Of course, digital currencies are volatile and there are many risks, including custody. Digital currency investors need to have a custody strategy in mind when investing. While I use Coinberry myself, I diversify my holdings across different wallet locations.

If you click on our link to Coinberry, sign up and make a trade on Coinberry, you will be supporting our business as INK Research will receive a commission. If you want to hear more about my experience with Coinberry, please direct message me in INK Chat. As a reminder, we also have live digital currency quotes on Canadian Insider.

Novogratz also addresses the issue of gold versus bitcoin. He is not anti-gold at all. He just believes the opportunity is greater with bitcoin right now. Here is how he explains the opportunity:

It’s the same story in gold with scarcity, but it has a huge turbo charger and that turbo charger is adoption. Bitcoin has got a $180 billion market-cap, gold is $9 trillion. And so, bitcoin is so early on the adoption curve.

The Novogratz and Pal chat is lively with some fascinating tid bits about what the Treasury is thinking about bitcoin right now. If you are not a Research Club member, join us today as an Ultra member for full access to Real Vision premium content on INK Ultra Money. We will also send you an invitation to INK Chat where you can join the innovation channel discussion on blockchain and crypto.

INK Ultra money is also starting the week off with a focus on a junior mining stock in New Brunswick which we featured in the INK Morning report.

New resource estimate coming?

We also have Mike Green on Real Vision interviewing Gontran de Quillacq, a practitioner and expert witness for Navesink International. When funds blow up and pensioners are left holding the bag, Gontran can step in and testify as to whether these experts were actually behaving like amateurs or the victims of an unpredictable black swan event. In this conversation, Gontran touches on his decades of experience trading complex and esoteric assets to explain why many of the models and common risk metrics like Sharpe ratio don’t capture the full picture of the risks that certain strategies employ. Filmed on May 14, 2020>>

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