cryptocurrencies

Venture Capitalist Fred Wilson Explains What Buffett Gets Wrong About Bitcoin

  • ‘I don’t know how you can put the genie back in the bottle’
  • Value of ‘hypercompetitive’ networks will accrue to tokens

Bitcoin: What’s Coming in the Year Ahead

The value of cryptocurrencies is ultimately going to accrue to the token, not necessarily the operating business or cash flow of the networks, Union Square Ventures’ managing partner and co-founder Fred Wilson said at the 2018 Consensus Conference in New York Wednesday.

Fred Wilson

Photographer: Peter Foley/Bloomberg
  • "When someone like Warren Buffett looks at that, he thinks, that’s no good, where’s the cash flow? It’s in the token; it’s not cash flow," he said, adding investors should look at MV=PQ, not DCF
    • "Calling it ’rat poison’ to me suggests that they haven’t taken the time to really understand what’s going on here. If all you think of it as is some new asset class, then I think you’ll come to that conclusion."
  • Wilson admits his business is making "highly speculative bets," but says at the end, "it’s all going to work out"
  • Says some valuations of crypto tokens will be seen as inflated, not good deals years from now
  • In terms of dialing back on progress made in the sector, Wilson says it’s difficult to "put the genie back in the bottle"
    • "I do think we’ll see governments try to rationalize these markets and constrain them in some ways. And I think they’ll be somewhat successful at doing that, but I think what we’re now calling the ICO market, I think is version 0.5 of the new capital markets"
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