What do Coindesk, Digital Currency Group, and Second Market all have in common?
They’re all owned by Barry Silbert, the early investor worth about half a billion dollars who’s been cheering on Bitcoin and crypto for years.
Silbert heard about Bitcoin in 2011 and describes his perspective as evolving through arrange of emotions that all true crypto fans are probably familiar with.
- Intellectually Curious
He started buying Bitcoin in 2012 at $8 and began angel investing in different companies the same year. An influential and occasionally controversial figure in the space, Silbert is noted not only for his staggering success, but for his enthusiastic cheerleading of different coins that he or his company hold. This has lead some social media users to nickname him “Barry Shilbert”. That’s social media for you.
Perhaps both reputations are well-deserved. He invested in Ethereum Classic less than two years ago at $0.50 per token and saw it increase over 90 times in value, seeing more growth than Bitcoin did in the same amount of time. He continues to back the currency and offer tips on Twitter while posting bullish statements as well.
His social media activity have caused concern that US regulators may take an interest. Securities lawyers have pointed out that while there’s nothing to be done about individuals attempting to influence token value in the unregulated crypto space, one of Silbert’s companies deals in US government-regulated securities whose value is derived from crypto, raising the issue of whether Silbert’s actions constitute illegal price manipulation prohibited by US law.
Silbert didn’t let the concerns go unanswered. He insisted that he was “highly sensitive” to the regulations regarding price manipulation and stated that he and his companies were fully subject to “anti-fraud provisions and insider trading”. To date he has made no comment about his online nickname… I don’t think anyone will hold that one against him!
Regardless of the gray area he may be straying into legally, it’s always worthwhile hearing what crypto giants are thinking and how they got to where they are. Barry Silbert made an appearance at the Yahoo Finance All Markets Summit and made a number of interesting points that we’re going to get into today. First, let’s take a closer look at his companies.
Digital Currency Group
Digital Currency Group is a company that funds promising entrepreneurs as an “angel investor” and invests in cryptocurrency. Silbert claims the company almost never trades, and favors holding tokens long-term instead. At the end of last year, DCG held over $600 million worth of cryptocurrency, and 90% of that was in Bitcoin, Zcash, and Ethereum Classic.
DCG played a key role in the funding and development of projects like CoinDesk, BitPay, and Ripple. They even went on to buy CoinDesk outright in 2016. Another subsidiary company of DCG is Grayscale, an investment firm that manages Bitcoin Investment Trust, the first ever company to offer shares and securities whose value is derived solely from cryptocurrency. It’s a big step for adoption, but investment opportunities are available only to accredited investors with hundreds of thousands of dollars at their disposal.
Silbert’s Summit Predictions: Good news, Bad news
Bad news first. Silbert firmly believes that the vast majority of cryptocurrencies are going to crash all the way down to zero.
That’s right – not “drop to a lower market value”, not “suffer a permanent correction over time” – zero. Nothing. Worthless. Similar sentiments were expressed by Goldman Sachs’ Steve Strongin. “Because of the lack of intrinsic value (in some correlated currencies), the currencies that don’t survive will most likely trade to zero… Most, if not all, will not see their recent peaks again.”
But it’s not all doom and gloom – far from it. In fact, when you hear the reasoning behind Silbert’s prediction, it’s rather good news. It actually makes a lot of sense. Silbert is convinced that there will only be one major player in each available “role” in the crypto space. He thinks there will only be one digital gold, only one privacy coin, one fast transaction coin, etc. Unlike in other markets, he thinks that the results of crypto will be somewhat binary – succeed or fail completely.
Wall Street Infrastructure
Silbert also alluded to what many have come to suspect recently amid the recent onslaught of FUD, fake news, and price drops, which is that Wall Street is starting to get in on the action.
“Behind the scenes, infrastructure is being built – on ramp, off ramp – to enable Wall Street to access this asset class in ways that you cannot imagine,” Silbert said, predicting that a “tidal wave of capital” from asset managers around the world will make its way into crypto markets in the next 12 to 24 months.
Interesting tidings indeed. This would herald the beginning of real widespread mainstream adoption of cryptocurrency, flooding the market with big money and increasing the market cap significantly. With deep-pocketed investors and hedge funds comes reduced volatility as large amounts are held for stable and consistent time periods. If the predictions are true, crypto might soon exit the Wild West territory we see it in today. The coming years might see crypto enter the big leagues of international adoption and investment.
While people like Strongin and Silbert should always be listened to with a measure of skepticism due to their vested interest in the space, early crypto investors tend to be people to keep an eye on – all it takes is one investment like the many successful calls that Silbert has made to change a life forever.
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