Oaktree Capital founder Howard Marks has bitcoin on his mind.
Marks, who called bitcoin, the digital coin up over 350% this year, a “fad” in a July memo, has warmed up to it after receiving backlash from the cryptocurrency community.
Marks revisited his thoughts on the digital coin in a wide-ranging memo sent out to clients on Thursday. The long and short of the note: Marks has changed his mind, but he still has reservations.
Marks concedes he might have been too quick to dismiss the idea that bitcoin can be considered a currency akin to the US dollar.
“What bitcoin partisans have told me subsequently is that bitcoin should be thought of as a currency — a medium of exchange — not an investment asset,” Marks wrote. “Given that the evolution of bitcoin is so topical, I think further discussion is in order.”
After exploring the key characteristics of a currency, Marks concedes that bitcoin does, in fact, share characteristics of money. Specifically, its use as a form of legal tender and a store of value.
“So my initial bottom line is that I see no reason why bitcoin can’t be a currency,” Marks said.
But this doesn’t mean Marks is completely on board with the bitcoin trade. According to Marks, just because bitcoin is could be a currency, doesn’t mean its not in a speculative bubble. Here’s Marks (
Being willing to agree that Bitcoin may become an accepted medium of exchange is not the same as saying you should buy it now to make money. Think about the fact that the price of Bitcoin has risen more than 350% so far this year and 3,900% in the last three years. To the degree people argue that Bitcoin is a currency, then (a) why is it so volatile? and (b) is that desirable? You might want to consider whether a real currency can do that, or whether speculative buying is determining Bitcoin’s price. And whether what’s gone up can come down.
That said, Marks, a self-professed “bitcoin dinosaur,” is open to further debate.
“I’m willing to be proved wrong,” he concluded.
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