Bitcoin hasn’t really hit Wall Street yet.
We can count the number of strategists we’ve heard talking about the virtual currency on one hand (Sebastien Galy at Société Générale explained how to think about valuing them, and Deutsche Bank’s Jim Reid mentioned it briefly once).
There’s also ConvergEx Group chief market strategist Nick Colas, who was really the first to address it several weeks ago.
He was on Bloomberg Surveillance this morning, and he told anchors Tom Keene and Sara Eisen that Bitcoin “absolutely is” something valid to consider for a diversified portfolio.
“If you want to make money, you have to be open to new ideas. This is a key new idea,” said Colas.
That’s a pretty ringing endorsement for an unregulated, digital currency market that seems prone to massive swings – like the 10-fold rise in value since January, or the 60 per cent wipeout that happened just today (though, to be clear, this interview aired this morning, before that big drop).
And Colas has written about that before. Arguably, Bitcoin’s biggest problem is a confidence one.
During the interview, Keene questioned whether investors could trust Bitcoin.
“I know where the gold is: the gold is in Fort Knox, the gold is at the IMF, etc.,” said Keene. “I’ve got a fiat currency structure off the budget of the United States.”
Colas replied, “Do you know how many times your gold has been re-hypothecated if you don’t have it physically in your vault? The same lack of transparency exists in gold.”
While acknowledging that there have been hacking incidents, Colas asserted that “the core of it, from a security standpoint, is quite sound.”
Returning to the confidence issue, Colas told the Bloomberg anchors, “What I think is most ironic and interesting about Bitcoin is that real people put real money into this system, having the same faith in it that they do in a sovereign government. Would you rather trust an unelected federal official or a decentralized computer system?”
“Bitcoin is gold for nerds, if you will,” said Colas. “It is something that a whole new generation of people believe in – the online nature of their lives, their economy – and so Bitcoin resonates with them.”
Watch the full interview below.
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