The CEO of Social Capital and Virgin Galactic Chamath Palihapitiya, in a recent interview with Unchained, described Bitcoin as a “schmuck insurance,” adding that investors who add the crypto asset to their portfolio as an uncorrelated hedge do so to protect their wealth.
That way, when the government takes an action that would be generally termed as a bad idea by the public (but is driven by short – term political incentives) and affects the financial economy, investors would have something to fall back on.
“One thing I’ve realized in anything, in any product is, you need true simplicity. And this is why I would encourage people to really embrace the simplicity of what Bitcoin is, which is – it is basically schmuck insurance in case the people in charge really fuck it up,” he said.
The 43-year-old billionaire believes that those in the legislature have the tendency to make what he described as a “short term window dressing type solution” which would affect the economy in the long run like in the case of the present situation of the US economy. The government controls more than 50% of the country’s GDP as a result of the increase in deficit and debt.
Commenting on why he feels Bitcoin would be in the best position to serve as a hedge instead of any other asset, Palihapitiya said, “Bitcoin to me is the only thing that I’ve seen so far that is really fundamentally uncorrelated to that decision – making process and to that decision-making body.”
He continues, “because at the end of the day, any other asset class – equities, debts, real estate, commodities – are all tightly, tightly coupled to a legislative framework and an interconnectedness in the financial market that brings together many of the governments that are sort of behaving this way.”
When asked how he came into the Bitcoin community, Chamath Palihapitiya explained that his decision to join the Bitcoin world was stimulated by a well-known person in the crypto space – Wences Casares, CEO of Xapo Bitcoin wallet. On their way to Las Vegas for Casares’s 40th birthday anniversary, the Xapo boss pitched the digital currency to Palihapitiya. Following the pitch, the billionaire made his first purchase of BTC which was worth a million dollar.
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