by Tanzeel Akhtar
Saudi billionaire investor Prince Alwaleed bin Talal said that Bitcoin will “implode” and that he agrees with Jamie Dimon that Bitcoin is a fraud, during a interview on CNBC’s Squawk Box this Monday.
“It just doesn’t make sense,” Alwaleed said. “This thing [Bitcoin] is not regulated, it’s not under control, it’s not under the supervision of any central bank.”
“I just don’t believe in this Bitcoin thing,” he continued. “I think it’s just going to implode one day. I think this is Enron in the making.”
Alwaleed referenced the Enron scandal, in which the company reached dramatic heights, with a peak of $90.75, only to collapse to $0.67 a share by January 2002 after declaring bankruptcy on December 2, 2001.
Bitcoin has become become impossible to ignore as the cryptocurrency has hit a new high this weekend surpassing $6,100 with a market cap of $98 billion. But its Icarian heights have some cynics wary of a bubble.
Saudi Monetary Authority Tweets Warning in July, But Is There an Agenda?
In July, the Saudi Monetary Authority warned about dealing with Bitcoin because the digital currency – which is not supervised by the government – might have negative consequences on individuals’ investments. Alwaleed runs the Riyadh-based Kingdom Holding,” which includes such investments as Citigroup (C – Get Report) , Apple (AAPL – Get Report) and Twitter (TWTR – Get Report) .
But billionaire investors may have agendas.
“When U.S.-dollar billionaires start mentioning Bitcoin as a ‘scam’ it could betray their concern that this is a new asset they may have discarded at first and now has the potential to represent a viable alternative to the U.S. dollar, the currency in which they hold most of their assets, stocks and commodities,” said Eddy Travia, CEO and co-founder of the London-listed Coinsilium Group Limited,
Expanding on this David Drake, chairman at LDJ Capital, explains that the $1 bill is a note from the government of the United States and a promise to honor it. Cryptocurrencies make the same promise, but it’s a utility/currency being able to be transferred globally and decentralized without government interference.
“Many tokens in cryptocurrencies are actual utility in which is pure software solutions that people pay for daily,” Drake added. “The big difference is it’s not Microsoft (MSFT – Get Report) or Google (GOOG – Get Report) selling you a product. I am glad these well-known investors are coming out now against it because the rest of the world is not looking back but looking forward.”
As a result, he’s not heeding Alwaleed pessimism.
“Countries are now considering tagging their currency to crypto,” Drake said. “The blockchain and cryptocurrency innovation is irreversible. There certainly will be individual bad boys of cryptocurrencies and we are learning how to underwrite these very quickly. My family office investments are focused more and more on existing businesses embracing this technology as a cryptocurrency utility.”
As the cryptocurrency market expands at a rapid pace, it is also attracting institutional investors. But even as established financial institutions like Fidelity and Goldman Sachs (GS – Get Report) warm to Bitcoin, detractors like Alwaleed are inevitable.