You might have gathered from Mike Novogratz’s (nearly) unwaveringfaith in the inevitability of a cryptocurrent future that he’s more of the mold of the true believers than the opportunistic sellout cryptocapitalists, a real devotee of Satoshi Nakamoto and member in Good Standing of the Church of the Holy Blockchain and Latter-Day Coins. This is apparently a misunderstanding. To be sure, Novogratz does believe in bitcoin and things it has a future, even now. But there’s enough of the old Fortress Investment Group executive still in there to know a bubble when he saw one. It’s just that he thought the bubble had finished bursting.
We thought it was a bear market. I went into it thinking in the long run crypto is going to be a real structural shift in the world and I can just hedge my portfolio. And to be fair, we did a really great job not losing money the first 60 percent down. What you forget is that a market like Bitcoin that’s down 84 percent has dropped 60 percent—and then another 60 percent. That’s where the pain happens. You start buying Ether again, because it’s only $400 after being at $1,300. But then it drops to $100, and you’ve lost 75 percent of your money. We haven’t done horribly in that context, but we’re still down.
Novogratz tells Bloomberg that his come-to-bitcoin moment was realizing that cryptos were basically the macro markets gone nuts. He just didn’t realize that the market could also go nuts in not following the classic bear market/bubble bursting and eventually stop losing money, especially when it’s got evangelicals throwing their money away like, well, evangelicals. From whose number he’d like to go on record excluding himself.
While I believe in the underlying technology and believe in the crypto movement, when prices get stupid, I sell. A lot of my friends in crypto just couldn’t let go. They were saying, “This is going to change the world.” Revolutions don’t happen overnight. I’d be walking down the street, and people would come up to me wanting to take selfies. That’s when I started to think, OK, this is weird.
In fairness, it’s not like he’s ever been guilty of making stupid price predictions… oh, never mind. Anyway, here’s a new thing he’s really into. Can’t wait to get a taste of that completely virtual IPA.
We’ve invested in a company called High Fidelity, which is a virtual world. Me and you, we’ll sit down, and we’ll have virtual beers. People think I’m crazy when I say that, but Second Life does $500 million a year of GDP, real money traded back and forth in a virtual world with old technology. That’ll be the first use case where blockchain really works.