Andrew Ross Sorkin, Here's Your Bitcoin Bear Case: $0

Anton Wahlman profile picture
Anton Wahlman


  • The idea that a cryptocurrency should have any value at all, as a currency, is absurd.
  • If you bought a tulip in 1637, at least you got a tulip. If you buy a Bitcoin or equivalent, you get nothing. Not even a fraction of a tulip.
  • Bitcoin is fundamentally worthless as the fiat currency that it criticizes. That’s one of the many paradoxes about it.
  • Unlike Bitcoin, gold is a real thing.  It’s been proven for 5,000 years.  Normal people actually know what it is.
  • Bitcoin has gone to the moon and could go to Mars before people wake up and realize that it's worth exactly $0.
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On Dec. 17, Andrew Ross Sorkin asked on his CNBC morning program about hearing the bear case for Bitcoin: here.

Well, here it is. My price target for Bitcoin (OTC:GBTC) is zero.

Sometimes there's something so absurd that you hardly know where to begin to make the argument, for it's so obvious and self evident that it should not have to be explained. Bitcoin and similar cryptocurrencies are such a case.

The case for Bitcoin and other cryptocurrencies actually start with something that's true: A criticism of fiat currencies. “It’s just paper money, it’s worth nothing”, BItcoin/crypto advocates say about the US dollar and all other similar currencies - and they're 100% right.

The U.S. cut its final ($35 per ounce of gold) link to gold (GLD) on August 15, 1971. Since then, the US dollar has lost most of its value, although that process already had been underway since at least 1913.

Bitcoin Vs. Blockchain technology

Warren Buffett has likened Bitcoin to a checkbook. How much is a checkbook worth? Perhaps $10, perhaps less. It’s a payment technology.

The check itself doesn’t have more monetary value than that. Whether I write $100 or $100 million onto each check in the checkbook, the whole checkbook is still worth only $10.

That's a perfect analogy with Bitcoin and Blockchain. The latter may be a most valuable technology that may have a strong role in a future payment system, helping to transfer money between people and across borders. It’s probably worth something, perhaps even to someone - if there's ownership to this technology.

However, ascribing actual monetary value to this technology, beyond the technology itself, is as false as the amount that’s written on a check, in relation to the checkbook itself. It’s simply irrelevant and absurd on the face of it.

Bitcoin Vs. Tulips

In 1637, a tulip was trading at an insane value, approximately 10 times the annual wage of a skilled craft worker. But if you bought a tulip, at least you got a tulip: Tulip mania.

However, if you buy a Bitcoin today, you don’t even get a tulip. There's no physical asset behind Bitcoin. Nothing. Not even a fraction of a tulip. There's no gold or silver. No real estate or share of a company. There's nothing.

Bitcoin’s false and irrelevant “scarcity”

Bitcoin bulls point to the scarcity of Bitcoin: Only so-and-so can be “manufactured” inside a computer. Let’s take that at face value for a moment.

Why should something be valuable just because it's scarce? I can burp only a limited number of times per day. That doesn’t mean that my burps are worth anything to anyone.

Looking outside a single Bitcoin, the notion that there can only be one cryptocurrency, and that only that one must hold value, also is absurd on the face of it. There's no limit on how many cryptocurrencies can be created.

The fact that a single cryptocurrency is “limited” does not mean it should have any value at all. It seems awfully convenient that someone could issue a cryptocurrency and effectively say “Well, I’m just going to limit it to so-and-so many coins” - so that it’s “only” valued at $1 billion or whatever. Why should someone get away with $1 billion in the first place? We know that $1 billion is less than $10 billion or $100 billion, but it’s still an insane amount of money even at $1 billion. Anyone could come up with such a new “coin” out of thin air and say it’s worth a lot of money - and it doesn’t make a lick of sense.

Bitcoin compared with gold

Gold is a physical thing that has been a store of value for 5,000 years. No computer algorithm, electricity or networking technology is needed for it to work. It’s a real thing. It actually exists, and everyone knows what it is and why it's valuable.

You don’t lose your gold because something you or someone else didn’t understand - or simply changed - inside a mathematical formula. Your gold bar or gold coin existed long before any computer or networking technology. It will outlive all human life.

The Emperor - Bitcoin - has no clothes

Bitcoin has the same value as selling fresh air in a bottle. There's some non-zero value to the bottle, but no value should be ascribed to the air inside it. There's not even a tulip inside the bottle. There's just nothing. Someone else has also finally figured it out:

One Bitcoin Skeptic Speaks Out On "Persuading People To Buy Fresh Air In A Can"

My Bitcoin target price: $0

Once people realize that a Bitcoin is worth less than a tulip, less than fresh air in a can, I believe its price will fall to its intrinsic value: $0. How long until that happens, and where will the Bitcoin price go between now and then? I have no idea. If something that’s inherently worth $0 could do something so insane as to go to $20,000 in the first place, it could go a lot higher before it hits $0. And it could take years.

It may not be possible to short Bitcoin simply because its eventual fall to $0 could happen in an instant, and be essentially impossible to time. It could happen for any number of reasons, but unless you are very certain about the timing of the specific catalyst that will set Bitcoin down by a huge percentage, you could get burned a lot more while waiting for that to happen.

As for gold, I expect its price in future years to reflect the increase in the quantity of government paper money. If the U.S. government - the Federal Reserve - increases the quantity of money by 10% per year, I expect the gold price to also average 10% per year increases. There should be no mystery there. Gold is a real thing, unlike Bitcoin or other cryptocurrencies.

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This article was written by

Anton Wahlman profile picture
I am a former sell-side analyst -- UBS 1996-2002, Needham 2002-2006 and ThinkEquity 2006-2008. These days I review automobiles and other technology products, as well as analyze the automotive and technology industries, and coming up with long/short ideas. I also continue to write (less frequently) on macroeconomics and politics.

Disclosure: I am/we are long GLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: At the time of submitting this article for publication, the author was long GLD. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers.

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