Jean Pierre Verster, portfolio manager at Fairtree Capital, has warned that Bitcoin is in bubble territory and he will not invest in the cryptocurrency.
Verster is known for predicting African Bank’s collapse, shorting the stock, and making R100 million in profit for his clients through the deal.
Speaking to BusinessDay TV, Verster warned that Bitcoin’s high value is based on a “false truth” and that it may not be a wise investment at this stage.
Verster said Bitcoin started with a “true truth”, the blockchain technology which underpins the cryptocurrency.
The blockchain supports an open, distributed ledger that can record transactions between parties efficiently and in a verifiable and permanent way.
Bitcoin currently sports a wide acceptance as a form of payment, which provides it with benefits over many other cryptocurrencies.
Bitcoin is particularly popular as an anonymous payment system, and is also used to bypass exchange controls in certain countries.
This is seen by authorities as a potential issue, and Verster said central banks around the world are looking at Bitcoin – and that they may have to put checks and balances in place to control cryptocurrencies.
Even with all the activity around Bitcoin, Verster still feels it is in bubble territory.
Bitcoin is another form of gold
Wayne McCurrie, a senior portfolio manager at Ashburton Investments, recently said Bitcoin is a digital version of gold.
Gold and Bitcoin are similar because they are independent currencies which no government can control, which you can carry around and get value for in any territory, he said.
However, McCurrie said gold has been around for a long time, has been traded with extensively, and has had recognised value for 5,000 years.
Gold has therefore established itself, while Bitcoin is yet to do so.
McCurrie said if Bitcoin becomes truly successful, and becomes really big, it will be the victim of its own success – as it will become legislated.
“Governments will never tolerate a separate monetary system outside of the formal banking system, so it will almost become illegal if it truly becomes big,” he said.