Oaktree Capital is an investment firm that plays in the big leagues. As of June 2017, they’ve managed over US$99 billion worth of assets. Bitcoin, however, is certainly not one of them.
Their co-chairman, Howard Marks, started off his July 2017 investment memo citing his expertise at predicting the fall of “bullish trends”, and called out cryptocurrencies as “not real” and “an unfounded fad.”
The changing winds of time
2 months later, he’s rethought his original position on the topic, thankful that he’s “a little less of a dinosaur regarding Bitcoin”, and is now “willing to be proven wrong”, stating:
“Whereas I said Bitcoin “isn’t real” because it has no intrinsic or underlying value, that’s certainly true of the dollar and other fiat currencies: there’s nothing behind them either. You can no longer exchange them for gold (and what is gold, anyway? But that’s another subject.) In fact, government-issued fiat currencies are accorded value only because of a government edict.”
Bitcoin as a currency
“Why, the fans of Bitcoin ask, is such an edict superior to an agreement among people to accept a non-government-issued currency? Fiat currencies have value simply because of faith in the governments that issue them. If enough people believe in it, why can’t faith in Bitcoin suffice? If you consider the properties of fiat currencies, these are darn good questions.” [Editor’s note: emphasis is that of Mr Marks.]
The billionaire investor, and author of several books on investing, is famed for the Oaktree Capital investment memos he writes to clients of the firm.
He continues in the latest issue, “Bitcoin can’t be debased by unlimited issuance, since the blockchain process has been set to permit only a gradual increase from today’s 16 million, to 21 million in 2140. In this sense Bitcoin is better than the dollar, of which a lot more can be issued at any time, diminishing its purchasing power through inflation. As Steven and Murray have written, “a purchase of Bitcoin is nothing other than a short sale of the currencies of the world. Merely by limiting the growth of supply, Bitcoin would become more valuable as other currencies devalue”.”
Oaktree Capital gets added to the list
Wall Street is lax to accept the legitimacy of a non-traditional participant such as cryptocurrency in the money race. But through examples the likes of Morgan Stanley and Taizon Son (read more about their statements in our September Cryptocurrency News Roundup), and now Howard Marks, it’s evident that this is changing. The rise of the alternative currency that started with Bitcoin is winning over more and more financial stalwarts. The future shines bright.