Blockchain Capital’s Bogart: Bitcoin the Only Crypto with a Proven Use Case

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Blockchain Capital’s Bogart: Bitcoin the Only Crypto with a Proven Use Case

By Kyle Torpey - min read
Updated 22 May 2020

Blockchain Capital Partner Spencer Bogart was on CNBC’s Fast Money on Monday to discuss the current state of the bitcoin and greater cryptocurrency market. During the interview, Bogart emphasized a preference for bitcoin over other cryptocurrencies and initial coin offerings (ICOs) at current prices, noting that bitcoin is the only crypto token that has proven its usefulness and gained some traction.

Additionally, Bogart shared his thoughts on why the crypto market is down roughly 50 percent so far this year, and he was also asked to comment on the seemingly never-ending bitcoin versus blockchain debate.

Bitcoin’s Usefulness is Not Theoretical

When making the case for bitcoin on CNBC’s Fast Money, Bogart pointed to the advantages that the world’s most popular cryptocurrency has over the alternative options. Bogart pointed to mindshare, global distribution, and relative safety from a possible regulatory crackdown as the key benefits of bitcoin over its competitors.

Additionally, Bogart spoke to the fact that many of the alternative tokens’ use cases are still mostly theoretical at this point.

“I think bitcoin is the only one that’s demonstrated its real use case and traction. If you think about bitcoin’s ability to move value around the world and to store it, it’s actually happening today. People are using it for that exact purpose. It’s not like people are hearing about how Uber is going to change transportation and they haven’t seen it yet. No, people are riding in the cars today with bitcoin,” said Bogart.

To Bogart’s point, no other cryptocurrencies — with the possible exception of privacy-focused altcoins like Monero for darknet activity — have gained much (if any) real-world traction. For example, while Ethereum has been touted as the base layer for decentralized applications (dapps), it’s most popular dapp (not counting exchanges), CryptoKitties, currently only has around 350 to 400 daily users (according to DappRadar).

“I think the price of something like bitcoin is very attractive at these levels . . . A lot of these coins, especially in the long tail of these coins, a lot of the ICOs that we’ve seen over the past year are still very overvalued. But when I look at something like bitcoin, I’m very, very constructive,” Bogart later added.

Why is the Crypto Market Down?

In terms of how the crypto market has gotten as low as it has in 2018, Bogart indicated that the limited partners (LPs) at various crypto hedge funds may be at least partially to blame.

“If we go back to the summer of 2017 when crypto prices were booming, there was about a hundred, two hundred, maybe three hundred new crypto hedge funds that were formed . . . Now, here in the summer of 2018, a lot of them are hitting the end of their one-year lockup. That means that the LPs in those funds are now looking at a down 50 percent year, and they’re saying, ‘Hey, I want to redeem out of that fund.’ That means forced selling on behalf of all of these new crypto funds that have popped up.”

Bogart added that, while he’s “super bullish on crypto right now,” things could go lower in the short term. Having said that, his view is that it’s better to start averaging into bitcoin now rather than trying to time the bottom of the market.

“I think most people that are going to wait for lower prices will end up paying higher prices than they are today,” said Bogart.

The Bitcoin vs Blockchain Debate

In light of the massive drop in the crypto market so far this year, Bogart was also asked whether there may be some merit behind the idea that blockchain technology more generally and not cryptocurrency will be the long-standing innovation here.

Bogart noted that Blockchain Capital makes investments in both the blockchain and cryptocurrency spaces, but he added, “Overall, I’d say [the blockchain without bitcoin concept] is a thesis that largely is derived in 2016, and so far, we’ve never seen a private blockchain that does not have a cryptocurrency attached to it actually function. So, it remains to be seen on that front.”

Notably, a recent report in Fortune indicated that R3, which is the most well-known and well-funded company focusing on blockchain technology rather than cryptocurrencies, is running out of money.