Long Self-Custody, Short Shark Tank

It's been a bad month for Shark Tank personalities. Arguing Gold vs Bitcoin has always been a silly battlefront when one can just buy both.

If you have Gold, you're dumb as **** - Mark Cuban

Ah Mark Cuban. Such a way with words. Mark Cuban, the famed Shark Tank personality and crypto-advocate, had some choice words for people who invest in Gold during a recent appearance on Bill Maher's Club Random podcast. The conversation, which was very much framed as a Gold vs Bitcoin (BTC-USD) debate only lasted a few minutes but it had some notable takeaways.

Cuban's entire thesis for not thinking Gold is a good investment is that nobody who invests in Gold actually holds it. While that's probably mostly true, it isn't entirely true as there are plenty of Gold buyers who do self-store the metal - choosing not to rely on third parties for security and custodial services. Perfect! Money as it was intended, nobody's liability. In many ways, this debate is actually similar to Bitcoin. Not because both can be a store of value but because both Bitcoin and Gold are suffering from a similar problem; the crisis of self-custody in the 'store of value' communities.

Surely someone like Mark Cuban understands this as a crypto advocate. Bitcoin as an idea hasn't failed in 2022. No, it's the reliance on centralized entities for custodial services that failed in 2022. Surely someone like Mark Cuban knows better than anyone that if they aren't your keys, they aren't your coins. Interesting then that Cuban's Dallas Mavericks previously partnered with Voyager Digital (VGX-USD) to bring more people into the crypto-sphere through a centralized exchange. As we've seen throughout the year, holding coins on centralized exchanges introduces an added layer of risk in crypto that isn't ultimately necessary. I wonder if Cuban would feel the same way he currently does about Gold if his Mavericks had a partnership with a company like OneGold? Who knows...

Cuban's apparent problem with investing in Gold is that it isn't easily divisible for peer to peer transactions - nobody wants to have to weigh shavings to pay each other. I generally agree. The real problem with Cuban's anti-Gold view is that his reasoning is breathtakingly contradictory from his actions within the crypto ecosystem. Claiming an asset like Gold is useless because investors use custodians fails if you use your large influence to market centralized crypto exchanges - especially when the failure of those centralized exchanges have resulted in litigation against you over loss of customer funds. Just an incredible level of philosophical contradiction on display here from Cuban. 

It's Been a Bad Month for Shark Tank

Incredibly, Mark Cuban isn't the only Shark Tank star to have pumped a failed crypto exchange this year. This conversation between Cuban and Bill Maher is coming the same month Kevin O'Leary testified before congress about the FTX collapse. O'Leary, famously a crypto-skeptic before it was in his financial interest to not be a crypto-skeptic, was a 'brand ambassador' for FTX. Both O'Leary and Cuban have given their endorsements to centralized crypto exchanges that have cost customers billions of dollars. 

In the case of O'Leary, his position is arguably even more asinine given his apparent reluctance to see FTX for what it was. Instead, blaming the FTX collapse entirely on Binance taking out a competitor rather than on the people behind FTX committing fraud. CZ opportunistically taking out SBF was a viewpoint I shared toward the beginning - though I had very much taken the 'all is fair in love and war' view at the time. However, when funds started vanishing at the end of the week, it seemed pretty clear to any rational thinker that there was criminality happening at FTX and Sam Bankman-Fried almost certainly knew about it. Still, somehow, O'Leary wants to give Bankman-Fried the benefit of the doubt. Wild stuff.

Gold or Bitcoin?

Yes. It's not an either or scenario. Gold is great as a long term store of value with much less volatility and history on it's side. Bitcoin is better at immediate cross border-settlement of small transactions between people who are not on the same continent. Bitcoin requires electricity to be useful, Gold doesn't. 

That said, the great myth about Gold is that it doesn't require any energy after it has been pulled from the ground. This is simply not true. If Gold is to be used as an industrial component, for minting coinage, or creating jewelry - it requires energy to change its form. If gold bars are to be transacted as bullion, they require energy to be physically delivered from one person to another. Gold can be swapped on a public blockchain in a tokenized form for fast, cheap cross border swaps through a derivative. Bitcoin exists digitally on a public blockchain ledger independently and requires no wrapping or trusted custodian. Both Bitcoin and Gold have advantages and disadvantages. Again, we don't need to pick. 

The idea that money is an idea is not wrong. - Bill Maher

Ultimately, I think both Bitcoiners and Goldbugs will be proven correct 5 years from now. I just don't think picking between the two is necessary when we can just buy and hold both. Of course, no matter which store of value you choose - the lesson is the same; self-custody over trusted parties.

Disclosure: I am not a financial adviser. I share what I do and why I do it for informational purposes. This blog simply reflects my personal opinions. I have exposure to equities, precious metals, cryptocurrencies, and various other alternative assets. I am staunch supporter of third-party risk minimization when applicable. Meaning, do it yourself and hold it yourself. If you don’t know how, learn. If you can’t manage your wealth yourself, talk to a professional wealth manager. Of course, please remember nobody cares about your money as much as you do.