Recently, bitcoin hit a new all-time high above $11,000 before its price corrected, and subsequently started clawing back to $10,000. At press time, according to data from CoinMarketCap, bitcoin is back above $11,000, trading at $11,179. The cryptocurrency’s advances, as well as its intense volatility, led various prominent Wall Street personalities to weight in on the cryptocurrency, including business magnate and investor Carl Icahn.
While speaking to CNBC, Icahn, the founder of Icahn Enterprises, recently admitted that he doesn’t understand much about bitcoin, and added that to him it “seems like a bubble,” specifically reminding him of a bubble involving swampland in Mississippi.
After stressing that he “just doesn’t get” the enthusiasm behind bitcoin and other cryptocurrencies, he compared it to the 18th-century land bubble, stating:
“If you read history books about all these bubbles, like in Mississippi — where John Law went around selling all this land in Mississippi that was sort of worthless and the French were going crazy giving him all this money. And then one night it all blew up … to me, this is what this is.”
The famous Mississippi Bubble, brought by Scottish adventurer and economist John Law, essentially consisted of him being granted authority to open up a company to manage trade in the French’s territorial claims near the Mississippi River. To fund the venture he issued paper shares to investors, who under the “lure of gold and silver” eagerly bought these shares, leading to a 1,900% increase in under a year, according to historian Jon Moen at the University of Mississippi.
Per Moen, many turned into millionaires at the time, but things went south when people realized much of the lands were just worthless swamps. Icahn’s comparison suggests that same thing will happen to bitcoin, which is up over 1,000% year-to-date, once people no longer see value in it.
What it neglects, however, is that the cryptocurrency’s growth has been accompanied by a surge in its adoption, popularity and userbase. Coinbase, the largest U.S.-based cryptocurrency exchange, added 100,00 new users in a single day last month.
“I got to tell you honestly, I don’t understand it. I’m the last guy — I just don’t get it. I just stay out of something if I don’t understand it.”
Recently other prominent financial big shots bashed the cryptocurrency as well. Goldman Sachs CEO Lloyd Blankfein recently derided the cryptocurrency as a “vehicle to perpetrate fraud,” while Nobel Prize-winning economist Joseph Stiglitz claimed that bitcoin “ought to be outlawed.”
Featured image from YouTube/Bloomberg.