UPFRONT STATEMENT: I have crypto, but treat it as an experiment
I attended an event in 2016 where Elon Musk was the star speaker. It was a good event, and he made sense. He doesn’t make sense anymore.
Back then, I wondered if he was the 21st century’s real-life Tony Stark creating life on Mars and a renewable planet. Today, he just appears to be an idiot.
It made me wonder where he was coming from when the Thai boys football team were lost in a cave and called the British man who was trying to save them a paedophile. That was a nasty situation.
Then there was the smoking dope.
Maybe he thinks it’s cool. Maybe I’m old. Either way, imho, the guy has lost it.
Now, Elon is creating waves in the crypto community and his behaviour has been wild. It began with pumping and dumping Dogecoins and then doing the same with bitcoins. If you haven’t kept up with it, the gist is that Elon endorsed Dogecoin and then trashed it on Saturday Night Live. The price has swung wildly upwards and downwards as a result.
Now, he’s doing the same with bitcoin by ordering that Tesla invest $1.5 billion of its treasury reserves in the cryptocurrency and will accept bitcoin payments for Tesla, and making that public, to then suddenly turn around and say bitcoin is bad due to its environmental impact.
He claims to know a lot about this space.
But PayPal was twenty years ago and, since then, he’s created Tesla and SpaceX. Does the guy really have the time to keep up?
For example, the bitcoin energy issue has been a long debate that goes back to 2015. Nothing new there. So, why would he invest in 2021 (February) and then scare everyone a few months later, using this as an excuse. Well, his strategy is to exploit the market. Right now, cryptocurrencies are still volatile, but settling. Some make sense, some do not.
The big argument is centralised versus decentralised. I was fascinated by the argument over proof-of-stake versus proof-of work, for example. I’m so dull that I actually wrote a paper about it last month. The issue is that the mining architecture of bitcoin requires high degrees of compute power to prove the coin exists, as nothing backs the asset except proof you did the work; a proof-of-stake model does not, as it is backed by real value. It is the difference between bitcoin and Ether, between permissioned and permissionless, between centralised and decentralised. This is the raging argument taking place.
Therefore, it became interesting when a real crypto expert took Elon to task over the weekend.
Musk replied with a simple retort that bitcoin is centralised in Chinese coal mining with a link to a Fortune article.
But then, as I’ve mentioned before recently, money is just a construct.
So, is Elon an idiot?
Not at all. To be clear, Elon is just stirring the pot. It’s all about keeping his name and his main focus, SpaceX and Tesla, in the public eye. It’s pure PR. A bit like appearing on Saturday Night Live, it’s pure PR. Grabbing global headlines with his name in the title, as in this blog entry, is pure PR.
The problem with Elon’s pure PR is that a whole generation of young people will become losers thanks to his pure PR.
Elon realised the power of his pure PR via social media when he got into a spat with Mark Zuckerberg over AI, and then used his social media presence to try to falsely pump his own business. That got him into trouble with the SEC, the US Securities regulator, so he’s taken to pumping and dumping things he doesn’t own, and hoping to avoid the SEC and sanctions in the process. If you’re not the CEO of Doge, can you get into trouble for pumping and dumping it?
The bottom-line is that Elon knows he cannot mess with regulated markets and that’s the reason why he’s messing with unregulated ones. Why else has he become so active in pumping and dumping cryptocurrencies? Meantime, there are millions of naïve young folks putting it all in Doge, losing on bitcoin and professional financial people, who understand how to do these things, retiring on his ride.
Are you crying or laughing on the Elon roundabout of pure PR?
Thanks Elon, but you’ve lost all of my respect. You’re not Tony Stark. You’re the Joker.
The thing is that money is not a joke. You have students hoping to pay their fees by betting their loans on crypto; millennials with mortgages thinking this may be a way to get out of the loan; and Goldman Sachs traders retiring on your jest.
It makes me think that Elon Musk is less like Robin Hood than Robbing Hoodie, but then he can pass the whole thing off as a result of his Asperger’s Syndrome, used cleverly for his intro on Saturday Night Live. If you want to see his Asperger’s claim in practice, just watch this.
Elon, you’re not Tony Stark, the Joker or Robbing Hoodie. You’re Elon Musk, the man who makes money by getting all of your followers to trash theirs.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...