The founder of Protea Capital Management, Jean-Pierre Verster, gave an interview to BizNews Power Hour analyzing the latest market insights and outlining his opinion – not very positive – on crypto and their real value.
Useful applications of the blockchain according to Verster
Verster is known for predicting the problems of African Bank and Steinhoff and short-selling their shares.
Founded in 2017, Protea Capital Management is an investment firm that manages award-winning hedge funds and long-only portfolios in domestic and global developed markets, and was successful in obtaining a Financial Service Provider license in 2019.
During the interview, Verster said he believes blockchain is a wonderful technology. Indeed, he believes that it can find applications when it comes to having open records and ledgers, or when it comes to secure transactions where people do not have the ability to alter data after it has been recorded.
“The application of blockchain into cryptocurrency for me is where it gets a bit carried away. I don’t believe there’s intrinsic value of these cryptocurrencies. I can understand that if you have different countries with foreign exchange restrictions, hyperinflation and people getting told by governments you’re not allowed to move your money as you see fit, that it makes cryptocurrency very popular”.
The hedge fund guru does not like speculative investments, which is why crypto assets are not part of his investment strategy.
According to him, cryptocurrencies produce nothing, have no intrinsic value and you can’t get interest or dividends from cryptocurrencies like you can from stocks for example.
Jean-Pierre Verster and his opinion on crypto and trading
The only way to make money with cryptocurrencies is to sell them to another person at a higher price in the future, but in any case, if the value of an asset has increased in the past there is no guarantee that it will increase again in the future.
In these types of investments, one becomes dependent on the value that another person places on the asset, without the presence of other references to help in the valuation.
Verster further explained that there could be a collapse in values, like a Ponzi scheme, when all the people interested are involved in crypto:
“So it has got these elements of a Ponzi scheme, which means that for a long period of time, prices go up, go up, and it looks like value increases and then it all comes crashing down”.
Many other respected investors, including Berkshire Hathaway CEO and chairman Warren Buffett, share Verster’s view that Bitcoin and altcoins have no underlying value.