Ex-Facebook Exec: Bitcoin is ‘schmuck insurance’ against traditional financial system

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Bitcoin deposits into Bakkt's custody arm insured up to $125 million

A former senior executive at Facebook-turned-venture capitalist describes Bitcoin as the perfect “schmuck insurance” that investors should hold.

Social Capital CEO Chamath Palihapitiya expressed his bullish faith in Bitcoin and the economic opportunities that the cryptocurrency offers to people.

Palihapitiya, who worked at Facebook between 2007 and 2011, recently appeared on CNBC’s Squawk Box where he lauded Bitcoin as “the single best hedge against the traditional financial infrastructure.”

“Whether you support the fiscal and monetary policy or not, it doesn’t matter. This is the schmuck insurance you have under your mattress,” he added.

Chamath Palihapitiya
Chamath Palihapitiya (Flickr)

A long time proponent of Bitcoin, the prominent venture capitalist first began buying BTC when the cryptocurrency was trading at around US$100 [AU$143] back in mid­-2013.

Not only was Palihapitiya an early investor, but he claims that at one point, he and two friends owned a full five percent of Bitcoin’s then-circulating supply.

For reference, the total circulating supply of Bitcoin in 2013 grew from 10.6 million to 12.2 million BTC which means that Palihapitiya would have owned anywhere from 530,000 to 610,000 bitcoins.

The bear market of 2018 did little to dampen his enthusiasm for BTC as he had predicted in 2017 that the price of Bitcoin would hit $1 million within the next 20 years.

Bitcoin

From social media to Social Capital

Palihapitiya founded Social Capital with his wife in 2011 following his departure from Facebook.

Once known as The Social+Capital Partnership, the firm has $1.2 billion in assets and focuses its attention on the areas of healthcare, financial services, and education.

PayPal co-founder Peter Thiel expressed his admiration of the approach Palihapitiya took in regards to Social Capital and eventually became a limited partner in 2015.

Some of Social Capital’s notable funding projects include Yammer (which was bought by Microsoft), Impermium (which was bought by Google), Wave Accounting, InstaEDU (which was bought by Chegg), and Slack Technologies, the software company behind the popular collaboration app.

Out of all of his considerable business and financial accomplishments, one that Palihapitiya says he regrets is his role in helping Facebook become the social media giant it is today.

“[T]he short-term, dopamine-driven feedback loops that we have created are destroying how society works: no civil discourse, no cooperation, misinformation, mistruth and it’s not an American problem. This is not about Russian ads. This is a global problem,” he says.

While he is no longer bullish on Facebook and its impact on society, Palihapitiya is still gung-ho on Bitcoin.

“Just buy the coins. It’s a fantastic instrument,” he says.

Bitcoin is currently trading at $12,946, an increase of nearly three percent over the last 24 hours.