‘Shark Tank’ Star Mark Cuban Calls Bitcoin A ‘Collectible’ But He’s Still A Fan Of Blockchain

The tech billionaire says transactions are too expensive for Bitcoin to ever become a viable currency.

Streeter LeckaGetty Images

According to Mark Cuban, Bitcoin is like a work of art. No, he’s not talking about how pretty he finds the golden Bitcoin logo. He’s comparing the teen idol of the financial world to traditional forms of investment. The cryptocurrency, which evangelists push as a new form of currency for ecommerce and widespread trade, is valuable to Cuban more as a collectible than the future of money.

Cuban made the statements in a RealVision Television interview, as reported by Yahoo. His reasoning was twofold: if Bitcoin has a future as a currency, it would not have to be compared to fiat currencies to peg its value. The attraction comes because of Bitcoin’s scarcity, since by design only a limited amount of units will ever be mined.

“So point being, scarcity sells … And there’s no greater scarcity than Bitcoin and Ethereum.”

Cuban offers a word of advice for anyone opting to invest in cryptocurrencies: assume you’ve already lost your money and don’t put in more than 10 percent of your entire portfolio.

“[I]f you do that, you’ve got to pretend you’ve already lost your money. It’s like collecting art, it’s like collecting baseball cards, it’s like collecting shoes. Something’s worth what somebody else will pay for it.”

The Shark Tank panelist did not disclose whether he invests in cryptocurrency, calling himself “more spectator” in the space. But he’s been open about his support of blockchain, the technology upon which cryptocurrency is based. Blockchain was defined by Fortune as a way to structure data. It creates an immutable, decentralized open transaction ledger that is not dependent on any one authority.

Back in August, Tech Crunch reported that Radical App, the group that oversees the Dust messaging app, for which Cuban is an advisor, was releasing its Mercury Protocol. The innovation brought blockchain to messaging, with a system of tokens that rewards good behavior and limits access to those who do not play nice with others.

Cuban noted to RealVision that Bitcoin is a long way from widespread use as a currency since each transaction takes a great deal of time and money. One ongoing narrative about Bitcoin, in addition to its skyrocketing price, is the amount of energy used by its blockchain.

Since the finite number of Bitcoin in the system have not all been mined, there’s intense competition to find more. This takes an immense amount of computing power since miners earn Bitcoin by confirming transactions and solving a math problem that gets more complex the more miners are on the system.

Vox reported on December 2, 2017, that although the numbers are disputed, there’s evidence Bitcoin mining uses up the same amount of energy as the entire power use of some countries. Most Bitcoin mining happens in China, where power is cheap and the environmental damage is substantial.

Once every Bitcoin has been mined, transactions will still require confirmation in order for the blockchain to function as a platform for exchange. At that point, however, miners will be rewarded with the transaction fees alone. Cuban seems acutely aware of this numerical certainty.

“In this particular case, it’s a brilliant collectible that’s probably more like art than baseball cards, stamps, or coins, right, because there’s a finite amount that are going to be made. There’s 21.9 million Bitcoins that are going to be made.”

If you’re curious as to when that number will be reached, by current estimates you won’t be around to see it. The reward for mining Bitcoin is halved after a certain number of blocks, then halved again and again at future milestones. In other words, the more Bitcoin is mined, the lower the reward for finding it. Back in 2013, CoinDesk estimated that all Bitcoin would be mined by the year 2140.

Shark Tank airs Sunday nights on ABC.