Vivek Wadhwa, Scamster Bitcoin Doomsayer
IN the first week of this year, Vivek Wadhwa of Duke University was co-guest with Bitcoin hedge fund manager Dan Morehead on CNN’s Smerconish, in a segment titled “Cryptocurrency Mania: Digital Gold Or Ponzi Scheme?” Morehead took the pro-Bitcoin position, while Wadhwa railed against it. In no uncertain terms, Wadhwa warned against buying Bitcoin, and encouraged everyone to “get out of it.”
Half a year later, and Bitcoin is now trading at almost exactly half of what it was then — $6,721 today vs. $13,412 at the beginning of 2018. Wow, Wadhwa was right! Right?
Wrong. Wadhwa’s a bluster-spewing idiot who hasn’t a clue what he’s talking about. Ignore him, and buy/hold Bitcoin whenever Bitcoin’s unique characteristics suit your investment needs.
Doomsayer’s Racket
Suppose I issue a dire prophecy that something will decline, and then, instead, it goes up — way, way up. If it eventually crashes (someday, somehow), was I right? Hell, no! Imagine if I phrased it this way: “Nothing lasts forever, so get out of everything while you still can!” Now, technically, that advise can’t be wrong. But after hearing me say it, would you immediately run out and sell off all your investments? Of course you wouldn’t.
Two years before his debate with Morehead, Wadhwa wrote “R.I.P., Bitcoin. It’s time to move on” (The Washington Post):
Bitcoin did have great potential, but it is damaged beyond repair. ... Bitcoin was born with serious flaws. ... it has been compared to a Ponzi scheme. ... It’s time to admit that the current Bitcoin needs to be scrapped ... bear in mind what it is that makes some venture capitalists Bitcoin zealots: pure greed. That is the reason clearest to me for Bitcoin’s failure.
On Smerconish, Morehead calmly described what happened after that:
I did read your piece on the way to the studio, and it said, “It’s time to move on. Bitcoin will surely go the way of MySpace and pets.com.” And I would say that there is a chance. I’m a trader; I can never be sure of anything as you are as a writer. But when that piece was written; that was two years ago. And since then, $100,000 in Bitcoin would be worth $4.5 million. There’s certainly gonna be some volatility, going forward. But the point is, very asymmetric bets like this, you don’t have to be sure it’s gonna go up if you think there’s a high likelihood that you have a very large return, potential upside.
Morehead also splashed some cool rationality on Wadhwa’s frenzied “Ponzi” rhetoric:
When people call it a fraud or a Ponzi scheme, I don’t think they’ve really read anything about it. A fraud is a deception intended for personal gain. Bitcoin’s an open-source piece of software. How can that be a fraud or a deception? We can all audit it.
While Morehead spoke, Wadhwa chuckled audibly and shook his head “no” with a condescending smile. In contrast, Morehead sat impassively while Wadhwa sprayed rapid-fire, dogmatic vomit throughout the segment:
[BitCoin]’s the greatest scam of modern times. ... the poor, the average mom-and-pop, the truck driver and the barber, who put their life savings into this, are going to lose their money, and be told to keep holding on, trust us, the value will go up. And they’re gonna go bankrupt. They’re gonna lose their life savings. ... This is what happened with the dot-com boom, the grandma and grandpa lost their life savings. History is repeating itself. ... We have these scamsters, basically, hyping the heck out of it, while all it’s being used for is illegal money laundering. ... It’s simply gonna implode before you know it. And regular people who trust you are gonna lose their shirts. ... Would you put your life savings into digital currency? You lose a password and you’ve lost everything. ... They know it’s gonna crash and burn. ... it crashes and it goes to zero, and people lose their life savings. Don’t do it. Get out of it, rather than losing everything you have. Yes, the price might increase, but more likely than not it’s gonna be zero before you know it.
If I worked at Enron, and I knew something very wrong was going on there, and so I predicted its collapse, and you said “why,” I could tell you why. But Wadhwa doesn’t tell us why; he just blathers in a panicked tone that you’ll lose your life savings if you don’t get out. How does he know? Because it’s going to zero! He offers nothing but circular proclamations that a crash is coming, but no substantive reason to think so.
Imagine that I had bought Bitcoin in early 2016, and by 2018 my investment had grown to 45 times (that’s 4,500%) its original value. What is Wadhwa advising me to do? Of course, cash out before the inevitable catastrophe. So let’s say I heeded his advice, and did exactly that. Then let’s say, six months later, Bitcoin loses half its market value (not exactly zero, but still a huge dive), and everyone who’s still in it wishes they had sold it when Wadhwa said so on Smerconish.
In that case, part of me will think, gee I’m so glad Vivek Wadhwa gave me that guidance, and even more glad I heeded it. If I hadn’t, I would’ve lost half this giant pile of money!
But just as gratitude for Wadhwa’s great advice is welling up within me, I will suddenly stop, and think: wait a minute — if I had followed his advice two years ago when he first started bad-mouthing Bitcoin, I would have unloaded my Bitcoin then, and almost all of this money I now have would never have occurred.
So even if Wadhwa’s “zero before you know it!” prediction comes true, and does so very soon, he absolutely wasn’t right all along. He was very, very wrong. Wrong times forty-five.
What is Wadhwa’s problem? He says “R.I.P. Bitcoin,” then when two years pass and it’s stronger than ever, he just doubles-down, repeatedly stating it’s “going to zero before you know it,” which will surely erase mom and pop’s life savings. Why? Because there was a dot-com crash, and it’s so obvious “history’s repeating.” Does having an advanced degree and professorship just make you automatically right, no matter what you choose to say? He must think so. Wadhwa strikes me as a perfect example of how even the smartest, most educated people can lock themselves into a position that ultimately doesn’t stand up to evidence and logic, then find themselves emotionally unable to let go of it, no matter what the long-term consequences to their reputation.
The Other Bitcoin
Pardon me if you’re not a fan of Apple, but I have to mention: Wadhwa also casts repeated aspersions on Apple’s prospects, none of which seem to come true:
By picking this particular fight [with the FBI], Apple is doing the technology industry a big disservice. ... Apple will very likely lose this case in the courts and suffer a public relations disaster. —“Apple picked the wrong battle in privacy war” The Dallas Morning News, 2016-02-18
Well over two years later, we all know there was no PR disaster, no court case, nothing. The only news on this front is that Apple just today released an update that makes iPhone even much stronger against government unlocking than it was before.
Steve Jobs was a true visionary who refused to listen to customers — believing that he knew better than they did about what they needed. He ruled with an iron fist and did not tolerate dissent of any type. ... Apple may have peaked. ... its last major innovation — the iPhone — was released in June 2007. —“Why I’m skeptical about Apple’s future” The Washington Post, 2016-03-23
Talk to Apple’s major players who worked with Steve Jobs, and they’ll all tell you that every big decision was a debate, which Jobs didn’t always win (though he often took credit after the fact). But five years after Jobs’s death, Wadhwa asserts, “He ruled with an iron fist and did not tolerate dissent of any type.” It’s complete fiction, but Wadhwa’s happy to desecrate the man’s memory if doing so will in any way prop up his article’s overall message: Apple’s peaking.
Apple has stopped innovating. The last big thing they did was nine years ago with the iPhone. And since then they made it bigger with the iPad; they made it smaller with the Watch. All they keep doing is playing with the size. ... Here’s what Apple needs: It needs an Elon Musk or a Zuckerberg running it. What if Apple spent $30 billion and bought Tesla? It has the Apple car, and it makes Elon the CEO; it has a real visionary. ... [iPhone] is a ten-year-old device. They’ve done everything they can with it. And Samsung, and even BlackBerry, have similar or even better ratings than the iPhone does. That’s the biggest slap in the face you could possibly have: BlackBerry almost ranking the same as an iPhone? Time to move on; time to now develop the next innovations. ... Elon would transform this company as much as Steve Jobs did. —“Apple should buy Tesla and make Elon Musk CEO” CNBC, 2016-04-27
The numbers make it clear that the future of [Apple] is no longer in its consumer products. The fix? Apple should release a version of iOS for non-Apple devices. This suggestion will seem like heresy to the brand’s loyalists, but it may be necessary for the success of the company. ... Without expanding its operating system, the future looks bleak for Apple. —“Why Apple needs to liberate iOS” VentureBeat, 2016-07-27
With everything else he’s said about the company, it’s only fair to wonder if this advice might be just a tad disingenuous.
Apple is repeating the mistakes it made in China. It is relying on its brand recognition to build a market and failing to understand the needs of its customers. By marketing inferior products, it may also be insulting Indian consumers. —“Why Apple is destined to fail in India” Vivek Wadhwa, 2017-03-16
With iPhone recently selling more in China than in the USA, Apple can only be wishing that its efforts in India will wind up like they did in China.
Even more than does Bitcoin, Apple’s unprecedented 2000s resurgence — after it was seemingly down-for-the-count in the ’90s — draws out the worst of some intellectuals’ inability to admit error. Case in point: longtime tech writer John C. Dvorak confidently predicted the failure of the just-released iPhone:
To me, I’m looking at this thing [iPhone], and I think it’s kinda trending against what people are really liking in phones nowadays, which are those little keypads — I mean, the Blackjack from Samsung, the BlackBerry obviously kinda pushes this thing, the Palm ... some of these stocks went down on the Apple announcement, thinking that Apple can do no wrong. But I think Apple can do wrong, and I think this is it.
Five years later, when questioned about it, did he say, wow I was just mistaken; this product is an unqualified success! Well, not exactly:
[A]s for my prediction that this phone [iPhone] would be a bad idea for Apple to pursue, anything can still happen. Time is a cruel mistress.
Dvorak would know.
Perennial Harvard blowhard Clay “Disruption Theory” Christensen also didn’t think much of what was destined to be the most successful product of all time:
[T]he prediction of [my disruption] theory would be that Apple won’t succeed with the iPhone. They’ve launched an innovation that the existing players in the industry are heavily motivated to beat: It’s not [truly] disruptive. History speaks pretty loudly on that, that the probability of success is going to be limited.
Seven years older, not seven years wiser, he hacked up the following defense:
I said, “I don’t think the iPhone will succeed.” [and it did] ... But then comes the Android operating system from Google, which by definition makes the devices open and modular all the way through. So the people using the Android operating system are now Motorola, Samsung, LG. And they are killing Apple: now, Android accounts for about 80 percent of the market. So I was wrong, and then I was right.
A few months after that, iPhone broke its own all-time quarterly record, and continues to do so pretty much every year. iPhone now takes the majority of all smartphone revenue, and has long taken the great majority of smartphone profits, but Christensen focuses on the one metric — unit sales — that can be distorted by dumping shiploads of bargain-basement crap phones, running some old version of Android, on third-world markets.
So Wadhwa’s in great company.
Ad Nauseam
My advice to Wadhwa: Keep insisting that Bitcoin and Apple have dim futures. And if both are still around and thriving several years from now? Just keep saying they soon won’t be. Chortle, smirk, and wag your beard in bemused dismay. You can never really be wrong when you know you’re right. And the Post will keep giving you a lofty pedestal from which to say so. And Duke will keep writing you those checks.
Update 2019.05.19 — Bitcoin now over $8,000.
Update 2020.03.26 — Suprita Anupam in Inc42:
“Why Use Bitcoin, When We Have UPI, Asks Entrepreneur Vivek Wadhwa”
Why use Bitcoin, says the “entrepreneur and distinguished fellow, Harvard Law School” who for the past several years has been the harbinger of Bitcoin’s total collapse, and is now calling for a government ban on it.
Update 2021.04.14 — Now trading over $64,000. If Wadhwa had invested just $1 million in Bitcoin when he wrote “R.I.P., Bitcoin” (a mere five years ago), he would now have about $200 million. If he had invested $5 million then, he would now be a billionaire.
Update 2023.04.18 ⋅ After years of regulatory delays, India’s first Apple retail store opens to huge crowds, including people who “travelled across India” to attend. (Two-day update: Huge crowds also at store #2.)
Update 2023.07.08 — Bitcoin once again loses over half its value, but now is holding pretty steady at $30K for the past few months.
Update 2024.04.10 — 1/7 of all iPhones now are manufactured in India.
Update 2024.07.15 — BlackRock co-founder and CEO Larry Fink, formerly a Bitcoin skeptic, now calls it “a legitimate financial instrument.”
Update 2024.10.05 — Apple opening four new stores in India this coming year.
Update 2024.12.17 — Now back up to an all-time high around $107K. On a $5M buy-in, Wadhwa now would not only be a billionaire, but he could actually give away a billion dollars, and still have a cool $450 million to enjoy for the rest of his life. Or instead of giving away a billion, he could give from (and live on) the interest income, which (at, say, 4%) would be over $58 million/year.
See also:
The Old-Fashioned Way
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Apple Paves the Way For Apple
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iPhone 2013 Score Card
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Disremembering Microsoft
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What Was Christensen Thinking?
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Four Analysts
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Remember the iPod Killers?
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The Innovator’s Victory
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Answering the Toughest Question About Disruption Theory
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Predictive Value
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It’s Not A Criticism, It’s A Fact
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Vivek Wadhwa, Scamster Bitcoin Doomsayer
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Judos vs. Pin Place
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To the Bitter End
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