Anthony Scaramucci, who has been named Donald Trump’s new White House Communications Director, speaks during a press conference at the White House in Washington, DC on July 21, 2017. – Anthony Scaramucci, who has been appointed Donald Trump’s new White House Communications Director, is a former millionaire hedge fund investor in its first managerial role for the 53-year-old Republican fundraiser with telegenic looks, who has long been an articulate replacement for the president and who was first appointed to his transition team last November. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON / AFP via Getty Images)
AFP via Getty Images
Many people likely hadn’t heard from Anthony Scaramucci before 2017, when he served as White House communications director under former President Donald Trump for 11 days before he was fired. Before and after those week and a half, he built a successful career in the hedge fund industry with his firm SkyBridge Capital. After his tenure on the Trump train derailed, he became a vocal critic of the former president and a bitcoin hodler.
I spoke to Scaramucci to learn more about his personal journey into Bitcoin and what convinced him not only to invest, but also to create a special vehicle for others to grow their wealth in crypto. He also shared some fascinating glimpses of how emerging technologies like Bitcoin, which are still rough around the edges, can gain mainstream adoption over time.
Excerpt from Forbes CryptoAsset and Blockchain Advisor. Subscribe here.
Forbes: Can you provide a rundown of Skybridge to get things going?
Anthony Scaramucci: The idea behind Skybridge was to democratize the hedge fund industry. Hedge funds often have very high minimum requirements, especially the more demanding and better managers. I’ve created a fund of funds with a minimum of $ 25,000 to $ 50,000. And my motto was that I wanted to be the hedge fund manager for every dentist in America. So if you had a million dollar fortune and you wanted to invest 5% of that in hedge funds to look for alternative investments, you’d come to us. In 15 years we have built a good track record, 26,000 customers and around $ 8 billion in management. From there, I branched out into a couple of other products. For example, when I got back from Washington, we set up an Opportunity Zone fund to take advantage of the 2017 Tax Reform Act. And recently, in 2021, we launched the Bitcoin fund.
Forbes: guide us on your Bitcoin journey of discovery. What were some of your first impressions and what convinced you that it was a worthwhile investment?
Scaramucci: We researched the bitcoin funds for more than three years. Me and my research team were very skeptical. I think there are two things that you need to overcome with Bitcoin. First you have to know exactly what it is, because one of my rules of thumb – like Warren Buffett’s – is, if I can’t understand something, I don’t want to invest in it. Second, how confident do I have that this investment will not go to zero and why is this a permanent long-term exchange of values between people on planet earth? After three years of evaluation, we believe this is the case. I’ll give you the three main reasons for that. The first is that Bitcoin scales as a digital asset and store of value compared to its competitors. Since its inception in 2009, it has been attacked 6,500 times by various competitors. And yet, when you look at Bitcoin’s market cap relative to everything else out there, it dwarfs everything, approaching $ 1 trillion. Number two, Bitcoin is an effective encrypted ledger. These codes can, if you will, be impregnable between people. And so it’s almost like a certificate, if you will, a value between people. And that’s really all money when you step back and look at those 5,500 years of money.
Last point and this is the most important one, Bitcoin is a monetary network. If we look at what happened in the 21st century, we have seen the development of a retail network known as Amazon. We saw the revolution of a social network called Facebook. We have a search and advertising network called Google. With the introduction of these new technologies, you create these networks in our society. And the networks themselves are of enormous value. There are currently more than 140 million Bitcoin owners worldwide. They look at the users, the scalability, the ease of portability between the owners of Bitcoin or the potential new entrants – they have the ability, in our opinion, to act like gold and be an additional store of value. In a way, I’ve been telling people that I think Bitcoin is better at being gold than gold.
Forbes: Now that you’ve been sufficiently convinced of Bitcoin’s value proposition, how did you build the Bitcoin fund?
Scaramucci: One of the most important factors for us was storage. I think we have now achieved that. Fidelity Digital Assets stores our Bitcoin. It’s not the wild west of Bitcoin that you have a USB stick in your pocket or a safe. If you lose him, you are out of luck. It’s still difficult to access for individuals too, so we’ve created a cost-effective product at 75 basis points compared to our competitors that in some ways offers a 60% discount on something like a gray level. We want to give people the ability to scale with a minimum of $ 50,000 in Bitcoin. It has a three month lock-up period, which is important because we’re trying to turn people into long-term investors.
For these reasons, we consider this to be a rare opportunity for retail investors to stay one step ahead of the institutional community and be part of the future of digital assets. I can’t guess where Bitcoin is going, but I’ll just do the math with you. If the gold market is seven to ten trillion and bitcoin is 700 million to 1 trillion, bitcoin could move 10 to 1. It won’t happen overnight and it will come with tremendous volatility. But given everything that’s going on in the global banking community, the 23.2% production of more dollars in the US economy, and all the things that happen to fiat currencies, I think it’s a very good bet for people is having a little bit of money in a position like this.
Forbes: In a recent comment, you mentioned that buying Bitcoin now is like investing in Amazon soon after the dotcom bubble burst. Can you expand that?
Scaramucci: I used that as an example because Amazon is a great retail network, and if you look at Amazon in 2000 you think it’s okay, I missed this meteoric stock performance. But if you step back and look at Amazon over its 26 year lifespan, you’d say, wow, this thing has lost 50% in value six times since it went public. However, if you’ve been brave enough to hold this stock, Amazon is likely the best-performing stock in US stock markets history. I would overlay the bitcoin chart on Amazon because they are very similar. As users and customers rise, Amazon’s price goes up, and that is exactly what seems to be happening to Bitcoin.
And again I would tell you that in the past 12 years you have made 64 times the return on Amazon. But if you sat there looking at the stock chart 12 years after Amazon was born in 2006 you think this went very quickly, it’s expensive, I’ll pass it on, which of course it would have been a mistake. I am making the same point about bitcoin. This is one of the last frontiers of digital networking. It is effectively Google or Amazon now worth digital assets or digital store.
Forbes: That leads me to my next question. The bitcoin fund is only used to buy bitcoin. Do you have any plans to offer funds targeting other tokens in the future?
Scaramucci: The short answer to the question is no. The longer term answer is maybe. So far, there has been a gradual and gradual process of accepting Bitcoin or digital assets. I want to focus on that one advantage. What I would say is best in class as a store of value. If you and I do this interview in three, five or eight years from now, could we dive into other digital coins or possibly have a fund of funds doing it for the people? Yes, I want to be open to that. However, as an entrepreneur, I have found that my greatest success comes from incrementalism and focus. So I would say that for the next three years we have blind and maximalist eyes on the goal of our Bitcoin fund.
Forbes: You also recently said that you are more comfortable buying Bitcoin now than it was a few years ago when it was $ 400. To some people this may seem counterintuitive. Could you please explain why?
Scaramucci: Of course, if you shopped for $ 400 you made a fortune. But if you bought it in 2014 it was the Wild West and it wasn’t clear who would be the winner either. My good friend Michael Dell once told me that in order for Dell to beat its competitors, it has to make 100 really good decisions and make 100 for 100 on those decisions. In the case of Bitcoin, because it is decentralized, no one makes that decision, but it had to be near-perfect or near-perfect operating system and structure. And so, in 2014, due to the onslaught of competition, the low price, and the difficulty of storage, it wasn’t clear that it would be the winner. But in 2020 or 2021, now at 27,000, 34,000 per coin, it’s the winner. As a result, it is the industry standard. Now you have this easy shelf life too, and it’s very fluid.
Forbes: Your fund is structured to reduce the risks of protecting your crypto. However, there are still some macro risks for Bitcoin and crypto in 2021. Which ones are most important to you?
Scaramucci: There are three major risks. From a regulatory perspective, the ban in China hasn’t stopped appreciation, but if it’s banned in the US, it could weigh on things. However, the chances of this are slim. Second, you could see the emergence of a new asset, although I also consider that distant. It would be like playing against Google now. Even if you have minor or major improvements in search technology, it is very difficult to compete on the Google scale. Some of these technologies like Ethereum are considered better technologies than Bitcoin, but they don’t have the scale. Third is the problem of zero capability. What is that thing worth anyway? It’s just a series of numbers, digits, and codes that I buy on the internet. And why would anyone accept it as a value chain or an operating book for the transfer of value or money? You either see it or you don’t.
Forbes: After all, a lot of people look forward to getting a Bitcoin ETF approved by the SEC. How do you think this will affect your fund?
Scaramucci: We believe an exchange traded fund is still 12 to 18 months away and without knowing what it looks like we cannot comment on the impact on our fund.
Forbes: Thanks for your time.