• Sheldon Inwentash, Chairman and CEO, ThreeD Capital (CSE:IDKFF)


• 14.01.2021 01:06 pm

A collective interest has been sparked around Bitcoin over the past decade.  Since its inception, Bitcoin has seen dramatic highs followed by a few crashes, but overall it has consistently retained a significant portion of its gains.

To shed some light on where Bitcoin is headed, we sat down with Sheldon Inwentash, Chairman and CEO of ThreeD Capital (CSE:IDKFF), a Canadian-based venture capital firm focused on opportunistic investments in companies in the junior resources and disruptive technologies sectors.

He shared his thoughts with us on Bitcoin and what its future may look like.

Financial IT: Establishing Bitcoin price is interesting and widely differs from the way the price of fiat money is set. What is your opinion on the way Bitcoin price is determined?

Sheldon Inwentash: In the short run, it’s all about supply and demand.  Miners are only able to mine a certain amount and it halves every 4 years.  The ability and the amount to mine decreases over time.  Unlike gold, which is produced every year, Bitcoin has a finite supply of 21 million.  On the demand side, there’s a growing respect for digital currencies which has been based on credibility and improvements, i.e. platforms like PayPal and Google Pay, and regulatory improvements.  In the long run, Bitcoin could have a substantial place in central bank reserves.  

Financial IT: What is your advice to investors who are interested in investing in Bitcoin but aren’t sure they want to make the leap?

Sheldon Inwentash: Like it or not, Bitcoin is going to be a key part of digital currencies moving forward.  It’s the first major digital currency.  Not to say that there will not be other digital currencies that will do quite well, but I would recommend everyone hold some.  If investors have a certain amount of money that they are going to commit to Bitcoin, let’s say as a risk category, (and we’ve seen some major US funds take a position to Bitcoin), for an individual one has to realize it is very liquid, so you can sell it.  That is a good thing.  Because of the price volatility over time, I would strongly suggest a dollar-cost average purchasing program so you don’t get caught up in the hype.  If someone buys at $41,000 and the next thing you know Bitcoin is at $33,000, they’ll also be buying at the low price of $33,000.  So spread your buying over an elongated period of time to get the best average price.

Financial IT: In addition to Bitcoin, what do you consider to be the most interesting use of blockchain technology today?

Sheldon Inwentash: Blockchain has a very pervasive, widespread use that is going to have hundreds of thousands of applications.  I’m a CPA and one of the first claims of blockchain was going to be, “do you really need an auditor?”  All of the smart contracts and corporations doing business are going to be self-auditing through self contracts.  WIll you need a lawyer or can you rely on the blockchain?  For example, there’s a number of applications for what lawyers closing real estate transactions can do.  Take a look at corporations and their whole supply chain doing business between one party and another.  Now, because of the smart contract, there’s evidence of ownership and evidence of the transaction.  Through smart contracts, the risk and the cost of doing those transactions will be reduced substantially.

Every smart contract is represented by a token and that token will have value.  The value of cost savings and efficiency will be reflected in the price of the token over time.  Hence, we have additions to the whole digital currency ecosystem. 

Financial IT: Do you think the role of traditional financial systems will fade due to the development of cryptocurrencies?

Sheldon Inwentash: No. I don’t think so. I think they’ll morph and change.  Look at what has happened over time.  Ten thousand years ago they used stones for methods of data. Then,they discovered gold and silver which are currencies that have stood the test of time.  But, realistically in today’s world, silver and gold are archaic other than their use in the industrial and jewelry space. 

As a form, cryptocurrency is probably going to be relegated, and I think governments are realizing they can’t fight it, so they are going to accept it.  China is creating their own digital currency which is backed by their fiat currency.  You’ll see that with many other companies and countries that cryptocurrency is on the agenda of many central banks.  I believe the world will adjust to the new reality - that reality being that we are in a digital age.

Financial IT: ThreeD Capital’s portfolio includes early-stage investments in a range of industries, including in the Fintech/Bitcoin space.  What is it about fintech companies that are worth your time and investment?

Sheldon Inwentash: Fintech is an explosive area of financial transactions and it is obviously tied to technology and digital technology.  On every platform, the cost of doing business is reduced substantially by using financial technology.  Without question, Fintech is feeding into the digital world of blockchain.  They go hand in hand.  Again, they’re going to be part of the same ecosystem of digital currencies.

Financial IT: To conclude, what upcoming news do you have at ThreeD Capital that you can share with our readers?

Sheldon Inwentash:  We are extremely active in investing in new disruptive technologies as well as in junior mining.  At the beginning of January this year, we disclosed that our disruptive technologies had gone up from 22 to 31 investments.  In February, we are going to begin disclosing our month-end net asset value from the previous month.  That is something to look forward to in terms of how the underlying portfolio is growing within ThreeD Capital.