Bitcoin has found a fresh flock of followers this year, with a number of high-profile investors naming bitcoin as a potential hedge against future inflation.
The bitcoin price has more than doubled over the last 12 months, ramping up its latest rally this month and once again coming within touching distance of $20,000 per bitcoin.
Now, Ricardo Salinas Pliego, Mexico’s second-richest person, has said he’s put 10% of his liquid assets into bitcoin—arguing it protects from “government expropriation.”
“Many people ask me if I have bitcoins,” Salinas, who Forbes estimates has a fortune of around $12 billion through an empire sprawling retail, banking and broadcast businesses, said via Twitter in comments translated from Spanish. “Yes. I have 10% of my liquid portfolio invested it.”
“Bitcoin protects the citizen from government expropriation [the state taking property from the owner for public use],” Salinas added, recommending people read The Bitcoin Standard by Saifedean Ammous, calling the 2018 book “the best and most important to understand.”
Salinas didn’t disclose the value of his bitcoin holdings but said he first bought bitcoin four years ago through digital currency asset manager Grayscale and holds the rest of his liquid portfolio in precious metals miners.
Bitcoin has developed its reputation as digital gold this year, finding support from Wall Street and traditional investors as governments rev up their money printers in response to the coronavirus pandemic and lockdowns put in place to contain it.
Many economists expect taxes to rise in the aftermath of the coronavirus pandemic while U.S. president-elect Joe Biden ran on a platform of raising taxes on the wealthy to fund trillions of dollars of public investment.
Salinas also shared a video via Twitter that he claimed showed banks in “a Latin country” throwing bags full of cash into a dumpster, saying that “paper money is worth nothing” and adding: “That is why it is always good to diversify our investment portfolio.”
Venezuela has been recently been suffering from hyperinflation due to the country’s ongoing socioeconomic and political crisis, recording an inflation rate of 1.8 million percent in 2018.
Earlier this year, bitcoin’s potential as a hedge against inflation was given a significant boost when legendary investor Paul Tudor Jones revealed he was buying bitcoin futures as a hedge against inflation as “the best profit-maximizing strategy is to own the fastest horse … my bet is it will be bitcoin.”
“We are witnessing the Great Monetary Inflation—an unprecedented expansion of every form of money unlike anything the developed world has ever seen,” Jones wrote in a note to Tudor Investment clients in May.
Jones was the first in a flood of big-name investors who have since named bitcoin as an antidote to stimulus-induced inflation.
However, others are wary of how governments might react to the popularization of bitcoin and non-fiat currencies.
Earlier this month, Ray Dalio, the billionaire founder and co-chairman of the world’s biggest hedge fund, Bridgewater Associates, warned that governments will “outlaw” bitcoin if it continues to grow and starts to become “material.”