CNBC’s Jim Cramer said Tuesday that he believes cryptocurrencies like bitcoin and ether perform different functions than gold in a portfolio, suggesting that investors may be exposed to both.
Proponents of gold or bitcoin often promote their respective assets as long-term value stores to protect themselves from inflation and irresponsible public spending. Still, the “Crazy Money” host told him, “It’s neither one nor the other.”
“After all, I’m believing in both gold and cryptography,” Cramer said, adding that he sees “absolutely no reason to treat these two things in any way equivalent.”
Gold has a scarcity value and has proven its value over time, Cramer said. “I consider gold to be a long-term inflation insurance policy; it’s boring, but absolutely essential.”
Bitcoin and ether, on the other hand, have created “ridiculous fortunes” in recent years, although they remain fledgling and as a result can be very volatile, Cramer said. Bitcoin was created in 2009 and the Ethereum blockchain, in which ether is the native digital currency, was founded in 2013.
Cramer said he sees them both as a “speculative trade.”
“Maybe cryptography will be a store value when it goes up, but it’s a colossal mistake when it goes down,” Cramer said. “It’s not what I’m looking for in an insurance policy. We don’t speculate with insurance. Crypto has its advantages if you’re willing to take additional risks to pursue big gains, but that’s very different from protecting yourself.”
Cramer has previously invested in both bitcoins and ether, which are the two largest cryptocurrencies in the world by market value.
“The value of gold is its timelessness; the value of cryptography is its timeliness. Do you want insurance? Buy gold. You want to speculate, buy bitcoin or Ethereum, but don’t confuse the two,” Cramer said.