The billionaire who bought $1 million worth of Bitcoin in 2013 but hopes that Bitcoin will return to zero reveals his identity as a "Bitcoin whale"

Chamath Palihapitiya sees Bitcoin as financial doomsday insurance.

The 43-year-old billionaire venture capitalist and chairman of spaceflight company Virgin Galactic said on the Unchained Podcast that investors should allocate 1% of their portfolio to BTC and hope it never works out.

“I just think that if people work hard and keep their heads down, and if the government itself continues to make a series of bad decisions that exacerbate the situation, then they can make sure that they don’t get wiped out. Bitcoin, to me, so far, is the only thing that I’ve seen that is not at all tied to the decision-making process and the decision-making institutions. Because at the end of the day, any other asset class — stocks, debt, real estate, commodities — they’re all tightly tied together, tightly tied to the legislative framework and the interconnectedness of the financial markets, which in turn brings many governments together.”

So in a way, it’s almost like a bet against the ruling class, and Bitcoin is just a small amount of insurance that you pay… Insurance is something that you pay $1,000 to $1. You need these large, asymmetric returns because you’re securing a small amount of insurance to protect you. That’s why I think you should just take 1% of your portfolio, put it in Bitcoin, and never look at it again… and hope that 1% turns to 0%.

Palihapitiya has made headlines recently for criticizing the U.S. government's coronavirus relief package. He called on lawmakers to make hedge funds and billionaires "out of business."

The venture capitalist noted that while Bitcoin is a good hedge against traditional assets, investing in cryptocurrencies is not a strategy that will pay off as a result of a single event or moment.

Instead, he said Bitcoin’s success will depend on the sum of many bad decisions made by governments, an outcome he said no one wants to happen.

“If your Bitcoin bet pays off, it means it’s going to be catastrophic for the world. It’s going to have a huge impact on the people we care about and the people who haven’t hedged with Bitcoin. So you almost don’t want that to happen.”

Palihapitiya doesn’t really see any other avenues for Bitcoin to succeed other than the entire financial industry collapsing. He believes there are a number of easy-to-use products that will serve as a virtual payment mechanism.

He also said that his first investment in Bitcoin was buying $1 million in BTC in 2013, when the price of Bitcoin was around $80 .

“There’s a well-known person in the Bitcoin community. His name is Wences Casares. He’s the one who introduced me to Bitcoin in 2010, actually when we were getting ready to go to Las Vegas for his 40th birthday. He introduced me to Bitcoin. I remember three days later, I called my home office and said, “Buy a million Bitcoins.” That’s how I got started with Bitcoin. It was around $80 at the time. It sounded really interesting.

But then it took me a few years to really understand Bitcoin. I didn’t fully understand all of its mechanics, and to be honest, I’ve forgotten most of them now. I studied it… I made the decision to buy it, and then I didn’t think much about it. And, by and large, I never thought about it again.

I remember when Bitcoin was $20,000, my home office suddenly went bust and their reaction was ‘ugh’ and my reaction was “Don’t tell me, guys, I don’t want to know. Take it off the balance sheet and never look at it again, just keep it at cost and don’t be psychologically affected by this number.”