Industry News BIlionaire Believes Bitcoin Token could reach One Million USD

BIlionaire Believes Bitcoin Token could reach One Million USD

April 7, 2020

Chamath Palihapitiya is the Social Capital’s CEO. He previously worked as a Facebook executive and is also an early investor in bitcoin. In 2013, he bought the same cryptocurrency for around 80 USD per token. At one point, according to him, he owned about five percent of the entire market capitalization of bitcoin. Presently, with the coronavirus COVID-19 outbreak and subsequent pandemic, it might seem that most see the entire field of crypto in the best case as dormant as most other industries.

After all, with the global lockdown and the industries all over the world grinding to a standstill, expecting that bitcoin or any other digital currency performs much better is not realistic. Furthermore, the recent downfall of crypto prices that coincided with the movements on the traditional market showed that they might not be a big of a safe haven as many wanted to see in times like these.

However, Chamath Palihapitiya believes that there is something else on the horizon. In fact, he thinks that the potential of bitcoin is so huge that even people like John McAfee, who are known for their outlandish predictions related to crypto, would think twice before they would declare something like that.

Getting Things Back on Track

In a recent interview, Palihapitiya showcased some of his ideas and thoughts on the current state of the economy across the globe. He also presented some ideas on how different governments might use their resources to get their own economies back on track. In the same talk, he also reflected on bitcoin and its future as the major economic crisis unfolds not only in this year, but likely in the decade to come as well.

Firstly, Palihapitiya believes that bitcoin is simply too volatile today for any kind of mass adoption push, no matter how desperate people might become in particular regions. Previously, these were places like Venezuela and Yemen, but also Hong Kong on the account of the civil strife that took place there in 2019. However, in spite of the present volatility, he sees a big chance for bitcoin as an alternative global reserve currency.

In this regard, he does not see the recent alignment with the traditional market as a big problem this cryptocurrency is facing in the coming weeks and months. Instead, its independent nature, even though sometimes in alignment with other financial assets, is what will drive users towards it, in particular when the local monetary authorities buckle for any reason. Presently, with the pressure of the pandemic and the lockdown, there is more and more of that buckling to come.

Speculative Instrument

Palihapitiya underlined that presently bitcoin is basically a speculative instrument, so much so that it is reliable for everyday use. In his view, anyone who wants to make a case that the cryptocurrency can replace fiat alternatives needs to take similar volatility. Presently, the volatility levels of the BTC tokens are nine sigmas more volatile. This means that such a setup simply cannot work. Across the world, businesses adopted a range of fiat currencies because they are stable and accountable.

Bitcoin has its level of volatility play against it time and time again as Palihapitiya sees it. While many use BTC for things like online betting or even access to loans, the instability of its value is still a wall that divides it from many ordinary adopters. Furthermore, the extreme volatility is also attracting those who deem to profit from it. All of this is making the crypto sphere into a kind of a ghetto for speculators and day traders. While they stand to profit from the up and down swings, they are also a barrier that is at the same time further expanding itself as well.

2020s Opportunities

When it comes to actual opportunities that bitcoin might come across in the coming decade, Palihapitiya sees an interesting fact – the traditional system of finance and economy presently looks much weaker than just a few months ago. In many digital domains like esports and social media, the fact that the competition is working poorly might be reason enough for an entity to immediately benefit.

In that environment, the alternative looks better by the sheer fact that it is not the system that is currently being assaulted from many different directions. Yes, the pandemic allowed this to balloon out of proportion like never before in the modern-day and age, but the inherent issues were in place for much longer. For example, the US and China trade war has been brewing and then escalating long before the novel coronavirus outbreak. Now, all of these problems are there to be seen by all, which is in turn further enforced by an overall sense of instability related to not just the economy, but the whole political system as well.

Debasement and Inflation

Palihapitiya sees most economies having to choose one of two alternatives: inflation or debasement. In both cases, bitcoin and other cryptocurrencies stand to profit as the capital takes flight. He underlines that this is not once again the story of bitcoin being digital gold, but something that will last months if not years.

During that time, even if crypto does align sometimes with fiat currencies, chances are that gradually, its value will begin to once again attain an uncorrelated nature to things like the US dollar or the Euro. If that process keeps on going with a certain rising pressure, many will go for bitcoin just to basically hedge the bets. The same approach will then find its way to other individuals and eventually to ordinary people as well. Once that occurs, the price of a single token could reach any number, even one million USD.

The catch is there that the same one million, adjusted for inflation, might be worth less than one million today, ranging anywhere from a bit less to several times less. If the instability and degradation of the traditional systems continue for long enough, bitcoin could reach a price of one million USD, but at that moment, chances are that no one would want to exchange it for fiat. In a scenario like that, the crypto asset would be much more valuable than any fiat alternative.

Source: Forbes