Bitcoin is a societally important phenomenon because it holds the potential to become the world’s single currency, and is as of today already an important asset, worth approximately $1 trillion. Will Bitcoin continue to grow as a phenomenon, or is it merely a fad? Perhaps due to it being the first of its kind, opinions strongly diverge on the matter. For example, risk specialist Nassim Nicholas Taleb published a paper entitled “Bitcoin, Currencies, and Fragility” explaining that Bitcoin must ultimately be worth 0. Others such as economist Nouriel Roubini and billionaire John Paulson share this opinion. However, the path to the price of 0 cannot be predicted, meaning Bitcoin could be worth $100k, $1M, or any other value before ultimately reaching 0 and staying there. Due to this difficulty of “path dependence”, it is not possible to use traditional markets such as the futures market to reasonably bet on Bitcoin’s demise (which has been lamented by Nassim Nicholas Taleb and John Paulson). What is needed instead is a bet with a long expiration date which is independent of the price behavior until that expiration date. I am hereby predicting that Bitcoin will not disappear, and that it will still have value 10 years from now, on September 15th, 2031. The world needs an asset with money-like properties and a capped supply. Bitcoin’s price increase until now, its user adoption, and technological progress are all testament to the fact that this need is recognized and that Bitcoin is being adopted more and more. Bitcoin enjoys network effects, meaning that the more users it has, the more users it will attract. By virtue of being the cyptocurrency or cryptoasset with the highest market cap and the most brand recognition, Bitcoin enjoys the strongest network effects among possible competitors. This makes Bitcoin ever less likely to be just a fad and disappear. I am therefore predicting that prophecies of Bitcoin’s demise within a reasonable time frame will be proven wrong. I am predicting that Bitcoin will have at least a small purchasing power instead of predicting that it will have a non-zero purchasing power because I want to increase the odds of my prediction being challenged. One could argue that a number of cryptocurrencies are stubbornly in a state that is neither quite dead nor alive, with a value of close to 0, but not quite. It is easy to give a token an arbitrarily small value, hence my counter-side might be understandably reluctant to accept a bet predicting a value of precisely 0. I am using gold as a measure of value instead of a major currency for two reasons: 1. Over the ten year period of my prediction, the currency might lose a lot of value due to inflation (an event of hyperinflation cannot be ruled out), making difficult the inflation adjustment calculation. 2. Bitcoin is frequently compared to gold. Nassim Nicholas Taleb claims that Bitcoin has an inherent “absorbing barrier”, which gold lacks, supposedly making Bitcoin very fragile. John Paulson also compares the two but recommends buying gold and predicts the demise of Bitcoin. Gold is therefore the natural measuring rod for Bitcoin. A price of 0.05 troy ounces of gold per Bitcoin is equivalent to a bit more than 80 USD per Bitcoin (today’s price and dollars), a price Bitcoin has managed to achieve only in its fifth year of existence (2013), thereby clearly being a price that can be considered “non negligible”. The price of Bitcoin in terms of troy ounces of gold can currently be tracked at the following URL https://www.investing.com/crypto/bitcoin/btc-xau under the ticker “BTCXAU”.
Challenge Harold Christopher Burger to a bet on this prediction!