On March 17, Balaji Srinivasan made the following prediction on Twitter: the value of bitcoin, then around $26,000, would grow to reach one million dollars in the next ninety days. He didn’t just make the prediction but offered to put two million dollars of his wealth in some escrow system and exchange each million for one bitcoin within ninety days, in mid-June, with two people who accept the bet.
So far, everything is fine: everyone does what they want with their money, and they can decide to risk it in bets as long as they feel like it. The question is not the bet itself, but who is making it: Balaji Srinivasan is not just anyone, but the former CTO of Coinbase, former partner of the venture capital fund Andreessen Horowitz, investor, co-founder of several companies, PhD in engineering from Stanford and author of ” The Network State “, a book that has been a best seller as an e-book despite being fully available on the network in which many elements of the future of the chain of blocks and cryptocurrencies are raised, and how they could work as a way to replace the authority of countries. Balaji has wide recognition and prestige in the crypto community, and the fact that he suddenly launched with such a prediction has left very few indifferent. We can think of many things about Balaji Srinivasan, but he does not seem to have the profile of a speculator or a trickster at all.
Predicting that bitcoin can reach a million dollars in ninety days is not something that refers only to the evolution of the value of bitcoin: it is also predicting a brutal fall in the dollar, a very strong crisis in the North American currency due to bank failures, hyperinflation and similar catastrophes, and a complete loss of confidence in the system. According to Balaji, what will happen is that faced with such a scenario, the world will rename bitcoin as “digital gold”, and nations, companies and individuals will begin to acquire it in large quantities, which will generate an appreciation of its value that can reach 3,600%, which would be what is necessary for it to reach a price of one million dollars. It is the so-called « hyperbitcoinization theory«, or basically, the scenario that makes a mechanism such as cryptocurrencies truly valuable as an alternative currency and safe from government decisions.
So far this year, bitcoin has appreciated 70%, although compared to its highest historical price, $68,990.90 in November 2021, the fall has been 60%. Some analysts have predicted that bitcoin could exceed one hundred thousand dollars during the year 2023, but taking the prediction to one million dollars would necessarily require a catastrophic scenario for the traditional economy, with all that this could entail. It would be very similar to the scenario that Tomás Pueyo ventured into in his article about a year and a half ago entitled ” The end of nation states “ placing it in 2050, but also in numerous dystopian scenarios common in science fiction novels such as Snow Crash .or Ready Player One.
Some analysts have stated that there is probably a scenario in which a bitcoin could be worth a million dollars, but that scenario is not going to happen 90 days from now, but rather 10 years from now, because if it did In such a short term we would be talking about a brutal collapse of the economy and a series of catastrophic events that would make it so that we would never want to reach such a scenario. If something like this happened and we got to an “every man for himself” scenario, the phrase “Balaji was right” would become the most terrifying phrase in the English language.
For a long time, the evolution of bitcoin has somewhat laxly paralleled the progress of the technological market par excellence, the NASDAQ. However, lately, bitcoin has evolved clearly above the NASDAQ, and it is, together with the strong appreciation behaviour that it has maintained during the Silicon Valley Bank crisis, which makes many speculate on a decoupling of the evolution of that market and with scenarios in which more and more people come to think that their money is safer in bitcoins than in the banking system itself or other traditional economic schemes.
Are we facing a possible scenario of economic dystopia between now and mid-June, an imminent collapse that puts bitcoin in the position of becoming an unstoppable force, or simply before a crazy prediction destined to capture the attention of as many people as possible? possible about the hyperbitcoinization hypothesis? A reaction to the United States artificially printing trillions of dollars to pay its foreign debt? And if bitcoin were to appreciate very strongly, what consequences could it have for the world, or other cryptocurrencies with greater adaptability, also high levels of adoption and lower environmental costs, such as Ethereum?
Whether or not we are facing a possible economic collapse and given the need to resort to bitcoin to maintain economic activity and the value of our money, the scenario described by Balaji Srinivasan invites us to think at least. The value of a cryptocurrency depends almost exclusively on the number of people who trust it, and that number is strongly affected by the functioning of the economic system and by the faith that many people place in it.
Until now, widely adopted cryptocurrencies such as bitcoin and Ethereum have suffered falls associated not with their operation, but with scandals, actions by irresponsible characters, or crashes of exchanges that centralized risk, but in no case have these cryptocurrencies stopped working, nor have they experienced a crisis in the way they do it: the algorithms behind them have not only demonstrated their robustness but have even proven, in the case of Ethereum, to be able to evolve to solve problems such as energy consumption or the fragility of exchanges.
If Balaji is right, indeed, may God catch us confessing. But on the other hand, and although it will surely not take place in ninety days, it is increasingly possible that we are heading towards the digital reinvention of money based on cryptography as a technology, that money will never again depend on the governments, our faith in central banks or God, and that nobody, absolutely nobody, can do anything to change it.
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