“What is the relevance of Bitcoin to the world?”
“The most important thing that Bitcoin offers is a new form of sound money outside the control of any authority or government in the world. This is something that is very very important for the world economy and I think it is going to have a very large impact on how the world economy functions in the future.”
~Saifedean Ammous, Author of The Bitcoin Standard
In my opinion, that quote above sums it all up well, succinctly and accurately. And it goes a long way toward explaining why the views of certain Bitcoin industry insiders may not be so crazy, or even misplaced, after all.
“Jack Dorsey, the CEO of Twitter and Square, expects bitcoin to become the single global currency within the next decade, he told the Sunday Times newspaper.”
Tim Draper, one of the technology industry’s most well-known investors, and an early investor in successful ventures such as Hotmail, Skype and Tesla, predicts an even shorter time horizon for Bitcoin eclipsing fiat (national) currencies.
“In five years you’re going to walk in and try to pay fiat [a government-backed currency like the U.S. dollar] for a Starbucks coffee, and the barista is going to laugh at you, because they’re going to say, ‘What is this? Are you counting out pennies? Give me shells?’ venture capitalist Tim Draper said Tuesday on CNBC’s “Fast Money.
“They’re not going to use fiat. Five years from now, none us of will be,” Draper said. “Because all of this engineering effort, all that excitement, this focus is really on bitcoin and all of the cryptos around it. And I think that’s what we’re all going to be using and paying with.”
Everyone has opinions, though – has Draper actually bought Bitcoin, himself?
“He bought nearly 30,000 bitcoins in a 2014 U.S. Marshals Service auction. He told CNBC in December he was still holding all those coins. If that is still the case, Draper’s holding is worth $322.5 million at Tuesday’s bitcoin prices.”
“This is the most excited I’ve ever been as an investor, and I was right there at the beginning of the internet,” Draper said Tuesday.”
Personally, I think Draper shouldn’t hold back – that he should tell us how he really feels. Oh, never mind — check out these additional statements from Tim Draper, made just yesterday (April 23, 2018).
“This is bigger than the internet. It’s bigger than the Iron Age, the Renaissance. It’s bigger than the Industrial Revolution,” Draper said at Intelligence Squared U.S. debate presented in partnership with Manhattan Institute’s Adam Smith Society on Saturday. “This affects the entire world and it’s going to be affected in a faster and more prevalent way than you ever imagined.”
Draper, founder of leading venture capital firms Draper Associates and DFJ, reiterated his bullish call for bitcoin to hit $250,000 within four years and elaborated on use cases.”
Now, such statements can seem unrealistic, maybe even outlandish to many of us, of course.
However, I think there’s a key point worth making here:
Experts such as Saifedean Ammous and Tim Draper have ongoing personal and professional involvement with the subject matter at hand, and their careers indicate that they know what they are talking about.
But Bitcoin’s price reaching $250,000 within four years? By 2022? Doesn’t that seem a bit, well, crazy?
Maybe so. But is it any crazier than this?
“In September of 2014, in an interview with Fox Business, Tim Draper claimed Bitcoin would hit $10,000 USD in three years. To put that in perspective, Bitcoin was worth $413 USD at the time of the interview.”
Did Bitcoin reach $10,000 within three years? Not if you’re calculating by the month.
But if you’re calculating by the year – it did, and then some.
Bitcoin first reached a consistent price of $10,000+ near the end of November, 2017 – just over three years from when Draper made his prediction. It climbed to right around $20,000 by the end of December 2017. It dropped quite a bit after that (to below $6,000), and is now trading at $9,362.88 – just under Draper’s predicted $10,000.
As predictions go – I consider Draper’s quite accurate.
Will his $250,000 prediction also prove to be accurate? Unknown – and also outside of the scope of this answer, which is about the relevance of Bitcoin.
And the point of the price-related portion of this answer is that Bitcoin’s price, and related estimates, point to the very high relevance assigned to Bitcoin by both industry experts and insiders, and by the market itself.
And as far as the potential relevance of Bitcoin beyond even its sound money aspects, I’ll close with a quote from Bitcoin industry insider, the founder of Angellist and Coinlist, Naval Ravikant:
And so, the relevance of Bitcoin seems potentially very high, as many people with insider-level knowledge and understanding and ongoing professional involvement seem to agree.
The bottom line regarding Bitcoin’s potential relevance over time, in my personal and professional opinion, is this:
Bitcoin truly is “digital gold” – like physical gold, but significantly better in every sense (from a financial and monetary standpoint – gold still wins, in terms of aesthetics, of course).
Physical gold, and the related gold standard, has proven economically superior to almost every other option and structure, over the entire history of money.
Bitcoin, while less physically tangible, is more secure, more divisible (easier to use as currency), and more transportable (global Bitcoin transactions are a lot easier and faster than global gold transactions).
Over time, Bitcoin may well prove consistently more valuable, and even less volatile than gold (Bitcoin’s price volatility has decreased markedly over the last few years, and shows every sign of becoming ever more stable, in terms of price, and maintaining value.)
An ounce of gold is currently priced at $1,326.90.
A single bitcoin is currently priced at $9,402.30
It seems entirely possible that we may well see an evolution from the gold standard to (the de-evolution of) inherently inflationary, unbacked fiat (national) currencies, to adopting, in the relatively near future “the Bitcoin standard” of the world’s first digital money becoming the global standard currency, as gold was for a time, until the second decade of the 20th century.
This, in turn could offer economic benefits to people and societies the world over.
And so, Bitcoin is potentially very, very relevant, indeed.