Saifedean Ammous, the author of the book “The Bitcoin Standard,” recently tweeted his thoughts on the $2 million bet made by former a16z partner and Coinbase CTO Balaji Srinivasan, who predicted that Bitcoin would reach $1 million in the next three months. Ammous tweeted that he doesn’t think Bitcoin will hit $1 million in 90 days and that the dollar cannot hyperinflate this quickly.
Why Ammous Doesn’t Believe Bitcoin Will Reach $1m In 90 Days
Ammous gave several reasons for his stance. First, a banking crisis is deflationary, and if most banks go bankrupt, most of the money supply is destroyed, making hyperinflation less likely. Second, even if central banks print more money in response, it cannot cause hyperinflation in such a short period of time.
Money supply increases always drive hyperinflation, and history shows that it takes many months or even years to arrive at the point where the value of a currency drops by half in a day.
Ammous also noted that the devaluation of the dollar could cause a massive run to Bitcoin that shoots the price up to $1 million. However, this is highly unlikely to happen without unreasonably fast dollar hyperinflation.
Moving to Bitcoin is not as simple as dumping dollars for BTC, as there is a steep learning curve for understanding it, how it works, how to store it, where to buy it, and why to avoid shitcoins.
Moreover, significant economic network effects & coordination costs must be overcome. A business with 1,000 customers & suppliers who all deal with dollars cannot just tell them to shift to Bitcoin overnight or even over three months. Many would jump to competitors.
In the long-term, BTC’s limited supply combined with governments’ irrepressible monetary and fiscal incontinence can only lead to one outcome, the rise in the dollar price of Bitcoin.
However, Ammous concludes that he doesn’t think anything drastically changed in the case of Bitcoin over the past week to cause us to suspect $1 million is around the corner, and it was just a change in Balaji’s stance.
While the long-term trend is unmistakable, Ammous believes that BTC hitting $1 million in the next three months is highly unlikely.
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