Peter S Onge has an interesting article here.
Without trying to quantify any future Bitcoin value, the underlying question is, under what circumstances Bitcoin would rise to extreme heights, a very interesting question indeed.
The author states that a collapse of the US Dollar would inevitably lead to such event and the question follows how this may happen.
In the article, excessive printing is one way to get it done, but the second point is the most obvious and most convincing:
“The dollar’s price could collapse … simply because nobody wants to use it anymore.”
Why would this happen, that nobody wants to use the US Dollar anymore?
Well, here are the reasons:
- Increasingly global transactions are not conducted in USD anymore. This scenario is already on its way (China, Russia, Iran)
- Excessive printing leads to inflation, as we can see and expect to get worse. More gov restrictions ahead like restriction of cash payments
- Costs of money supply
- Transaction difficulties and costs.
Introducing a FED-CBDC would solve the last point, none of the others, and opens the pandora box of even more manipulation.
Simply said, USD is the old-fashioned taxi business and BTC is UBER, autonomously driving and without sexual harassment.
So when people decide, step by step, that BTC is better to use for transactions, they will switch. This means that fewer people want to use paper money anymore and even demand a premium for such payments. Think of credit card fees.
Already today, many employees want to be paid in crypto, not in whatever fiat.
Already today, corporations keep crypto as an asset on their balance sheet. See www.microstrategy.com
San Salvador has made BTC legal tender and each business has to accept it. More countries are considering such a step, some as it means progress, others to solve their inflation problem.
But, you say, crypto is used for criminal transactions. Maybe, but in all the narco movies I have seen, the suitcases had been stuffed with dollar bills. So what?
But, you say, if BTC is such a great store of value, why would people spend instead of holding it? Well, they don’t have to. They can easily keep and use it as collateral for loans in stablecoins or even CBDC for transactions.
But, you say, If an EMP or CME is hitting earth and crashing the power supply, all is lost. Well, it is not, because as a decentralized system, there will always be network nodes alive somewhere and keeping it together.
If all the electricity in the world breaks down, as worst-case, then it’s all about survival, not money anymore.
So let us watch the USD going down and enjoy the increase in value of bitcoin.