I was just reading an article on how John MacAfee has made the claim that Bitcoin will go to $1,000,000 within a few years or he’ll eat his own d**k. He’s a really smart guy and I don’t doubt that but the reasoning behind his prediction is the thing that makes me skeptical. I’ve always thought that at some point in order for cryptos to maintain a value they would have to establish this value which I don’t know has happened yet with any cryptos.
The reasoning behind the $1,000,000 prediction was that MacAfee has calculated backwards from the projected date that the last bitcoin would be mined and the cost to mine it at that particular time. When it gets down to the last coin left apparently the mining costs are going to be around 10 million. So, he’s saying that the $1,000,000 estimate is conservative.
In my view the potential problem here is that this model assumes that the price of Bitcoin will increase as the minable coins are acquired due to scarcity. However, as we know from other assets, scarcity does not always equate to value. Case and point are precious metals. It costs more money to mine an ounce of silver than silver is worth in most mines yet the value has been flat to lower for years.
I want to make it clear that I’m not against Bitcoin or crptos in general, my presence on this site is a testament to that. Being an investor I question everything and I still feel that cryptos haven’t yet been value tested. We’ve had a dip in the early part of the year and quite a few of the cyptos bounced back but then again the overall world markets had a dip and also bounced back. We’ve had rising interest rates but they’ve since moved lower and the US dollar has been maintaining strength. Not much has gone on in the world at this point to move things in either direction, but they will.
MacAfee has disclosed that despite his prediction in the Bitcoin price that he has sold off all of his s-9 mining rigs. This seems contrary to his prediction but he says that he did it because it was “boring”. Maybe that was true but it’s still contradictory. My thoughts on the next move to establish market direction is to just wait and see how the different coins react in relation to the overall markets. The big problem with a lot of crypto investors is that rather than look for underlying market catalysts they invest for the reason of simply not wanting to “miss out” on the next moon shot up move. If there is going to be a major up move there is always someone who knows about it ahead of time. Consistent successful Investing is made through information, stay informed people!
Image source: wired.co.uk
