The objective of this article is to examine the fundamental path to a price $100,000 per bitcoin.
It has been the most thrilling fourteen months I have ever spent, filled with agony, joy, and sleepless nights all behind a keyboard. It took over ten months of obsessive studying to muster up the knowledge to confidently speak in front of an audience, be interviewed by a local news channel, and publicly write on this intriguing subject matter.
Through my study, I have found that our current debt-based society has no endgame in the ability to repay governments’ considerable amount of debt — quantitative easing and fractional reserve banking does not work. Bitcoin’s mysterious origin is thus the direct result of the cypherpunk movement defying corrupt banksters by establishing the most secure and unstoppable, peer-to-peer network for the exchange of value at internet speed. Bitcoin represents a speculative option, uniquely different from any past forms of money with extensive implications in the geopolitical arena. Numerous scenarios were discussed that include a coordinated attack on the Bitcoin network, the short-term bubble bursting, and/or the outright governmental ban of bitcoins. Plenty of people claim that bitcoins are not backed by anything, unaware that the computer protocol is quite literally backed by physical hardware to the tune of ~$3.9 billion. Bitcoin’s technological breakthrough has spawned multiple million-dollar trading platforms and tens of thousands of new jobs at companies like Microsoft, IBM, and JPMorgan Chase.
About the Author:
Kerati Apilak
Writer on the political and economic impact of Bitcoin, Blockchain, and Cryptocurrency
You can find other stories by Mr. Apilak on Medium, click his link above.
Image Courtesy of: https://lightning.network/lightning-network-paper.pdf
Financial third-party intermediaries are threatened by technological innovation for the first time in a very, very long time. With the deployment of the Lightning Network earlier this year and almost simultaneously, major credit card issuers including Bank of America, JPMorgan, and Citigroup banned the purchase of cryptocurrencies. Visa, the debit/credit card network processor accounting for the most volume of all purchase transactions worldwide, dropped cryptocurrency cards and provided a lip service statement as to why. I am not so sure that these financial institutions are acutely concerned with the American people not being able to pay back their debt, with interest potentially accruing at a 17.49% to 24.49% annual percentage rate. In my opinion, we are in the stage of retaliation by the big banks and credit card networks.
The road to $100,000.00 will not be easy.
Competing cryptocurrency camps reason that the LN will create centralization because of merchant hubs, payment channels, or hotspots. This is most certainly not the case because the LN has no control as to the direction or development of the computer program; the LN hubs do not have any power over on-chain coding — Bitcoin’s program development is an open meritocracy if you are talented enough. It is simply a layer-2 solution or application built on top of the decentralized and immutable ledger; LN hubs do not have any technical control over other layer-2 apps. It is important to note that the Lightning Network is entirely voluntary for users, whom can choose to open up multiple payment channels if they wish; bitcoin hodlers do not need to use the LN if they do not inherently want to. Alternative coins also assert that the LN is an IOU system because the transaction is settled off-chain. This is also a misconception because you cannot spend any bitcoins you do not have. The most BTCs you will be able to spend is the max available amount in your LN payment channel. Once the BTCs are transferred to the destination, they remain there until the transaction gets recorded on-chain; there are no fraudulent chargebacks or IOUs. To state as plainly as I possibly can, the Lightning Network allows for off-chain transactions of over millions per second at darn near no-cost to later be recorded on-chain and you cannot spend any BTCs you do not have. Bitcoin is not credit or debt-based.
//GLOBAL REMITTANCES, STOCK MARKETS, UNITED STATES DOLLAR IN CIRCULATION & ROOTSTOCK SMART CONTRACTS
Global remittances are primarily used by migrant workers in the United States to send money home to their families. The total market cap amounts to $574 billion. A majority of these individuals work demanding labor jobs at low wages relative to the average U.S. resident. These families endure a sending/receiving fee of 7.4% on average, globally. We already know of the hyperinflationary situation of a nation-sponsored currency in Venezuela, where their people are surviving on bitcoins instead. Bitcoin, layer-2 solutions and the Lightning Network may be the most useful for these men and women.
The stock market has been on an absolute tear recently, breaking all time highs since the start of the new century. This is partially due to the controversial method of stock option buybacks, whereby companies use funds to buy their own stock share, decreasing selling supply and increasing price. These funds are solely from business revenue and central bank printing of fiat. On average, corporations spend more money buying back their own stocks than they do on research and development. The Price-Earnings Ratio (P/E ratio) is a telling indicator on potentially over-valued stocks according to how much the company is worth in relation to their earnings. The P/E ratio is once again at dangerous levels similar to the dotcom bubble and the Great Depression of 1929. Total stock market cap sits at $66.8 trillion.
International commodities and transactions are typically priced in USD. Cryptocurrency markets are priced in BTC. To be fair, we will not use the $83.6 trillion figure of all M1 & M2 money supply but instead use the circulating supply of USD, estimated at $1.5 trillion. The sum of global remittances, stock market, and USD in circulation totals $67.374 trillion. Dividing this number by the BTC available supply then using 0.8% of the division, we arrive at $32,729.80 per BTC.
The Rootstock smart contract platform (RSK) is coming to the Bitcoin protocol as a side-chain, layer-2 application featuring merge mining from the base-immutable-layer and a two-way peg from BTC to Smart Bitcoins (SBTC). Next to the Lightning Network, RSK is one of the most widely-anticipated upgrades to Bitcoin. Smart contract platforms have been one of the most speculated cryptocurrency assets, displayed by Ethereum (ETH), NEO, and Icon (ICX). Smart contract platforms are promising to further disintermediate the need for third-parties.
I believe it is fair to add $1,113.22 to the grand total because of RSK and SBTC, making it an even $100,000.00 price per BTC.
//CONCLUSION
Bitcoin and the cryptocurrency market is extremely speculative, financially risky, and insanely irrational.
The purpose of this piece is to outline the Bitcoin protocol’s utility in serving as a form of money, among other things. I believe that once there is enough liquidity in BTC of at least $2 trillion, we will start to see less volatility and more stability in price. The fundamental and technical advances in Bitcoin’s software development the past eight months have been outstanding yet the price remains speculative.
At the time of publish, the U.S. Treasury considers Bitcoin and other cryptocurrencies as cash money. The U.S. Commodity Futures Trading Commission (CFTC) defines bitcoins as a commodity. The U.S. Security and Exchange Commission (SEC) is treating cryptocurrencies as a security. Finally, the U.S. Internal Service Revenue (IRS) classifies the new asset class as property, specifically stating that “virtual currency is treated as property”.
Traditional assets frequently fall under the regulatory oversight of one government agency, sometimes two, seldom three, and definitely not four or more.
Tomorrow at 10:00AM Eastern Standard Time, Tuesday, February 6, the SEC and the CFTC will be meeting with the Senate Banking Committee to explicitly discuss virtual currencies. It would not surprise me if the members of the Senate Banking Committee have friends with deep pockets in the corporate sector. With that being said, I am somewhat optimistic that there is a lot of cash sitting on the sidelines waiting for the U.S. government’s green light by providing clarity in an otherwise grey area. This is the United States of America’s chance to get it right and once again be the leader in the next tech boom. Too many regulations will stifle innovation.
The overall market decline from a historical perspective has been accurate for the past four or so years as shown by graphs available throughout the internet. Combined with FUD campaigns, literally fake news from the mainstream media idiotically and/or deliberately misconstruing information to cause fear, uncertainty, and doubt. Perhaps I am a delusional bull, but I believe BTC will reach $100K by February 5, 2023, conservatively speaking. If Bitcoin goes to $0 however, I am going down with the ship.
Thank you for reading.
