The sensational reason why Bitcoin could finally reach a price of 1 million dollars
Back in April, legendary investor Cathie Wood of Ark Invest turned heads in the crypto world with a stunning Bitcoin (BTC 0.66%) price estimate of 1 million dollars. Of course, that was before the market collapsed. Now, six months later, Ark Invest has reiterated its $1 million price target for Bitcoin. After running the numbers, the investment firm concluded that the three basic use cases for Bitcoin support a future market value of $28 trillion, or more than $1 million per Bitcoin.
What’s really startling about this calculation is that the team at Ark Invest arrived at a $28 trillion market cap by adding a new use for Bitcoin: as “an insurance policy against arbitrary asset seizure.” This most likely refers to the concerns that many libertarian supporters of Bitcoin have about governments in general. Ark Invest seems to suggest that people may choose to invest in Bitcoin as a way to protect their savings from government confiscation. Mind blown.
Arbitrary seizure of assets
In years past, “arbitrary seizure of assets” was something that only happened in dystopian novels like George Orwell’s 1984. Unless there was criminal activity or other wrongdoing involved, authorities couldn’t just take your money. But think about what is happening now in Western society. We are moving very quickly from “de-platforming” to “de-banking” people based on their views. Emboldened by the efforts of Big Tech social media companies to ban, censor and de-platform people who hold certain views or opinions, it now looks like financial companies are beginning to roll down the same slippery slope as well.
Just look at what’s happening now with Kanye West. JPMorgan Chase (NYSE: JPM) is now looking to cut ties with Kanye West based on the problematic and highly offensive things he has said online and in public. Similarly, payment services giant PayPal (NASDAQ: PYPL) recently came under public fire for its controversial plan to fine customers $2,500 each time they spread misinformation online. To their credit, PayPal immediately reversed this and apologized.
Bitcoin vs. censorship
In a recent Bloomberg TV interview, Ark Invest specifically noted that Bitcoin is “censorship resistant.” This means that investing in Bitcoin allows you to say certain things – even if they violate the terms of use of a particular platform – because there is no fear of censorship. Ark Invest also noted that Bitcoin is “non-sovereign”, meaning that a sovereign government will never be able to look into your crypto wallet and see what you have inside. You know, in case they don’t like what you say about them online. We saw this scenario in Canada earlier this year, when the Trudeau government attempted to freeze the bank accounts of anyone helping the “Truckers Convoy” in Ottawa. The easiest way to silence the opposition is apparently to abolish it.
From this perspective, Bitcoin can be a way to bypass the current system and keep your assets safe from seizure. This can be another of the advantages of cryptocurrency. A decade ago, there were bad actors trying to hide their shady dealings from the state. This time it is people who no longer trust sovereign governments to do the right thing. This is not to say that this is the only reason people invest in Bitcoin – the overwhelming majority are simply looking to make money. Already, crypto enthusiasts are urging Kanye West to launch a new cryptocurrency or invest in Bitcoin as a way to avoid de-banking. Perhaps unsurprisingly, Kanye West has already been seen in public wearing a Satoshi Nakamoto baseball cap as a nod to the anonymous creator of Bitcoin.
The Three Pillars of Bitcoin Valuation
Of course, the team at Ark Invest is not suggesting that this fear of censorship and asset seizure is the only reason supporting a $1 million price for Bitcoin. As a cryptoanalyst for the firm said in a Bloomberg TV interview, the use cases for Bitcoin are additive — you can stack them on top of each other to arrive at a final valuation. The primary use case for Bitcoin is as a digital store of value, similar to gold. The second use of Bitcoin is as a payment and settlement network. “The insurance policy against arbitrary asset seizure” is the third and last use case.
A $1 million price for Bitcoin might sound absurd and fantastic, but if society keeps trying to de-bank people it doesn’t approve of, it might not sound so strange in a few years. At that point, the only people who will be able to say what they really think and feel may be those who had the foresight to move their money from fiat to crypto.
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin, JPMorgan Chase and PayPal Holdings. The Motley Fool has a disclosure policy.
