Bitcoin is a revolution that will take everything in its path. The big question now is to guess who will be the next big player to enter into the Bitcoin world.
Bitcoin is at a major turning point in its history. More and more big players decide to enter the Bitcoin world. The year 2020 has been marked by a coronavirus pandemic that will be recalled in a few years as the tipping point for Bitcoin.
If you are not familiar with the concept of the tipping point, it was popularized by Malcolm Gladwell in his book “The Tipping Point: How Little Things Can Make a Big Difference” published in the early 2000s.
In his book, Malcolm Gladwell explains that once this tipping point is reached, everything becomes different afterward. The coronavirus pandemic was a major event that triggered an economic crisis on a scale not seen in decades.
Central banks and governments always apply the same ineffective policies
The responses of central banks and governments have been those employed consistently since the establishment of the current monetary and financial system in August 1971:
- Lowering interest rates to zero.
- Printing money fiat out of thin air ad infinitum.
- Increase in public debt to finance stimulus plans to support the economy.
The problem is that crisis after crisis, the magnitude of the measures to be implemented keeps increasing. If billions of dollars were enough in the early 2000s, tens of billions of dollars were needed in 2008. And in 2020, we are talking in trillions of dollars.
The central banks of the major economic powers have printed more than $12 trillion since March 2020. Global debt has exploded to $277 trillion.
As the world’s leading economic power, the United States is obviously at the top of this ranking with a public debt that now exceeds $27.300 billion. The ratio of public debt to GDP has reached a record level in the United States:
Globally, the norm is now to have a public debt-to-GDP ratio well above 100 or even 110% in most of the world’s major economic powers.
The current situation is unsustainable, and a Bretton Woods 2.0 will not be enough
The current economic situation is clearly unsustainable over time. For many, the seven deadly sins of the current monetary and financial system will sooner or later lead to its collapse.
Well aware of this, many economists and politicians now call for a Great Reset of the current system. A kind of Bretton Woods 2.0 to put the world back on the right track by taking into account the new challenges of the 21st century.
What these economists do not understand is that the great monetary inflation we are currently experiencing cannot be stopped as long as central banks have such unlimited power in monetary creation.
As early as the 1980s, Friedrich Hayek called for taking control of money out of the hands of the States:
“I don’t believe we shall ever have good money again before we take it out the hands of governments.”
Friedrich Hayek has spent his life alerting people to the dangers of the current system
He has always been very critical of this system. For Friedrich Hayek, it was essential to have competitive money outside the control of the States. This would be the best protection against the risks of inflation.
For Friedrich Hayek, it was obvious that inflation decided by governments has always been carried out solely for the benefit of the governments themselves:
“I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”
Today, many people think that money should absolutely be a prerogative of the States. In his book “The denationalization of money” published in 1976, Friedrich Hayek argued for a money market outside the monopoly of the States.
According to him, it is essential to move away from the dogma that money should be the responsibility of the States.
Friedrich Hayek considered that money should not be the prerogative of the States
This conception, which seems obvious to us today, is very recent. In the Middle Ages and until late in history, the control of money by the royal power was limited to certifying that a gold coin was equal to one gram of gold.
Kings did not have the power to act on the money supply in circulation as central banks do today.
Friedrich Hayek, who died in 1992, must be turning over in his grave after seeing central banks print more than $10 trillion out of thin air since March 2020. Friedrich Hayek was already concerned about all this in the mid-1970s.
For him, the big culprit was the English economist Keynes. He was guilty of pushing strongly the idea of control of currencies by governments and central banks.
To stop this inflationary spiral, Friedrich Hayek saw two possibilities:
- A return to the gold standard, which makes it possible by the scarcity of the precious metal to limit inconsiderate monetary creation.
- Or a competition between currencies.
Bitcoin is the solution Friedrich Hayek dreamed of. The emergence of Bitcoin is thus the realization of Friedrich Hayek’s dream. Hayek’s vision is therefore gradually taking over from that of Keynes, which has been dominant since the middle of the twentieth century.
Attitudes are changing and Bitcoin is becoming the number one option against the GMI
In 2020, institutional investors understood that Bitcoin was the best possible weapon against the great monetary inflation (GMI) that we are experiencing. Paul Tudor Jones launched a movement in May 2020 that has not stopped growing since then.
Grayscale Investments’ Bitcoin fund now holds more than 509,000 BTC for its clients which are more than 90%, institutional investors. The major companies make Bitcoin their reserve asset. The move was initiated by MicroStrategy and CEO Michael J. Saylor in early August 2020.
A major player in the Bitcoin world with its ultra-popular CashApp application that facilitates the purchase of Bitcoin, Square then joined the movement in early October 2020.
At the end of October 2020, it was the turn of PayPal to announce its upcoming entry into the Bitcoin world. By early 2021 at the latest, PayPal will allow its 346 million users worldwide to buy/sell Bitcoin directly from its platform.
Even better, PayPal will offer payments in Bitcoin to the 26 million businesses in its network. However, this raises questions in terms of self-sovereignty, as shown by a first case that made a lot of noise about a user account that was banned for too many transactions in cryptocurrencies.
Only Warren Buffett and Ray Dalio are left not to believe in Bitcoin on Wall Street
More and more legendary Wall Street investors are embracing Bitcoin, explaining that it is a unique opportunity. Bitcoin is indeed the opportunity of a lifetime. In the end, only Ray Dalio and Warren Buffett are left to fiercely oppose Bitcoin. They can’t understand that Bitcoin is a paradigm shift, and they get stuck into thought patterns holding them back to buy Bitcoin.
Ray Dalio still believes, wrongly, that Bitcoin will be stopped by governments if it becomes too big. Ray Dalio is totally mistaken. Bitcoin can no longer be stopped, and above all, the trend is rather towards a better consideration of Bitcoin through more favorable regulations.
At least this is the hope that was born after the election of Joe Biden as the 46th President of the United States.
Warren Buffett still thinks that Bitcoin is a “Rat poison squared”, but after all, at his age, it seems logical that he is not able to question himself to understand why Bitcoin is revolutionary. So I can hardly imagine that Warren Buffett will be one of the next to enter the Bitcoin world.
If Warren Buffett will not be among those who will enter the Bitcoin world in the coming months, the big question is who will be next.
The arrival of PayPal brings credibility with the general public
The entry of PayPal is important because it brings enormous credibility for Bitcoin. PayPal is a major and highly respected player in the online payment world. Those who were still hesitating to cross the pass because of Bitcoin’s bad public image will probably be reassured.
In the summer of 2020, the Office of the Comptroller of the Currency (OCC), which is the U.S. banking regulator, gave the green light to U.S. banks to buy and hold Bitcoin for their customers.
It is therefore easy to imagine that American banks will be the next to offer Bitcoin purchase/holding services to their customers.
If this is not a good thing from the point of view of the Bitcoin revolution, since banks are part of the problem that Bitcoin wants to solve, it is something that will greatly boost the adoption of Bitcoin by the general public.
U.S. banks will follow PayPal’s lead in the coming months
Jamie Dimon, who said in May 2020 that he regretted calling Bitcoin a fraud at the end of 2017, explains that he sees Bitcoin gaining a sustainable foothold. He nevertheless specifies that it is not his thing. He urges JPMorgan to enter the Bitcoin world to take advantage of it.
Since May 2020, JPMorgan has been offering its banking services to Coinbase or Gemini, for example.
In 2021, I imagine that JPMorgan will end up offering Bitcoin to its customers. In the wake of JPMorgan, other American banks will follow like Morgan Stanley or Citibank. Citibank has just published a report in which its analysts see Bitcoin capable of reaching a price of over $318K by the end of 2021.
This is even more optimistic than my forecast of a $100K Bitcoin by the end of 2021. But why not …
Apart from the American banks, what other players could come into the world of Bitcoin in 2021?
The GAFA, with Amazon and Apple in the lead, will eventually come to the Bitcoin world
I think immediately of Amazon, which could enter the Bitcoin world by accepting Bitcoin as a means of payment on its site. This would be something that would boost the credibility of Bitcoin, but also its use.
Besides Amazon, Apple would have a double interest in entering the Bitcoin world quickly. The first would be to use part of its $192 billion cash reserve to buy Bitcoin. This move could then be followed by many other major companies in the United States. They are sitting on mountains of cash that are suffering the effects of this great monetary inflation.
But Apple could also generate a lot of money if it integrated Bitcoin into Apple Pay, which is becoming more and more popular. Apple could build a secure crypto wallet directly into its iPhones.
While this might have seemed utopian a few months ago, the probability that these players will enter the Bitcoin world in the coming months and years is growing.
Conclusion
Bitcoin is a real revolution that is set to last. Faced with such a monetary revolution, there is only one choice: embrace it as soon as possible to get the most out of it. The GAFAM will be no exception to the rule, and they will have to enter in the Bitcoin world sooner or later.
It will be a matter of survival for them as well.
I have not even mentioned here the governments that are becoming more and more involved in Bitcoin to free themselves from the American yoke on the world. I am thinking of Iran or Venezuela, who see Bitcoin as a way to free themselves from the American sanctions.
In any case, the future looks bright for Bitcoin, and the best is yet to come. Don’t be surprised by the great announcements for Bitcoin that will multiply in the months and years to come. This is just the beginning.
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