#TheBWord: Elon Musk, Jack Dorsey and Cathie Wood Discuss Bitcoin as the Native Currency of the Internet
When the greatest entrepreneur in our lifetime, Elon Musk, the CEO of two influential public companies, Twitter and Square led by Jack Dorsey, and the most innovative investor, Cathie Wood at ARK Invest, get together to discuss Bitcoin as the native currency of the internet, it’s worth listening.
So, that’s exactly what I did.
Today, Elon, Jack and Cathie had a discussion at the #TheBWord conference to discuss Bitcoin. I had the pleasure to tune in. Here are some key insights shared and my thoughts on Bitcoin.
Cathie starts by sharing when she first learned about Bitcoin and started to review it from an investment perspective she shared her analysis with her mentor, Art Laffer.
Art won the Presidential Medal of Freedom for his contributions to economics. At first, Art was extremely skeptical of Bitcoin. But as he reviewed the details, he shared that this technology, and set of unchanging rules, was something economists had discussed was needed for decades.
Money was always controlled by humans, governments and centralized powers. This centralized control led to mistakes and corruption.
Bitcoin is the first monetary invention that humans have created that follows a set of programmable rules not controlled by anyone. There can only ever be 21 million Bitcoin. All transactions are public on the blockchain. Bitcoin created a whole new form of money.
Jack views Bitcoin as a deeply principled approach to a monetary system. He also believes it solves the predatory nature of the current financial system by removing governments and organizations that can harm everyday people by trying to maximize their own gain.
Bitcoin has the potential to replace this archaic, centralized system, and be the true native currency of the internet.
Jack boldly claims that Bitcoin could go as far as bring world peace.
In the news recently, it’s impossible to miss headlines about inflation.
40% of US dollars in existence were printed in the last 12 months.
The pandemic has caused the US government to print an obscene amount of money. This money printing will most certainly cause inflation. This means since there is more money in circulation, the worth of each dollar goes down.
Everyone, around the world, works incredibly hard for their money. It’s not fair that as time goes on, the money we work for continues to go down in value. Most people are not well educated enough, have the time and/or interest to actively invest their money into assets that can grow their dollar value. This means anyone who leaves their hard earned cash in their bank account is losing value EVERYDAY.
One of the things that Bitcoin does best is act as a deflationary asset. This means that overtime, less and less Bitcoin are created.
Since there can only ever be 21 million Bitcoin (there are about 18 million now), no government can print more of it. Average consumer spending amount goes up overtime, but because Bitcoin is fixed in supply, it becomes a safe haven way to store value.
Cathie believes Bitcoin could replace the entire US monetary system which as of today is around $8T. While Bitcoin is this big idea, it does have some concerns among skeptics.
A big concern for Bitcoin is the use of energy to mine it. Elon wants to see Bitcoin mining be at least 50% renewable before his companies start accepting it as payment again.
Jack and Cathie put out an interesting paper proposing that Bitcoin will actually accelerate the adoption of clean energy. They imagine a future where people will use left over solar and wind energy to mine Bitcoin.
Elon argued that they would need sophisticated battery technology in order for the mining to work 24/7 but could see hydroelectric, geothermal and nuclear all being good sources of energy for Bitcoin mining.
This idea though is a powerful concept to understand.
A system that generates energy sustainably from the earth and then uses residual power to mine Bitcoin. This sounds like the future to me!
While Elon provided his concerns about the environmental impacts of Bitcoin, he stated that not only does Tesla own Bitcoin on its balance sheet, but also himself AND SpaceX hold Bitcoin. Elon is leading the charge on companies putting Bitcoin on their balance sheet to store value and this is an incredible validating proof point from an investors perspective when thinking about buying Bitcoin.
The story of energy and Bitcoin will be an interesting one to follow, there are also some inspiring ways that Bitcoin can improve lives for the least fortunate around the world now.
For example, Jack is most inspired by the idea of how Bitcoin is the native currency of the internet and how it can help the developing world, specifically Africa, that doesn’t have good digital infrastructure to process payments.
Right now if someone from Ethiopia wants to send money to a relative in Ghana, it will cost them about 20-30% off the top in transaction fees and swapping the currencies. Additionally, most taxi drivers are still taking money in cash because transacting digitally in their native currency is ineffective.
Bitcoin has the potential to be more affordable and one-stop shop way for people to send digital money around.
Additionally, some countries in developing world such as Venezuela and El Salvador have mismanaged their money supply so bad that their currencies are practically worthless. This makes Bitcoin to their citizens and their governments, an incredible way to maintain value.
Ultimately, it’s extremely clear to me that the old financial system is out of date. Bitcoin was created as a response to the ‘08 crash due the irresponsibility of centralized powers to properly manage the monetary system for the world.
I see Bitcoin as a way to store value, bet on the future of the internet and give power back to the people to control their financial well being.
Right now, the market cap for Bitcoin is $600B and the current price per Bitcoin is about $31K. Over the next 5 years or so, I could see this easily going to $6T ($300K per Bitcoin) which would still be a 10X investment at these prices.
If you’re interested in reading more about the potential price for Bitcoin, I encourage you to also read: The Case for $500K Bitcoin, which talks about how Bitcoin will mirror the size of Gold in market share as a deflationary asset.
To follow through on my conviction, I bought a little more Bitcoin today. And as a reminder, I don’t plan on selling any of my Bitcoin until it hits $1M per Bitcoin.