Has John McAfee lost the plot on bitcoin or could he be right that the cryptocurrency could hit $1 million dollars in a couple of years?
Bitcoin managed to escape last week’s dramatic plunge in the global markets, but the currency still languishes below $9,000 USD, after hitting a high of over $19,000 just two months ago. To many, those kinds of fluctuations speak of irrational speculation and bubble-born mania over a currency that has yet to gain widespread acceptance or overcome some of the technical issues involved in scaling up.
None of that is a worry for cybersecurity expert and cryptocurrency guru McAfee, however, who has doubled down on his prediction that bitcoin will hit $1 million by the end of the year 2020.
Here here is recently, tweeting in all his crudeness:
“When I predicted Bitcoin at $500,000 by the end of 2020, it used a model that predicted $5,000 at the end of 2017. BTC has accelerated much faster than my model assumptions. I now predict Bitcoin at $1 million by the end of 2020. I will still eat my dick if wrong,” writes McAfee, creator of the self-named virus protection software.
For those who don’t know McAfee’s story, it includes the accumulation of massive wealth, followed by a spiral of sex, drugs and guns, a fortified stronghold in Belize, accusations of murder and deportment back to the US. For his third act, McAfee emerged to seek nomination as Libertarian Party candidate in the 2016 US Presidential election (which he failed to attain) and, now, he spends much of his time as a self-styled cryptocurrency promoter.
On social media, McAfee is a notorious bickerer, often responding with anger and contempt to critical commentary of his views. But McAfee’s 779,000 Twitter followers are also evidence of his influence. A Motherboard report in January found that McAfee’s tweets on altcoins had a measurable effect on their value, temporarily causing some to rise by between 50 and 350 per cent.
Some of McAfee’s claims about bitcoin seem to stretch the bounds of credulity, which in itself is nothing new for a man as unhinged as McAfee —in 2015, he said the terrorist group, Islamic State or ISIS, had “tens of millions” of hackers in its service who were about to start a cyber war “far more devastating than any nuclear war.”
His pronouncements on cryptocurrency are just as hyperbolic —for example, that some people he knows “do not use any other currency now than bitcoin,” or that the blockchain is the “most powerful invention that the world has seen since the invention of agriculture.”
McAfee may very well be crazy, but his retorts over bitcoin’s bubble status are worth paying attention to, if only to understand a certain current mindset.
McAfee writes, “The word ‘bubble’ does not apply to bitcoin’s growth because bitcoin is not just an investment medium, it is a currency. As the number of vendors who accept bitcoin increases, the demand for the currency will increase proportionally … The popping of a bubble is impossible in this system. Prices may fluctuate wildly in the short term, but the price trajectory will continue to steeply rise.”
He wrote this before bitcoin crashed.
“As people move into bitcoin for payments and receipts, they stop using [fiat currency] which in the long term devalues these currencies. So, what you’re seeing is more of a currency devaluation than a bubble in bitcoin. As more people use it, it has more intrinsic value,” he writes.
The gist of this argument, then, is one of a limited supply coupled with exponential growth in demand. But while it’s true that bitcoin has a low circulating supply (the lowest amongst the major cryptocurrencies), that fact could just as easily speak to its lack of utility in the long run. If bitcoin were the only option for non-fiat, blockchain-platformed currencies, then the argument for bitcoin’s otherworldly price hike would make sense, but the hordes of competing cryptocurrencies beg the question: Why would people bother with bitcoin and its gargantuan valuation if other just as usable currencies are around?
A second assumption of McAfee’s is that governments the world over are likely to accept the devaluing of their own currencies in the face of bitcoin’s rise. It’s a possible scenario but, again, hard to fathom, since if there’s anything governments are wont to do it’s to control the kinds of currencies allowable within their borders. A prohibition against businesses using bitcoin would spell the end to bitcoin’s crypto-dreams of world domination, while doing nothing to harm state economies. Again, it’s not without question that a given state will react in this way, but why wouldn’t a government want to put up a wall instead of letting its own money get held hostage to a cryptocurrency?
Add to that the (slight) possibility of bitcoin being compromised by a hack of more than 50 per cent of its nodes —and, more importantly, the effect that such a possibility would have on government perceptions of bitcoin— and you have a number of “ifs” about bitcoin.
Whether these ifs are enough to kill off investor interest in bitcoin is yet to be seen, but shouldn’t the fact that cryptocurrencies are being trumpeted by the likes of John McAfee, and called the biggest thing since the Neolithic Revolution, no less, be reason enough to question their paradigm-shifting credentials?
Bitcoin may prove to be a revolution, of sorts. But revolutions like the Enlightenment, the Protestant Reformation, the scientific revolution and the Industrial Revolution all took place without the need for PR men like McAfee ranting and raving about how great they are.
In the end, the deck seems squarely stacked against bitcoin hitting a million bucks, but if it ever did, will it be because McAfee said it would?