Cathie Wood, Elon Musk, and Jack Dorsey joined forces to discuss bitcoin and tout its use cases to the world. Here's the full rundown of what they predicted about the future of crypto.
By: Business Insider
July 22, 2021 at 10:03 AM EDT
Ark Invest, File (for Wood) and Hannibal Hanschke/Pool Photo via AP, File (for Musk).Summary List Placement
Bitcoin's 50% crash from its mid-April highs may one day be an unrecognizable blip if the world's most famous cryptocurrency eventually rises tenfold and becomes as big as the US monetary base.
A trio of powerful, influential cryptocurrency advocates joined forces Wednesday and stopped the recent bitcoin bloodbath at a conference called "The B Word." The panelists of a talk called "Bitcoin as a Tool for Economic Empowerment" were Elon Musk, CEO of Tesla and SpaceX; Cathie Wood, founder, CEO and CIO of ARK Invest; and Jack Dorsey, CEO of Square and Twitter.
Bitcoin bounced 6% on the day.
Wood, a leading bitcoin bull, became the envy of Wall Street last year as her ARK Innovation ETF (ARKK) rose an eye-popping 150% over the course of 2020. Her success came thanks to prescient bets on Tesla (TSLA), which soared 760% last year, and other innovators that threaten entrenched firms stuck in the status quo.
Bitcoin fits the "innovative disrupter" mold as the world's first rules-based monetary system, and it may grow into "the payment system that the internet neglected to build," Wood said.
"Think about the internet in the earliest days," Wood said. "We couldn't imagine what was going to happen, but the impetus to growth was pretty incredible. … I'm looking at [Bitcoin's] technology itself and the convergence between blockchain technology and artificial intelligence, you know, to change the world in ways that we cannot imagine right now, solving even more problems but creating more opportunities as well, which is the history of technology and disruptive innovation."
Wood said she realized bitcoin's potential in a conversation years ago with her mentor, famed economist Arthur Laffer.
"I remembered saying to Art, 'How big could this be?'" Wood said. "And he said, 'Well, how big is the US monetary base?"
If Laffer is right in suggesting that bitcoin's value could one day equal that of the US monetary base, that implies bitcoin could rise tenfold from current levels to $320,000.
Bitcoin's appeal is, in part, that its supply is intrinsically capped at 21 million. That puts it in stark contrast with the US dollar, whose supply increased 27% since March 2020, meaning that one in five dollars in circulation today was introduced in the past 16 months. Rapid money supply growth in response to the pandemic fueled bitcoin's popularity and drove its 224% rise in 2020.
Wood and others have argued that Bitcoin's limited supply makes it a strong inflation hedge as prices surge in the US, though the cryptocurrency's weakness as of late casts some doubt on that thesis. Still, bitcoin should hold up as a long-term inflation hedge to protect against both inflation and deflation, where falling prices driven by innovation lead to stalled spending.
"This idea that it's a hedge against confiscation of wealth, and that can take place in a myriad of ways, but inflation — and especially hyperinflation in emerging markets — is the primary way," Wood said. "Talk about just destroying purchasing power."Bitcoin has no boundaries
The world's largest cryptocurrency is primarily used as a store of value today in the US, as high transaction costs and difficult usability make bitcoin impractical for everyday use, Musk said. But the PayPal founder added that bitcoin has "a lot of potential" to replace "ancient" payment systems like ACH, where payments can take one to five business days to process.
Until people can seamlessly use cryptocurrencies, regardless of technological know-how, bitcoin is unlikely to take off as a payment for everyday purchases. Dorsey said he's working to make a simple, accessible hardware wallet for bitcoin via Square so people can "use it without thinking."
"You take away the boundaries, different currencies, just think about how explosive growth could be and how wide-reaching taking the friction out of the system could be," Wood said.
Developing countries like El Salvador are already relying on bitcoin as their main currency, despite its wild volatility. Today's "crazy, predatory" financial system takes advantage of those in third-world countries, Dorsey said, adding that bitcoin can become a native internet currency that all can use.
"If I happen to be in Ghana and my family is in Nigeria, and they need to send money back, [it costs] anywhere from 10% to 30% to send that money back," Dorsey said. "Bitcoin solves so many of those problems today, instantly, without having to go through any intermediaries or any slowness or complicated systems at a corporation or state."
Bitcoin's decentralized nature means the monetary system can be owned and controlled by the people instead of a government, bank, or corporation, Dorsey said. Every bitcoin payment is viewable and verifiable on a public blockchain ledger, which promises stability, security, and transparency.
Speaking of transparency, Musk revealed publicly for the first time that he owns rival cryptocurrencies ether and dogecoin. He of course still owns bitcoin, which he said he's not selling.
"If the price of bitcoin goes down, I lose money," Musk said. "I might pump, but I don't dump."