In mid-March, following the collapse of Silicon Valley Bank in the US, Balaji Srinivasan, the former chief technology officer of Coinbase (COIN) exchange, bet a million dollars that Bitcoin’s price would rise to a million dollars within 90 days.
Srinivasan has now conceded the bet, as it’s all but impossible for Bitcoin to rise to that level within the next month or so. But why did he make the bet in the first place? It seems unlikely to think that someone as smart as he would make such a bet without reason, and you’d be correct in that assessment.
A Wager Against Fiat
Balaji’s bet was more of a statement than a true wager. From the outset it seems likely that he knew that Bitcoin wouldn’t actually get to a million dollars in that short a timeframe. What he hoped to accomplish with the bet was open up a dialogue about fiat and the fragility of the banking system. Doing so after the collapse of some banks in the US would be about as good a time as any to try and draw attention to the issue and possibility of hyperinflation or true recession.
“I’m burning a million to tell you they’re printing trillions.”
Though the US dollar hasn’t seen a devaluation that one might expect, it remains to be seen how long it may take for the true effects of money printing to be felt to the fullest. With the federal budget over 5 times higher than it was not even 15 years ago, and with US debt at higher levels than ever before, a recession seems probable. If the debt ceiling in the US isn’t raised, it’ll be sooner than later. In closing out his bet, Srinivasan paid out $1.5 million, including $500k to Bitcoin Core development.
Ostensibly, whether as his overall intention or not, Srinivasan was doing Bitcoin marketing. At a time when fiat currencies should be more scrutinized than ever, they’re instead, at least in the US dollar’s case, considered to be some sort of safe haven. Even as the US banks collapsed, withdrawals were halted, and FDIC insurance also failed to cover depositors with over $250k USD, the USD and banks were still being touted as safe by most mainstream media outlets. Instead, Bitcoin and crypto were to blame.
But Bitcoin and crypto aren’t to blame for poor fiat monetary policy. Bitcon was born out of the 2008 financial crisis, and 15 years later, its purpose and fundamental ethos still rings true. Though it’s still not considered to be the answer to all of capitalism’s problems, it’s at least starting to be thought of as a potential solution by those who are getting tired of the way the traditional financial system works.
Closing Thoughts: A Long Term Bet on Bitcoin
While Balaji Srinivasan’s bet may not have paid off for him, it created a dialogue about fiat monetary systems, which was his true intention.
Though Bitcoin isn’t going to hit $1 million dollars in the next month, it’s still certainly a possibility that it reaches the mark one day. If governments like the US aren’t able to rein in inflation and fend off a recession, it will be interesting to see what happens to Bitcoin and digital asset markets compared to traditional ones.