Friday, July 10, 2020

PayPal Director: Bitcoin Has 50 Percent Chance of Success and Could be Worth Over $1 Million

Wences Casares, CEO of Xapo and PayPal’s Director is a recent essay stated that the chances for Bitcoin to succeed are at least 50% while its chances to fail are 20%. If it does succeed, then the virtual asset can trade as high as $1 million per coin in the next 7 to 9 years.

Bitcoin is an Experiment That Has the Chances of Failing or Succeeding

Based on Wences Casares’ essay, Bitcoin is still a fascinating experiment and as such, there is a possibility for it to fail. Bitcoin in his subjective opinion has a 20 percent chance to become worthless. However, given that it has been 10 years already since its creation and the digital currency has gained massive adoption, it has at least a 50 percent chance to succeed.

In the same vein, it is irresponsible to invest what a person is not willing to lose since there is a risk of losing the principal. It is also irresponsible not to even invest in the virtual asset at this point. In his own words: “It would be irresponsible to have an exposure to Bitcoin that one cannot afford to lose because the risk of losing the principal is very real. But it would be almost as irresponsible to not have any exposure at all.”

Investor’s Portfolio Should Hold 1% of Bitcoin

The Argentinian technology entrepreneur also recommended that most portfolios should allocate 1% to Bitcoin. According to him, if an investor has a portfolio of $10 million with $100,000 (1%) allocated to Bitcoin, the same wallet will only suffer a loss of $100,000 if Bitcoin devalues gradually between 3 to 5 years. It would also be a bearable loss.

However, if Bitcoin succeeds and each is valued at least $1 million, the same wallet has the potential of being valued at even $25 million which is over twice times of its original value.

Bitcoin Will Not Replace Fiat but Will be Used Alongside With it

PayPal’s director further outlined that Bitcoin will not replace fiat currency like the U.S dollar, Euro, Yen, etc. Rather, it will be used alongside each of these in the future and could become a supranational currency. It also has the potential of becoming a global standard of value such as meter, kilo, etc, but this time around, Satoshis is used to define fiat currency. Instead of saying the equivalent of USD in Euros, it will be the equivalent of USD in BTC in order to ascertain a fiat’s true value.

In terms of Bitcoin’s price in the near future, Casares outlined that he sees the digital currency trading above $1 million in the next 7 to 9 years. If it becomes a global standard of value, then its current market capitalization of $90 billion could surpass that of golds’ $7 trillion. However, the market cap will be less than fiat currency whose value is $40 trillion.

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