I made a post earlier today titled “Clarification about Balaji’s $1 million bet (misinformation)” where I was talking about his $1 million bet against dollar hyperinflation and $1 million btc price in 90 days; This is all based on all of his visible tweets that I linked to. Although many others in the sub said otherwise, I wondered what and where no one around said until u/angry_koala_26 quoted the terms of his $1 million bet.
It just so happens that he linked one of his tweets to a longer post that reads:
Here are the rest of the references, since Twitter has a limit on the number of links in a post.
I am moving $2M in USDC for the bet. I will do this with Medlock and one other person, just to prove the point. Check out my next tweet. Everyone else should buy Bitcoin, as it will be much cheaper for you than locking it up for 90 days.
Terms of bet: Ideally someone can set up a smart contract where BTC is worth >$1M in 90 days, then I win. If it is worth less than $1M in 90 days, the counterparty gets $1M in USD.
Hyperbitcoinization We must define hyperinflation in BTC vs. USD terms because all other fiat currencies can and will be inflated away. That is hyperbitcoinization.
This is the moment that the world renames Bitcoin as digital gold, returning to the same model as before the 20th century. What is going to happen is that individuals, then firms, then large funds will buy Bitcoin. Then sovereigns like El Salvador (@nayibbukele) and smaller crypto friendly nations.
A US state like Florida or Texas or a “normal” country like Estonia, Singapore, Saudi, Hungary or the UAE will take a big step when buying Bitcoin. And when @narendramodi tells India’s central bank to buy Bitcoin, even as a hedge, it’s over.
Why would it be so fast? Well, hyperinflation happens fast. We have seen the digital pandemic (COVID), the digital riot (BLM), and the digital bank run (SVB). Everything will happen very quickly when people check out what I’m saying and see that the Federal Reserve is lying about how much money is in the banks. All dollar holders are destroyed.
The thing is, people are still tuned into an analog world where things get worse slowly rather than all at once. But there’s not much predictability to a digital event – it’s a 1 and then it’s a 0. Just like a bank runs, except it’s a central bank.
However there are two sources of foreknowledge. The first is a chart of the long-term depreciation of USD vs. BTC, from $1 USD per BTC to $25k USD per BTC. After the financial crisis a lot of smart money is voting against the dollar. The end is a digital drop off a cliff, almost invisible on the charts – but highly visible to the world.
This tweet is the second warning. Even after a few years, people who believed in the American establishment would ignore and ridicule it. Who can’t imagine that American banks and media are lying to them to this extent.
But they are. As they did in 2008, and for the last ten years. A digital devaluation of the dollar is coming and it’s going to be fast.
Here ends, some of my afterthoughts
I have no idea what the monetary valuation of btc will be against the usd due to events we have never seen before, I think his reasoning and references are valid. I’m definitely rooting for the current financial and political system’s approach as I see it.
One aspect on which I differ is the source of the dollar’s devaluation. I’m not sure if I’m different exactly, because I’m not sure what he thinks about this issue. This is about the nature of bubbles in general over decades/generations. If we look at the history of bubbles, the only common thing that sparks them is when there is rapid growth in the economy and one or more other aspects that dominate most individual and social behavior.
Two more commonly known recent bubbles are the dot-com bubble and the housing bubble, both in the US. I don’t think many people around the world know or at least talk about Japan’s real estate and stock market bubble of the 1980s. There is a general perception in both the media and the general public that Japan has a sound monetary system. Despite being the world’s third largest economy, accounting for nearly 8.6% of global GDP, no one talks or reacts to rate cuts or hikes. All the mess we know is from the USA which is effectively making waves around the world as we feel in the global recession anyway with the dollar. A housing bubble caused by banking and valuation fraud caused the dollar to spin in the wind and all nations felt the effects as they used it as a reserve currency and partly where their own currency gained value. And as a result, if all of them increase against each other even in small proportions over a long period of time (decades), we can clearly feel that something could be wrong with the perception of money if the US gets hit somewhere badly. Especially how it is managing its $.
During the two recent banking collapses in America, we saw how the government panicked and announced that they would effectively fully insure all deposits. But only for these two banks. This is outside of the FDIC’s mandate and Secretary Janet Yellen took action because she perceived a “systemic risk” to the economy’s financial infrastructure. Words that mean, “Oh, shut up, or the banking sector will sink.” They have reason to be afraid. This is because everything is multiplied both to the world (corporations and foreign governments) and to ourselves. And all the banks have to keep as reserves is at the FED where they are exchanged for Treasuries where the government effectively takes it for a certain period of time and uses it for whatever they want. One thing to do with this is to lend and fund the work of multilateral institutions such as the IMF. It happens a lot to fulfill its duty as a government where it is also using it to exercise power in the world and its biggest form is military spending. What is the general international consensus that supports the strength of the dollar – it can control and surf through world events. No wonder they have been involved in every major war of the last century. Anyway, I’m talking about all this to make the point of the credit bubble. That’s spending too much to pay back anything that can be spent for real value – the real economy (! the monetary economy). Those American economists cannot call it an imbalance.
Everyone will know from Econ 101 that where there is an imbalance, the inflated side should be reversed. It’s scary to say but it literally translates to ‘the dollar must crash to represent what the real US economy can actually do.’ As there are many Americans in our sub, it would be interesting to hear if you count the costs of other diplomatic engagements around the world – military, financial (debt) and health are big parts of them. If citizens can’t do it, the government must go crazy. It funds it through taxes as well as the Fed backdoor. Even the whole world takes their word for granted if they are accounting for everything and not aligned with their incentives. What could go wrong I guess lol?
If banks start losing stock market value like they used to, people will slowly but surely start pulling out. If a bank is losing more than 10% of its market value in a week, would you keep your money? Or even a month? Forget, even a quarter? Guess it’s time to tell what’s going to unfold.
Also wanted to correct on bet’s terms where he is betting a lot to go down in the next 90 days with btc @$1mn. Definitely an interesting bet though degen at best to make a point 🤷♂️
