Bitcoin just soared to a new $1,600 high — but the first investor in Snapchat thinks it could hit $500,000 by 2030
Jeremy Liew. Getty Bitcoin has been the top-performing currency in the world in six of the past seven years, climbing from zero to a new high value of about $1,600.
But the cryptocurrency isn't anywhere close to its potential, according to Jeremy Liew, the first investor in Snapchat, and Peter Smith, the CEO and cofounder of Blockchain.
In a presentation sent to Business Insider, the duo laid out their case for bitcoin exploding to $500,000 by 2030.
Their argument is based on increased interest in bitcoin, thanks to:
Bitcoin-based remittances
Remittance transfers, or electronic money transfers to foreign countries, have almost doubled over the past 15 years to 0.76% of gross world product, data from the World Bank shows.
"Expats sending money home have found in bitcoin an inexpensive alternative, and we assume that the percentage of bitcoin-based remittances will sharply increase with greater bitcoin awareness," the two said.
Uncertainty
Liew and Smith said increased political uncertainty in the UK, US, and developing nations would help elevate the level of interest in bitcoin.
"We believe bitcoin awareness, high liquidity, ease of transport, and continued market outperformance as geopolitical risks mount will make bitcoin a strong contender for investment at a consumer and investor level," the two said.
Mobile penetration
Liew and Smith said the percentage of noncash transactions would climb from 15% to 30% in the next 10 years as the world becomes more connected through smartphones.
The global smartphone penetration rate is 63%, and the total number of smartphone users is expected to increase by 1 billion by 2020. The GSMA, a trade body that represents the interests of mobile operators worldwide, says 90% of these users will come from developing countries.
This would make it possible for nearly everyone to have a bank in their pocket, and that should provide a boost for bitcoin as well. Liew and Smith say bitcoin could account for 50% of all noncash transactions.
Here are the basic model drivers Liew and Smith used:
- A bitcoin price of $1,000 in 2017.
- Network users will grow by a factor of 61 from now until 2030. "Put another way, we need a population of bitcoin users around a quarter of the Chinese population (or 5% of the global population) in 2030 to see bitcoin at $500k," Liew and Smith told Business Insider. Bitcoin's user network grew from 120,000 users in 2013 to 6.5 million users in 2017, or by a factor of about 54, and this could be just the beginning. Growth of that magnitude would mean 400 million users in 2030.
- The average value of bitcoin held per user will hit $25,000. "As institutional investor cash in bitcoin, sophisticated investors trading bitcoin, and bitcoin-based ETFs proliferate, we think the average bitcoin value held will increase to around $25k per Bitcoin holder," Liew and Smith said. Currently, with bitcoin's market cap of $16.4 billion, each of its 6.5 million users holds $2,515 worth of bitcoin on average.
- Bitcoin's 2030 market cap is decided by the number of bitcoin holders multiplied by the average bitcoin value held.
- Bitcoin's 2030 supply will be about 20 million.
- Bitcoin's 2030 price and user count will total $500,000 and 400 million, respectively. The price was found by taking the $10 trillion market cap and dividing it by the fixed supply of 20 million bitcoin.
But a lot could go wrong, too. News surrounding bitcoin has been rather negative as of late.
China, which is responsible for nearly 100% of trading in bitcoin, has been cracking down on trading. The three biggest exchanges recently announced a 0.2% fee on all transactions and blocked withdrawals from trading accounts.
The US Securities and Exchange Commission also rejected two bitcoin exchange-traded funds and will rule on another one in the future. It's not expected to be approved.
However, Smith says bitcoin is still in its early stages.
"The SEC's ruling wasn't a surprise to us," he told Business Insider. He said that "getting that sort of approval" could take a long time.
"In the meantime, bitcoin is already simple to buy and hold, and as the asset continues to mature, we'll continue to see an increase in the development and deployment of surrounding products," he said.
And while bitcoin hasn't been granted regulatory approval in the US, it is catching on elsewhere. On April 1, the cryptocurrency became a legal payment method in Japan.
Another threat to its future is developers who are threatening to set up a "hard fork," or alternative marketplace for bitcoin. This would result in the split of into bitcoin and bitcoin unlimited. However, Smith isn't worried.
"Bitcoin has strong economic incentives to prevent this," he said. "If the last two years of healthy contention and debate lead to a conclusion, it's that bitcoin is incredibly resilient and stable. In fact, the bitcoin blockchain has operated for seven-plus years with no downtime, a feat no other back-end system operating at this scale can claim."
But the cryptocurrency sees violent price swings uncommon among the more traditional currencies. Bitcoin rallied 20% in the first week of 2017 before crashing 35% on word that China was cracking down on trading.
The cryptocurrency has regained those losses and is trading up about 67% so far this year.
Bitcoin just soared to a new $1,600 high — but the first investor in Snapchat thinks it could hit $500,000 by 2030
Jeremy Liew. Getty Bitcoin has been the top-performing currency in the world in six of the past seven years, climbing from zero to a new high value of about $1,600.
But the cryptocurrency isn't anywhere close to its potential, according to Jeremy Liew, the first investor in Snapchat, and Peter Smith, the CEO and cofounder of Blockchain.
In a presentation sent to Business Insider, the duo laid out their case for bitcoin exploding to $500,000 by 2030.
Their argument is based on increased interest in bitcoin, thanks to:
Bitcoin-based remittances
Remittance transfers, or electronic money transfers to foreign countries, have almost doubled over the past 15 years to 0.76% of gross world product, data from the World Bank shows.
"Expats sending money home have found in bitcoin an inexpensive alternative, and we assume that the percentage of bitcoin-based remittances will sharply increase with greater bitcoin awareness," the two said.
Uncertainty
Liew and Smith said increased political uncertainty in the UK, US, and developing nations would help elevate the level of interest in bitcoin.
"We believe bitcoin awareness, high liquidity, ease of transport, and continued market outperformance as geopolitical risks mount will make bitcoin a strong contender for investment at a consumer and investor level," the two said.
Mobile penetration
Liew and Smith said the percentage of noncash transactions would climb from 15% to 30% in the next 10 years as the world becomes more connected through smartphones.
The global smartphone penetration rate is 63%, and the total number of smartphone users is expected to increase by 1 billion by 2020. The GSMA, a trade body that represents the interests of mobile operators worldwide, says 90% of these users will come from developing countries.
This would make it possible for nearly everyone to have a bank in their pocket, and that should provide a boost for bitcoin as well. Liew and Smith say bitcoin could account for 50% of all noncash transactions.
Here are the basic model drivers Liew and Smith used:
- A bitcoin price of $1,000 in 2017.
- Network users will grow by a factor of 61 from now until 2030. "Put another way, we need a population of bitcoin users around a quarter of the Chinese population (or 5% of the global population) in 2030 to see bitcoin at $500k," Liew and Smith told Business Insider. Bitcoin's user network grew from 120,000 users in 2013 to 6.5 million users in 2017, or by a factor of about 54, and this could be just the beginning. Growth of that magnitude would mean 400 million users in 2030.
- The average value of bitcoin held per user will hit $25,000. "As institutional investor cash in bitcoin, sophisticated investors trading bitcoin, and bitcoin-based ETFs proliferate, we think the average bitcoin value held will increase to around $25k per Bitcoin holder," Liew and Smith said. Currently, with bitcoin's market cap of $16.4 billion, each of its 6.5 million users holds $2,515 worth of bitcoin on average.
- Bitcoin's 2030 market cap is decided by the number of bitcoin holders multiplied by the average bitcoin value held.
- Bitcoin's 2030 supply will be about 20 million.
- Bitcoin's 2030 price and user count will total $500,000 and 400 million, respectively. The price was found by taking the $10 trillion market cap and dividing it by the fixed supply of 20 million bitcoin.
But a lot could go wrong, too. News surrounding bitcoin has been rather negative as of late.
China, which is responsible for nearly 100% of trading in bitcoin, has been cracking down on trading. The three biggest exchanges recently announced a 0.2% fee on all transactions and blocked withdrawals from trading accounts.
The US Securities and Exchange Commission also rejected two bitcoin exchange-traded funds and will rule on another one in the future. It's not expected to be approved.
However, Smith says bitcoin is still in its early stages.
"The SEC's ruling wasn't a surprise to us," he told Business Insider. He said that "getting that sort of approval" could take a long time.
"In the meantime, bitcoin is already simple to buy and hold, and as the asset continues to mature, we'll continue to see an increase in the development and deployment of surrounding products," he said.
And while bitcoin hasn't been granted regulatory approval in the US, it is catching on elsewhere. On April 1, the cryptocurrency became a legal payment method in Japan.
Another threat to its future is developers who are threatening to set up a "hard fork," or alternative marketplace for bitcoin. This would result in the split of into bitcoin and bitcoin unlimited. However, Smith isn't worried.
"Bitcoin has strong economic incentives to prevent this," he said. "If the last two years of healthy contention and debate lead to a conclusion, it's that bitcoin is incredibly resilient and stable. In fact, the bitcoin blockchain has operated for seven-plus years with no downtime, a feat no other back-end system operating at this scale can claim."
But the cryptocurrency sees violent price swings uncommon among the more traditional currencies. Bitcoin rallied 20% in the first week of 2017 before crashing 35% on word that China was cracking down on trading.
The cryptocurrency has regained those losses and is trading up about 67% so far this year.
Bitcoin Cash is soaring as traders ready for another hard fork
- Bitcoin cash is up more than 10% Friday.
- A hard-fork of the currency is expected May 15, which will form Bitcoin ABC.
- Track the price of Bitcoin cash in real-time here.
Bitcoin cash was up more than 10% Friday, continuing its outperformance of other major cryptocurrencies, as a competing hard fork approaches on May 15.
The fourth-largest cryptocurrency, which split from bitcoin in a similar hard fork in 2017, is now up more than 30% in the past week. Bitcoin, by comparison, is up 5% over that time.
Bitcoin ABC, an acronym for Adjustable Blocksize Cap, will increase bitcoin cash's block size to 32 MB, a fourfold increase from the original 8MB and well above bitcoin’s 1MB block size. It’s set to roll out on May 15, the developers have said.
The fork will also remove the Segwit protocol, short for segregated witness, the process by which the number of transactions in a block can be increased by moving certain signature data from transactions to the end of the block.
Bitcoin cash has been accused of misleading investors by piggy-backing off the bitcoin name. While the new cryptocurrency includes the history of the original bitcoin's transactions up until the split, since the fork, the two currencies are unrelated except for their shared history and name. Theoretically, anyone can create a fork from the original bitcoin source code.
Everything you need to know about Bitcoin, its mysterious origins, and the many alleged identities of its creator
Thomson Reuters Since it was created in 2009, Bitcoin has experienced significant highs and lows. Just this week, the cryptocurrency surpassed an $11,000 evaluation for the first time in history.
Bitcoin is considered the preeminent cryptocurrency in the world, but there's still plenty of mystery surrounding its creation. Who came up with Bitcoin? Was it created by more than one person? And who is Satoshi Nakamoto?
Here's a rundown on the currency's strange beginnings:
Start Slideshow »
In 2008, the first inklings of bitcoin begin to circulate the web.
In August 2008, the domain name bitcoin.org was quietly registered online. Two months later, a paper entitled 'Bitcoin: A Peer-to-Peer Electronic Cash System' was passed around a cryptography mailing list.
The paper is the first instance of the mysterious figure, Satoshi Nakamoto's appearance on the web, and permanently links the name "Satoshi Nakamoto" to the cryptocurrency.
On January 3, 2009, 30,000 lines of code spell out the beginning of Bitcoin.
A copy of bitcoin standing on PC motherboard is seen in this illustration picture Thomson Reuters
Bitcoin runs through an autonomous software program that is 'mined' by people seeking bitcoin in a lottery-based system. Over the course of the next 20 years, a total of 21 million coins will be released.
But Satoshi Nakamoto didn't work entirely alone.
Hal Finney Vimeo
Among Bitcoin's earliest enthusiasts was Hal Finney, a console game developer and an early member of the "cypherpunk movement" who discovered Nakamoto's proposal for Bitcoin through the cryptocurrency mailing list.
In a blog post from 2013, Finney says he was fascinated by the idea of a decentralized online currency. When Nakamoto announced the software's release, Finney offered to mine the first coins — 10 original bitcoins from block 70, which Satoshi sent over as a test.
Of his interactions with Nakamoto, Finney says, "I thought I was dealing with a young man of Japanese ancestry who was very smart and sincere. I've had the good fortune to know many brilliant people over the course of my life, so I recognize the signs."
Finney has flatly denied any claims that he was the inventor of Bitcoin and has always maintained his involvement in the currency was only ever secondary.
In 2014, Finney died of the neuro-degenerative disease ALS. In one of his final posts on a Bitcoin forum, he said Satoshi Nakamoto's true identity still remained a mystery to him. Finney says he was proud of his legacy involving Bitcoin, and that his cache of bitcoins were stored in an offline wallet, left as part of an inheritance to his family.
"Hopefully, they'll be worth something to my heirs," he wrote.
As of today, one bitcoin is worth more than $10,000.
Nearly a year later, Bitcoin is slowly on its way to becoming a viable currency.
Bitcoin (virtual currency) coins placed on Dollar banknotes are seen in this illustration picture Mike Lazlo
In 2010, a handful of merchants started accepting bitcoin in lieu of established currencies.
One of the first tangible items ever purchased with the cryptocurrency was a pizza. Today, the amount of bitcoin used to purchase those pizzas is valued at $100 million.
The cryptocurrency began attracting interest from tech elites, as well. In 2012, Cameron and Tyler Winklevoss purchased $10 million worth of bitcoin, and, in less than a year their investment had more than tripled. It's been estimated the Winklevoss twins own 1% of all available bitcoin.
In 2011, the Silk Road, an online marketplace for illegal drugs, launches. It uses bitcoin as its chief form of currency.
A snapshot of Silk Road's website Screenshot
Bitcoin is inherently traceless, a quality that made it the ideal currency for facilitating drug trade on the burgeoning internet black market. It was the equivalent of digital cash, a self-governing system of commerce that preserved the anonymity of its owner.
With Bitcoin, anyone could take to the Silk Road and purchase cannabis seeds, LSD, and cocaine without revealing their identifies. And the benefit wasn't entirely one-sided, either: in some ways, the drug trafficking site legitimized Bitcoin as a means of commerce, even if it was only being used to facilitate illicit trade.
Two years later, the mysterious figure known as "Satoshi Nakamoto" disappears from the web.
On April 23, 2011, Nakamoto sent Bitcoin Core developer Mike Hearn a brief email.
"I've moved on to other things," he said, referring to the Bitcoin project. The future of Bitcoin, he wrote, was "in good hands."
In his wake, Nakamoto left behind a vast collection of writings, a premise on the workings of Bitcoin, and the most influential cryptocurrency ever created.
Wait, so who is this Japanese-American guy named Satoshi Nakamoto?
Dorian S. Nakamoto, a man who had zero involvement in the creation of Bitcoin. REUTERS/David McNew
Google "Satoshi Nakamoto" and the results will lead you straight to image after image of an elderly Asian man. This is Dorian S. Nakamoto, named "Satoshi Nakamoto" at birth. He is almost 70 years old, lives in Los Angeles with his mother, and, as he has reminded people hundreds of times, is not the creator of Bitcoin.
In 2014, Newsweek reporter Leah Goodman published a feature story pinning the identity of Bitcoin's creator on Nakamoto due to his high profile work in engineering and pointedly private personal life. Following the story's immediate release, Nakamoto was dogged by reporters, who trailed him as he drove to a sushi restaurant. Nakamoto told a journalist from the Associated Press that he had only heard of Bitcoin weeks earlier, when Goodman had contacted him about the Newsweek story.
Two weeks later, he issued a statement to Newsweek, stating he "did not create, invent or otherwise work on Bitcoin."
Dorian Nakamoto's claim was corroborated by the actual Bitcoin creator Satoshi Nakamoto a day later, with Satoshi's username mysteriously surfacing in an online forum to post: "I am not Dorian Nakamoto."
The Craig Wright controversy
Australian entrepreneur Craig Wright Screenshot Via BBC
In 2016, Australian entrepreneur Craig Wright claimed to be the creator of Bitcoin and provided disputed code as proof. Bitcoin developer Gavin Andresen further corroborated Wright's gesture, saying he was "98 percent certain" that Wright was the pseudonymous Satoshi Nakamoto.
But others were quick to disagree, and Wright's claim drew fierce skepticism from the cryptocurrency community online as well as alleged interest from the FBI. Amid the sudden influx of scrutiny, Wright deleted his post and issued a cryptic apology. "I'm sorry," he wrote, "I believed that I could put the years of anonymity and hiding behind me. But, as the events of this week unfolded and I prepared to publish the proof of access to the earliest keys, I broke. I do not have the courage."
Nick Szabo has been repeatedly identified as the creator of Bitcoin, a claim he denies.
The mysterious Nick Szabo Business Insider/Rob Price
In the course of determining the identity of Satoshi Nakamoto, there's one person who has been thumbed again and again: hyper-secretive cryptocurrency expert Nick Szabo, who was not only fundamental to the development of Bitcoin, but also created his own cryptocurrency called "bit gold" in the late '90s.
In 2014, a team of linguistic researchers studied Nakamoto's writings alongside those of thirteen potential bitcoin creators. The results, they said, were indisputable.
"The number of linguistic similarities between Szabo's writing and the Bitcoin whitepaper is uncanny," the researchers reported, "none of the other possible authors were anywhere near as good of a match."
A story in the New York Times pegged Szabo as Bitcoin's creator, as well. Szabo, a staunch libertarian who has spoken publicly about the history of Bitcoin and blockchain technology, has been involved in cryptocurrency since its earliest beginnings.
Szabo firmly denied these claims, both in The New York times story and in a tweet: "Not Satoshi, but thank you."
Here's how the real "Satoshi Nakamoto" could prove his identity:
He could use his PGP key
A PGP key is a unique encryption program associated with a given user's name — similar to an online signature. Nakamoto could attach his to a post or a message indicating his identity.
He could move his bitcoin
Nakamoto has amassed a fortune in bitcoin: He's thought to possess over one million coins, which today would be valued in excess of a billion dollars.
Theoretically, Nakamoto could move those coins to a different address.
Dorian Nakamoto, Nick Szabo, and Craig Wright aren't the only ones who been pinned as the inventor of Bitcoin.
Elon Musk has recently denied claims that he is the creator of Bitcoin. REUTERS/Stephen Lam
There's a laundry list of people who have been pegged with this claim, but so far, they've all been struck down. Just this week, Tesla and SpaceX founder Elon Musk denied being Bitcoin's creator.
The Wikipedia entry on Satoshi Nakamoto names at least 13 potential candidates as being responsible for the creation of Bitcoin.
It's been nearly 10 years since Bitcoin's beginnings, and we're still not any closer to confirming who invented it.
Why would the inventor of the world's most important cryptocurrency choose to remain anonymous?
Bernard von NotHaus, the creator of the Liberty Dollar YouTube
As it turns out, experimenting in new forms of currency is not without its consequences.
In 1998, Hawaiian resident Bernard von NotHaus dabbled in a fledgling form of currency called "Liberty Dollars" to disastrous results: He was charged with violating federal law and sentenced to six months of house arrest, along with a three-year probation.
In 2007, one of the first digital currencies, E-Gold, was shut down amid contentious circumstances by the government on grounds of money laundering.
If the inventor of Bitcoin wants to remain anonymous, it's for good reason: by maintaining anonymity, they've avoided adverse legal consequences, making their anonymity at least partially responsible for the currency's success.
Besides, one of the founding principals of Bitcoin is that it's a decentralized currency, untethered to conspicuous institutions or individuals. In his original proposition on Bitcoin, Nakamoto wrote, "What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party."
Why would someone go to all the trouble of creating a decentralized currency without sticking around to receive any of the credit?
Much of the mystery surrounding Nakamoto involves his motivations. Why would someone go to the trouble of creating a detailed and brilliant decentralized currency, only to later completely disappear from the public view?
A closer look at one of Nakamoto's original postings on the proposal of Bitcoin sheds some light on his possible motivations.
In February 2009, Nakamoto wrote, "The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts."
In Bitcoin forums, it's been speculated that Nakamoto might be "a libertarian and hates the corrupt rich people and politicians." Other Bitcoin enthusiasts suggest the timing of Bitcoin's emergence is a clear indication of its raison d'être: The currency, which was created in the years following the housing bubble burst in 2007, might have been invented as means of disrupting the corrupted banking system.
Here's what we know about Satoshi Nakamoto for sure:
Ethan Miller/Getty Images
They're a genius
In a New Yorker article from 2011, a top internet security researcher describes Bitcoin code as an inscrutable execution that nears perfection: "Only the most paranoid, painstaking coder in the world could avoid making mistakes."
They speak fluent English
Nakamoto has written extensively about Bitcoin, authoring close to 80,000 words on the subject in the course of two years. His work reads like that of a native English speaker.
They might be British
Judging by their spelling, and their use of British colloquialisms (they refer to their apartment as a "flat" and call the subject math "maths"), it's thought they might hail from the UK.
The timing of his posts seem to indicate this fact as well: It's been pointed out that Nakamoto posted during UK daylight hours.
They might be more than one person
The foolproof brilliance of Bitcoin's code have left many wondering if it isn't the work of a team of developers. Bitcoin security researcher Dan Kaminsky says Nakamoto "could be either a team of people or a genius."
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