Kris’ note: In today’s Dispatch, we publish the final part of a phone conversation with colleague and investment expert Nick Giambruno from his home in Argentina. Nick is the chief analyst of Casey Research’s flagship advisory, The Casey Report and its premium Crisis Investing advisory.
In this part of the conversation, Nick explains why corporations will have little choice but to add bitcoin to their balance sheets. And he explains why he doesn’t trust altcoins… and how the price of bitcoin could reach $2 million within the next decade.
Before we get to that, a brief introduction to Nick is in order. In his premium investing service, Nick has helped his readers make gains of 170%, 214%, 406%, 996%, and even 2,123%. Of his current open positions, the best-performing are up 326%, 409%, and 1,122%.
He writes about geopolitics, investing in crisis markets, the global cannabis market, international banking, second passports, surviving a financial collapse, and the rise of bitcoin.
He has lived in Europe and worked in the Middle East, including in Beirut and Dubai, where he covered regional banks and other companies for an investment house. Nick is a frequent speaker at investment conferences around the world.
Now read on for the final part of this three-part interview series…
Dispatch: It feels as though we’ve covered a lot when it comes to bitcoin. But there are a couple of final points to cover: one of them is your dislike for any crypto that isn’t bitcoin…
Nick Giambruno, chief analyst, Crisis Investing: I knew that was coming [laughs].
Dispatch: [Laughs] Yes, we’ll get to that in a moment. But before that, it’s well-known that there will only ever be 21 million bitcoins issued. So can you briefly explain if there could ever be a bitcoin 2.0… or an improved version of bitcoin? Is that possible?
Nick Giambruno: Well, I’ve seen enough to know that nothing is impossible.
But a similar possibility applies to gold, too. Mankind could start mining asteroids for gold. We could figure out how to utilize nanotechnology to extract all the gold dissolved in the oceans. That would make gold as common as the aluminum foil in your kitchen.
And without getting too deep into the technical side of it, the fact is we’ve been hearing claims about a “better bitcoin” for many years, and nothing has come close. In many cases, it has been scammers trying to separate fools from their money. So I’m not inclined to believe there’s a “better bitcoin” until I see it.
The bottom line is simple. At this point, it’s improbable that any other cryptocurrency will exceed bitcoin’s network effects, liquidity, immutability [Ed note: something that’s unchangeable], decentralization, resistance to inflation, or its economic incentives.
Dispatch: While we’re on the subject of other cryptocurrencies, let’s tackle the other subject I mentioned. Why is it that you don’t like other cryptocurrencies, such as Ethereum, Litecoin, Dogecoin, or the thousands of others out there?
Nick Giambruno: It’s important to clarify that none of the other 11,000 or so cryptocurrencies – altcoins – are genuinely scarce in the way bitcoin is. They all have key players, insiders, and development teams that can act like central banks and inflate the supply if they choose to.
It’s trivial for them to change the rules whenever they want.
In other words, altcoins have artificial scarcity.
It’s also important to clarify altcoins are not equity or an ownership interest whatsoever. It can be confusing when promoters use terms associated with equity like “initial coin offering” (ICO), which sounds a lot like an equity “initial public offering” (IPO).
Altcoins are simply tokens. A centralized entity issues them – and can create them in unlimited numbers – for use only on their platform.
Dispatch: So I guess if I understand you correctly, it’s kind of like a currency that you can only use in one place, right?
Nick Giambruno: Exactly. Let me give you a “real life” example. I assume you’ve been to game arcades or theme parks?
Dispatch: Yes, of course. I’ve played pinball, video games, done the shooting galleries. That sort of thing.
Nick Giambruno: Well, the tokens that you get to pay for the games are only usable at those locations, or others operated by the same company. For example, Chuck E. Cheese arcade tokens can only be used at Chuck E. Cheese arcades. You can’t use them at Six Flags.
Or think about airline frequent flyer miles. You can only use them with specific airlines and their partners. You can’t use them to ride the local bus.
So altcoins are the digital equivalent to these kinds of things. You can only use them on their respective platforms, which have questionable use cases at best.
But let’s say a crypto project does build a platform that creates economic value that people want to use. It can still create as many tokens as it likes.
The fact is that many people who buy altcoins are confused about what they’re buying. They think they own some sort of scarce asset or ownership stake. Going back to our example, that would be similar to mistaking Chuck E. Cheese arcade tokens for shares in Chuck E. Cheese the company!
Dispatch: And it’s not that way for bitcoin, right?
Nick Giambruno: Right. Bitcoin couldn’t be more different from altcoins.
All aspects of bitcoin are genuinely decentralized and robust. Nobody controls it, which is what gives its monetary policies credibility and what gives it genuine – not artificial – scarcity.
That’s why I find it wholly inappropriate to lump bitcoin in with the broader “crypto” space. They are two completely different things. It would be like lumping gold coins and Chuck E. Cheese arcade tokens into the same category because they’re both coins.
It just doesn’t make sense.
Dispatch: Okay. Got it. As I mentioned earlier, we’ve covered a lot of ground. But I can’t let you go until I’ve asked you the big question – bitcoin hit $64,000 this year. So will it go higher… and by how much?
Nick Giambruno: This is the single-most asked question I get. But I’m happy to answer it.
Think of it this way. Bitcoin has gone from having no market value when it was launched in 2009… to being used in its first commercial exchange to buy two pizzas in 2010… through to today where it generates over $50 billion in daily transaction volume from every country in the world.
Over 100,000 merchants accept bitcoin as payment. That includes Overstock.com, Expedia, Microsoft, and Starbucks. Tesla began accepting it, before putting that on hold due to unfounded and hysterical “climate change” issues around bitcoin mining. But that won’t last long. It was just a PR move.
The fact is that the number of businesses accepting bitcoin is rapidly growing. This is what the process of a new asset becoming money looks like, and it’s just getting started.
People worldwide are spontaneously adopting bitcoin as money because of its superior monetary properties, primarily its hardness. [Ed note: Nick discussed this in part two of this interview series here.] I think it’s clear we are still in the early days of bitcoin.
Dispatch: And the price? Our audience wants to know your price target for bitcoin.
Nick Giambruno: I’m getting there [laughs].
If bitcoin is going to compete with, and eventually overtake, government fiat currencies – which I believe it has an excellent chance of doing – its market cap must grow substantially.
If it were a government currency, bitcoin would be the 14th-largest currency by the market cap of its monetary base, ahead of the Russian ruble and just behind the Swiss franc. In other words, bitcoin is already bigger than most national currencies… and it’s going to continue to grow.
Think of bitcoin’s superior monetary qualities – namely its resistance to inflation by any third party – like a black hole sucking in capital from weaker currencies. Bitcoin is eating the demand for monetary goods from inferior forms of money, such as government fiat currencies.
I think this process will not only continue but accelerate exponentially in the years ahead.
Some proponents believe the endgame for bitcoin is to eventually emerge as the world’s dominant form of money – a process called “hyperbitcoinization,” or what I like to call the “Bitcoin Supremacy.”
It’s a global, voluntary transition from inferior money to a superior one.
If the Bitcoin Supremacy even comes close to happening – the case for which gets stronger every day – it would be the biggest transfer of wealth in human history.
To give you a comparison, if bitcoin’s market cap rises to that of gold’s – 10x from the current price – the price of a single bitcoin would be worth well over $400,000.
If that seems outrageous, consider how outrageous today’s price of around $44,000 would have seemed to someone just four years ago when the price was about $4,300. I think that is the kind of upside – 10x returns – that we can reasonably expect in the next four years.
Looking farther ahead – say to the end of this decade – if bitcoin absorbs all the capital held in all the world’s fiat currencies, a single bitcoin would be worth almost $2 million in purchasing power of today’s dollar.
Now, I’m not saying that will definitely happen. But the chance of it occurring is also not zero… and is in fact growing every day. That’s why I believe everybody should own at least a little bitcoin.
Dispatch: Well Nick, thank you. It has been terrific talking to you.
Kris’ note: That’s the final part of our three-part series. Nick believes every investor should own bitcoin in their investment portfolio. But Nick also believes investors should own another kind of investment that’s closely bound to bitcoin. It’s an investment that has helped him deliver gains of 165%, 988%, and in one position that he closed in less than 70 days, a 2,123% gain.
For details on how to access investments like these (which you can buy in a regular brokerage account), go right here.