What Did The Legendary Software Kingpin Say About The Cryptocurrency?
John McAfee has not lead the McAfee software company for well over 20 years (exiting shortly after its IPO in the early 90’s).
This has not precluded him – however – from constantly being used as a reference in many different technology-related stories, the latest of which being the insatiable rise of “Bitcoin”.
A STRONG advocate of privatization of data, and with many of his close friends actually labelling him as paranoid, it’s no surprise that McAfee has emerged as one of the strongest proponents of the new technology.
When considering the likes of a Bitcoin future from the angle of any potential new investments, you need to take information from both sides of the fence. This tutorial is going to do part of that job for you – examining John McAfee’s claims for the new currency.
This tutorial is not financial advice, nor is it aimed at endorsing the “crypto” market. We believe the majority of “crypto” is headed to the trash can anyway, so you should be very weary of what people say about it. If you’re looking at potentially buying one of the lesser-known coins, or are deciding when to sell your Bitcoin, this tutorial may give you some further insight…
The most famous remark from McAfee has come from his Twitter feed:
When I predicted Bitcoin at $500,000 by the end of 2020, it used a model that predicted $5,000 at the end of 2017. BTC has accelerated much faster than my model assumptions. I now predict Bitcoin at $1 million by the end of 2020. I will still eat my dick if wrong.
Obviously, the media jumped all over it.
The reality is that this follows a long line of other “bullish” quotes about the future of “crypto” currency, with another widely shared earlier in 2017:
Bitcoin’s low of $1,800+ yesterday simply could not be maintained. In the long term Bitcoin moves above $500,000 within three years. If not, I will eat my dick on national television.
All of this was of course in the middle of his own “coin” release (“McAfee Coin”).
Whilst it’s easy to dismiss him as a raving technophile, the reality is that McAfee’s quotes have been diometrically different to the consensus of the likes of “Wallstreet”.
“Bitcoin” – as with all other crypto “coins” – holds no value of their own. Thus, they are NOT a currency. They’re mainly a means of recording transactions between two or more people.
The fact remains that in order to create a “profit” out of these transactions, you still need a central “exchange” and also the ability to back up the Bitcoin with fiat currency. Most of the “technology” people who have pushed Bitcoin heavily have little to no experience of this, leading to the general theory that almost nobody is making money with the system, other than by “selling” the coins to others.
Thus, when considering McAfee’s stance, we tend to take things like that with a pinch of salt. Not only do his remarks ignore the core ideal of having to make the new “asset” pay, but they also are highly speculative in that they do not mention any sort of metrics about adoption etc. Consequently, looking at what he said – as well as others in a similar space – has to be very carefully considered.
To contrasts his ideas, you must also appreciate some of the quotes which have come from the “money” side of the fence…
Jamie Dimon (CEO of JPMorgan) said (of Bitcoin specifically):
“I could care less about bitcoin. I don’t know why I said anything about it. The blockchain is a technology which is a good technology. We actually use it. It will be useful in a lot of different things. God bless the blockchain. Cryptocurrencies, digital currencies, I think are also fine. JPMorgan moves $6 trillion around the world every day, and we don’t do it in cash, it’s done digitally. If it can be done digitally with the blockchain, so be it. But it will still be a dollar cryptocurrency. What I have an issue with is a non-fiat cryptocurrency. So crypto sterling, euro, yen, they are all fine. I don’t personally understand the value of something that has no actual value. You all can do whatever you want and I don’t care.
“I could care less what bitcoin trades for, how it trades, why it trades, who trades it. If you’re stupid enough to buy it, you’ll pay the price for it one day. I’ve also told people that it can trade at $100,000 before it trades to zero. Tulip bulbs traded for $75,000 or something like that.
“The only value of bitcoin is what the other guy’ll pay for it. Honestly I think there’s a good chance a lot of the buyers out there are out there jazzing it up every day so that maybe you’ll buy it too, and take them out.
“I quite mean that by the way. People are very good at manipulating the press these days and getting news out. Every day, you have CNBC, nonstop bitcoin — Who cares about bitcoin? The world economy’s so big, JPMorgan alone, $6 trillion, we move all this money, and bitcoin in total, all these currencies, $50 billion dollars, maybe a billion dollars trades a day.
“The other thing I’ve always [said] about bitcoin, governments — and this is not a technological statement — governments are going to crush it one day. Governments like to know where the money is, who has it and what you’re doing with it, in case you haven’t noticed. Right?
“And governments like to control their currency, like to control their own economy. So China’s already put curbs on it. Japan, they say Japan accepted bitcoin. No they didn’t. What I gather Japan did was they call it J-coin. It’s a yen cryptocurrency. It’s not a non-fiat [digital currency].
“People have said legitimately ok, it’s close to gold. Not really. Gold is limited, it’s been around for along time. [People also say bitcoin is] close to a fiat currency. Not really. A fiat currency is when a government says this is your legal tender, you have to give it and accept it.
“And a central bank — of course they can misuse it. The central bank [can also] inflate it. So there is a use case for bitcoin. If you live in Venezuela, North Korea, if you’re a criminal, great product. I mean that. It’s better than cash or deposits in that country. Cuba.
“But this is the last time I’m ever going to answer questions about bitcoin because I really don’t care.
“When I made that ‘stupid statement’ [calling bitcoin a] fraud, my daughter sent me an email saying, ‘Dad, I own two bitcoins.’ My formerly smart daughter.”
The problem with bright ideas is that they tend to forget the economics behind them.
As such, you need to appreciate that in order to make up your own mind about “Bitcoin” and the other “crypto” currencies, you must focus on whether or not their economics stack up. If they do, then you may wish to invest.