Cybersecurity pioneer John McAfee, in a recent interview, reiterated the famous prediction he made on 29 November 2017 on Twitter -- namely that one bitcoin would be worth $1 million by 2020 -- and explained how he arrived at that figure.
The first question was: "Why do you think Bitcoin will go to $1 million by 2020?"
McAfee answered: "There all kinds of ways to do it. The most common way is to take number of users of Bitcoin... because as Bitcoin expands its user base, both people who hold the coin and people who accept the coin for payment... It's sky-rocketing... It's not going to disappear. It can't possibly go to zero. It can only grow as the user base grows. So, it's impossible... Listen, it's Pandora's Box... The box has been opened...
Digital currencies will replace fiat currencies. Why? I have a wallet on my phone which is an entire bank... Lending money, sending wires, I don't have to go to the bank. It takes me 10 seconds to do a wire... Do you think that is going to go to zero and we're going to go back to this incredibly dull and bizarre way of using money with banks?"
The next question was why McAfee was not worried about the effect of regulations on Bitcoin.
McAfee answered: "Congress can make all the laws it wants. Obviously, they can outlaw Bitcoin. You are assuming there is a possibility of enforcing those laws... You cannot stop a distributed system that is worldwide. There is no law that you can make... If you had one person per citizen in the country... You still couldn't do it because the enforcer would have to sleep at some point... When exchanges were centralized, you could shut down an exchange. You can't do it anymore. They have now decentralized the exchanges... How will you enforce these magical laws that Congress is going to make? Jamie Dimon has no power in this world..."
The interviewer then asked what if the government tries to make it difficult for people to spend their bitcoin.
McAfee responded: "How are you going to make it difficult? What are you going to do to make it difficult? ... The banks are not involved. The banks have nothing to do with it... The misconception is that legislation can have teeth... You can't stop Bitcoin... Technologically impossible!"
Next, McAfee was asked if he had come up with the $1 million price target based on a mathematical formula or if he had come up with the figure based on some assumptions about its usage.
He replied: "I looked at it in two way... [First] I looked at the number of users, the user growth... I came up maybe with three and seven million... [Second] I came at it the mining way, which is I believe a lot more valid... The last bitcoin to be mined... It is going to cost four to five billion dollars to mine that last coin and miners are going to do it. The value of that bitcoin has got to be more than the work put in to mine it... So if it cost even one billion dollars, why don't you work backwards from there and find out what the end of 2020 it is going to be? ... $5 million it is probably the thing... So, $1 million is way outside the lower range, so I am very safe... And it is not just Bitcoin... There are 2000 other coins... You cannot stop them. You cannot change them. You cannot control them. Accept them and try to fix your life to get in line with reality... In the 1930s we made it a law that you couldn't drink alcohol. We consumed more alcohol per capita during that period than any period in American history..."
Although quite a few famous Bitcoin bulls have given what seem like quite outlandish figures as their price targets, such as Tim Draper's $250,000 price target by 2022, McAfee's is by far the highest and the period of time -- only two years -- to reach that target is the shortest we have come across this year.