Coinbase CTO bets Bitcoin to $1M in 90 days, but I’m not sure even he believes it
- Former Coinbase CTO Balaji Srinivasan bet an anonymous Twitter account $1 million that Bitcoin would trade at $1 million or greater in 90 days
- Srinivasan is predicting imminent hyperinflation and a collapse of the US dollar
- Bet is on wildly unfavourable terms, with the other side of the bet, James Medlock, able to lock in massive profit risk-free by simply buying a call option with a $1 million strike for insurance
- Bet comes nearly a year to the day after Do Kwon’s infamous bet with another anonymous Twitter account over LUNA price
I’m no chemist, but one of the most potent mixtures known to humankind has to be that of ego and money.
In what may go down in the annals of Internet history, former Coinbase chief technology officer and prominent angel investor Balaji Srinivasan bet $1 million that the price of Bitcoin would be $1 million or greater in 90 days’ time.
The bet was confirmed over Twitter, with the other side taken by anonymous meme enthusiast James Medlock. “(My wife) is the only person who knows I am James Medlock”, he posted in another tweet. “And I immediately told her about the bet”.
What is the bet?
The bet started when Medlock posted the below tweet, an innocuous tweet outlining his belief that the US would not experience hyperinflation, apparently in response to some crypto enthusiasts declaring that it was inevitable.
I’ll bet anyone $1 million dollars that the US does not enter hyperinflation
— James Medlock (@jdcmedlock) March 16, 2023
It should have ended there. But in came Srinivasan declaring he “will take that bet”. Not only that, but on wildly unfavourable terms. The setup is this: Medlock sends 1 BTC and Srinivasan sends $1 million to escrow today, with the latter denominated in the stablecoin USDC.
The logic is that, were hyperinflation to occur and the US dollar to collapse, Bitcoin would reap the gains and explode upwards. Hence, the bet turned from hyperinflation into the Bitcoin price.
If Bitcoin trades at $1 million or greater on June 17th, the kitty is Medlock’s. If it doesn’t Srinivasan takes the bounty.
I will take that bet.
You buy 1 BTC.
I will send $1M USD.
This is ~40:1 odds as 1 BTC is worth ~$26k.
The term is 90 days.
All we need is a mutually agreed custodian who will still be there to settle this in the event of digital dollar devaluation.
If someone knows how to do this… https://t.co/tcuBNd679T pic.twitter.com/6Aav9KeJpe
— Balaji (@balajis) March 17, 2023
The bet makes no sense
Obviously, this bet makes no sense for a variety of reasons. Firstly, the original tweet was a joke, as $1 million in the event of hyperinflation would become worthless.
But the crux of it is the terms. Looking at market odds, this is a longshot of almost impossible odds. So much so, in fact, that a massive chunk of the bet could be guaranteed to Medlock in a risk-free manner in about 30 seconds, should he so please.
All he would have to do is go to the market and buy a call option on Bitcoin with a strike price of $1 million dollars on the same expiry date of the bet (June 17th). This would cost pennies in comparison, and a massive chunk of the $1 million could be pocketed.
Of course, everybody knows this, and the bet is nothing more than a grab at publicity or some sort of self-marketing stunt by Srinivasan. He reportedly already holds a massive stash of Bitcoin in any case, with the bet not being overly material to him. Call me a cynic, but there is also the fact that Srinivasan launched a podcast a month ago.
The funny part is that Medlock didn’t have 1 BTC, worth $26,000 at the time, to hand. Poker player Isaac Haxton stepped in to cover the 1 BTC (without taking any upside). Medlock has also said he will donate a total of 70% of the winnings after taxes to charity – yet he will still pocket a cool $300,000 from a tweet which was a literal joke.
What would have to happen for the bet to win?
Were this bet to win, it is hard to imagine what the world would look like. A 3600% increase to $1 million per Bitcoin in 90 days would place the market cap of Bitcoin at close to $20 trillion. That is a mind-boggling number – for one thing, it is more than all mortgage debt in the US.
For this to happen in 90 days would likely mean a total collapse of the economy and society as we know it. The banking sector evaporating into thin air and the US dollar collapsing would throw the world into chaos, with an almost unimaginable level of crime, unrest and anarchy.
People would lose their life savings and society would collapse near-instantly. And yet, there are Bitcoiners cheering on Srinivasan in this bet. Go figure.
In an amusing twist of fate, the bet comes nearly a year to the day that LUNA founder Do Kwon bet with another anonymous Twitter account that LUNA would be a lower price in one year than it was then. This week marked the one-year point, and I think any cryptocurrency investor knows what has happened to LUNA.
Some people have too much money and just don’t know what to do with it, I suppose.