A growing number of crypto investors now think that Bitcoin (BTC 0.19%) could hit a price of $1 million within the next few years. In addition to Cathie Wood of Ark Invest, who famously predicted a $1 million price in 2022, there's now Jack Dorsey, co-founder and former CEO of Twitter. In a recent interview, Dorsey suggested that Bitcoin is going to "at least a million" by 2030.
What makes this forecast so interesting is that it's not coming from a Wall Street investment firm. Instead, it's coming from the perspective of a technologist with an intimate knowledge of how Bitcoin works, and not just how it trades. So if Jack Dorsey is bullish on Bitcoin, should you be too?
Is Bitcoin an asset or a technology, or both?
There are two classic ways that investors think about Bitcoin. The first approach is to think about Bitcoin as a commodity. From this perspective, Bitcoin is "digital gold" and a store of value, and should be hoarded much like physical gold. The second approach is to think about Bitcoin as a digital currency. From this perspective, Bitcoin functions primarily as a payment mechanism and means of exchange.
Image source: Getty Images.
But there's a third way of thinking about Bitcoin -- as a technology. That's how Dorsey is thinking about Bitcoin. He sees it as a blockchain-based technology that is capable of disrupting the modern financial system. And he's focused first and foremost on Bitcoin's flourishing ecosystem, which includes everyone from Bitcoin miners to companies creating new Bitcoin payment technologies.
According to Dorsey, every single person who touches Bitcoin in a significant way helps to make it better. He should know: Over the past few years, Dorsey has famously collaborated on a number of Bitcoin-related projects. Dorsey's latest project is Ocean, which is a new Bitcoin mining initiative.
How much is the Bitcoin ecosystem worth?
Given the emphasis that Dorsey places on Bitcoin as a technology, perhaps it's only natural to ask: "Just how much is the Bitcoin technological ecosystem worth when it comes to valuing Bitcoin?"
That's a great question, but I'm not sure if anyone has really answered it in a satisfactory way. Cathie Wood of Ark Invest has perhaps come closest, with her focus on the primary use cases of Bitcoin. For example, in Ark Invest's 2023 "Big Ideas" report, she highlighted various roles that Bitcoin can play, including as a remittance asset. So, for example, investors could plausibly attach a greater valuation to Bitcoin if they see its role in the cross-border remittances market increasing over time.
Another approach is to focus on the new products and services that members of this Bitcoin ecosystem are bringing to market. For example, Lightning Labs, already well known for its Lightning Network, is now working on bringing stablecoins and tokenized assets to the Bitcoin blockchain. And Strike continues to bring new Bitcoin payment options to global users. All these products and services are helping to make Bitcoin more valuable by boosting its adoption on a worldwide basis.
Is Bitcoin really going to $1 million?
When it comes to valuing Bitcoin, the focus should be on mainstream Bitcoin adoption. In other words, what are members of the ecosystem doing to make Bitcoin more useful in everyday life? In this case, "utility" means more than just a lot of people buying spot Bitcoin ETFs. It means people using Bitcoin as part of a decentralized financial system that empowers individuals, reduces fees, and lowers barriers to entry.
Jack Dorsey is on to something when he talks about Bitcoin's collaborative ecosystem. He has experience building tech companies and designing innovative technologies and platforms. He understands how important community and collaboration are to the success and mainstream adoption of any new technology.
While I'm still unconvinced that Bitcoin will hit the mythical price of $1 million by 2030, I am convinced that Bitcoin is currently undervalued at its current price of $63,000. That's because too many investors are focused on Bitcoin as a financial asset, and not as a digital technology capable of disrupting the modern financial system. With that in mind, I'm bullish on Bitcoin's long-term outlook.
