Bitcoin and AI

What Happens If BTC Becomes AI's Currency of Choice?

An AI machine doing some leisurely reading after a long day of transacting in bitcoin (BTC) | Source: Andrea De Santis

The artificial intelligence (AI) program Chat GPT has learned how to send Bitcoin payments.

Machines can now pay other machines.

What are the implications of this?

According to Arthur Hayes, co-founder and former CEO of crypto exchange BitMEX, the implications are quite notable — especially for the price of BTC.

In the latest edition of his Substack newsletter entitled “Massa”, Hayes broke down in great detail why AI would prefer bitcoin (BTC) as its currency of choice and what that would mean for the price of BTC.

Why would AI choose Bitcoin (BTC)?

Some quick points from the article on why Hayes think BTC would be AI’s currency of choice:

• Because Bitcoin is a permissionless network; AI won’t have to seek permission from a third party like a bank or PayPal to transact on the network

• Because BTC is a perfectly scarce asset

• Because the rules of Bitcoin are “enshrined in code” and are borderline impossible to change (unlike all other crypto networks)

Source

The Math on Global GDP Settled in Bitcoin (BTC)

Hayes used the number for the 2022 global GDP — $100 trillion — as his jumping off point for calculating what percentage of the global GDP the market expects to be powered by AI by 2025/26.

On the low end, he predicted 5% would be powered by AI. On the high end, he predicted 50% would be powered by it.

Let’s start with his low end prediction.

5% of 100 trillion if $5 trillion.

The current market cap of bitcoin is just under $0.6 trillion.

(I describe what market cap is in this piece: “What is unit bias?” (Finder))

This means that the price of bitcoin could more than 8x by 2025/26 if AI settles 5% of global GDP in BTC. This would bring the price of bitcoin to $240k by 2025/26.

If AI settles up to 50% of global GDP in bitcoin, you’d have to 10x the $240k number, bringing the price of BTC to approximately $2.4 million per coin within three years.

Will BTC Be Worth between $240k and $2.4 million by 2026?

I don’t think so (though, you never know).

And I didn’t share the numbers above as a means to entice you to buy BTC, especially because I’m not a financial advisor and nothing in this newsletter is financial advice.

I shared them mostly as a means to give you yet another example of what broader Bitcoin adoption might look like and what that might mean for the price of BTC.

We don’t yet know for sure if AI will choose BTC as its preferred currency or what amount of global GDP will be settled in BTC.

But keep in mind that the numbers I just shared are only related to AI transacting in BTC, and they don’t include broader adoption of BTC for transactions or for savings purposes amongst humans.

Speaking of broader adoption of BTC amongst humans…

new renaissance capital is available via Apple Podcasts

My podcast in which I document Bitcoin adoption around the globe is now available via Apple Podcasts.

Here’s a link if you haven’t already checked it out.

If you have, thanks for listening! Please subscribe and rate the episodes! It helps more people to find the podcast via the Apple algorithm.

The Paid Version of This Newsletter

As some of you may have noticed this week, I’ve started putting up a paywall for some of the content in the newsletter.

I’ve done so because:

1. It takes a lot of time and effort to write this newsletter, and it isn’t free to live in New York City.

2. I’ve worked as a full-time crypto writer and been published frequently in NASDAQ, Yahoo Finance and other notable outlets. I’ve decided to have the value of at least some of my work accrue to me as opposed to the institutions for which I write.

3. I’d like to hire guest writers, and I don’t plan to ask them to write for free.

4. I believe that the information I offer in the paid section of the newsletter — if applied thoughtfully — will provide returns far greater than $5/mo.

5. I’ve studied Bitcoin and some dimensions of the broader crypto market for well over 10,000 hours and believe that the information I’m sharing is valuable.

6. When people invest in a class or subscription, they tend to more readily apply what they learn. I learned this from my twelve years as a teacher/lecturer.

So, if you’d like more information about how to earn BTC and how to take a value investing approach to investing (not trading) in BTC and Bitcoin- and crypto-related public companies (e.g., Coinbase, Riot Platforms, Inc.), then please subscribe.

As a subscriber, you’ll also be able to leave questions and/or comments to ask for clarification or for me to cover certain topics.

I’m looking into ways to offer free subscriptions to those who share the newsletter and help me grow its subscriber base. I’ll keep you updated on that.

Speaking of sharing the newsletter, please feel free to do so :) I’d greatly appreciate it.

Lastly, please note that I will not be giving financial advice in the paid sections/editions of the newsletter. I’ll still simply be sharing ideas and information about investing that you can then choose to apply on your own and in a way that you best see fit.

I’ll still be putting out free editions/sections of the newsletter as well as the podcast. Plus, I’ll still be sharing information on Twitter, Instagram, Threads and YouTube.

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