The price of digital currency stockpiled by companies to pay off potential cyberthreats could reach $1 million one day, CNBC’s Jim Cramer said Wednesday.
Cramer was responding to a recent comment by Business Insider CEO Henry Blodget, who said bitcoin could go to $1 million.
“I think it could because the European banks are frantically trying to buy them so they can pay off ransomware. It’s a short-term way to be able to deal with cybersecurity. It is the way to pay off the bad guys,” Cramer said on “Squawk on the Street.”
“When you get hit and you’re not sure how to do bitcoin, these cyberattackers have customer service desks,” Cramer said.
What Blodget Really Said
Blodget also mentioned the downside: “Bitcoin could go to $1 million (or fall to $0),” said Blodget maintains the view that “ultimately, Bitcoin has no intrinsic value.”
New Target $1,000,000
On the CNBC show “Squawk on the Street,” Cramer stated that the demand toward Bitcoin is rapidly increasing and because of Bitcoin’s decentralized nature, its price could potentially enter the $1 mln region, which would bring the market cap of Bitcoin to tens of trillions of dollars.
However, Cramer’s reasoning behind his Bitcoin price prediction was fundamentally flawed as he failed to grasp the core purpose of Bitcoin and why investors are starting to purchase Bitcoin.
“I think it could because the European banks are frantically trying to buy them so they can pay off ransomware. It’s a short-term way to be able to deal with cybersecurity. It is the way to pay off the bad guys.”
Such claim is evidently non-factual because the European Bitcoin exchange market only accounts for nine percent of the global Bitcoin exchange market and it is behind the US, Japan, China and South Korea in trading volumes.
More importantly, Cramer’s statement fails to consider the fact that Bitcoin is being utilized as a currency and safe haven asset more than it is being used as a lifeline to feed ransomware developers.
In the case of WannaCry ransomware, the biggest ransomware attack in history, the distributors earned less than $100,000. That is only 0.0012 percent of the European Bitcoin exchange market. Thus, to say that Bitcoin price is rising because of 0.0012 percent of traders from the fifth largest Bitcoin exchange market is not an accurate depiction of the surging Bitcoin price.
Regardless, Cramer believes that Bitcoin price will reach $1 mln one day due to its rapidly increasing trading volumes and demand from investors."
Frantically “Trying” to Buy Bitcoins?!
The idea that banks need to “try” to buy Bitcoins is absurd.
Do. Or do not. There is no try.
Customer Service Desks
Cyberattackers have “customer service desks”? really? And they can be trusted? And banks don’t have backups? So banks need to “try” to stockpile Bitcoins as a precaution? And that will push the price to $1,000,000?
At least Henry Blodget discussed the downside without absurd hype.
Action to Take
If you think Bitcoin has any chance of hitting $1,000,000 then buy one for $2,725 or so and relax. Bitcoin is a life-long insurance policy.
Unlike term insurance, Bitcoin never expires. And unlike real estate, it’s easily divisible.
So buy one, put it in your will, and pass it to your kids. But make them promise to hold on to it. After all, a single Bitcoin may very well be worth $1 billion someday!
Why not? Why not $10 billion?
Even at $1 million, the world would be flooded with tens-of-thousands or hundreds-of-thousands of dollar “billionaires”.
Back in the real world, please think of what it would take for Bitcoin to hit $1,000,000. The answer is hyperinflation. The US dollar would essentially go to zero vs everything.
So when Cramer or anyone else discusses the possibility of $1,000,000 Bitcoins, they are really discussing the possibility of hyperinflation in US dollars.
Act Now Before It’s Too Late
I think it’s too late.
In fact I know it’s too late.
How do I know?
The following Email I received tonight should explain it nicely.
When you see stuff like this, not only is it too late, it’s way too late.
As a practical matter, and without all the hype, I will stick with gold even as I wish I had taken out some Bitcoin insurance at $1, $10, $100, or even $1,000.
Supposedly, it’s still not too late.
Mike “Mish” Shedlock