The last year has been particularly annoying for nocoiners—those of us who don’t hold crypto and view bitcoin as a Ponzi, like a Ponzi, or something more complex.
We have had to endure Tether minting tethers with abandon ($17 billion worth in 2020 alone) and bitcoiners obnoxiously cheering bitcoin’s new all-time highs, the latest being $33,000. Considering bitcoin began 2020 at around $7,500, that is a long way up. (Things went full crazy in March.) But we believe 2021 will be a year of comedy gold when this giant hill of dung all comes tumbling down.
I’ve spoken with several notable bitcoin skeptics, gathered their thoughts, and compiled a list of new year predictions. They shared their prophecies on Tether (a stablecoin issuer that has so far minted $21 billion in dubiously backed assets to pump the crypto markets), new regulations and the future of bitcoin.
Here is what they had to say:
Nicholas Weaver: T’will be the year the music stops
“This is the year the music stops,” Nicholas Weaver, a researcher at the International Computer Science Institute in Berkeley, told me.
Weaver has been following bitcoin since 2011. His work is largely funded by the National Science Foundation. He believes the bitcoin ecosystem is running low on cash. (This is the fate of all Ponzi schemes. Ultimately, they run out of new investors and when that happens, the scheme collapses.) In the case of bitcoin, he believes real dollars in the system are rapidly being replaced by fake ones in the form of tethers.
“Tether has been squeezing every dollar out of the system, and there aren’t enough suckers,” he said, meaning there aren’t enough folks waiting in line to buy bitcoin at its ever increasing prices. “When the dollar stock goes to zero, the system will collapse completely because you get a mining death spiral.”
Miners reap 900 newly minted bitcoin per day in the form of block rewards. If they can’t sell those for enough fiat money to pay their monstrous power bills, it makes no sense for them to stay in business. And since their job is to secure the bitcoin network, bitcoin will become vulnerable to repeated attacks.
Also, governments are finally waking up, said Weaver, alluding to new global efforts to clamp down on money laundering, capital outflows, and the financing of terrorism via cryptocurrencies.
He foresees Tether getting the Liberty Reserve treatment any day now. He also thinks China will decide “screw it, bitcoin is evading capital controls as a primary purpose, let’s cut off the subsidized electricity.”
Without cheap electricity, bitcoin miners—most of whom are in China—may find it difficult to stay afloat. Already bitcoin miners in Inner Mongolia no longer receive electricity at subsidized rates.
Jorge Stolfi: I can’t make price predictions
A computer science professor in Brazil, Jorge Stolfi wants to avoid making predictions on bitcoin’s price. He’s been following bitcoin since 2013—and has seen it through two prior bubbles—so he knows too well that anything can happen.
“I really don’t know how far the insanity can go. The crypto market is 100% irrational, sustained entirely by ignorance and misinformation,” he said. “How can anyone make predictions about that?”
Stolfi is a denizen of r/Buttcoin, a subreddit that makes fun of bitcoin, where he painstakingly explains the finer points of crypto nonsense to the unenlightened. In 2016, he submitted a letter to the U.S. Securities and Exchange Commission warning against the risks of a bitcoin exchange-traded fund and comparing bitcoin to a Ponzi scheme. (The SEC has shot down every bitcoin ETF proposal to date on the basis that bitcoin’s price is too easy to manipulate.)
“And since price determines everything else in the crypto space, I can’t make predictions on pretty much everything else,” Stolfi continued. “For example, If the price were to crash below $10,000, I bet that we would have a lot of comedy gold coming from MicroStrategy.”
Over the last several months, the Virginia-based enterprise software company has funneled $1.2 billion of its funds into bitcoin. As a result, Michael Saylor, the company’s CEO, now spends most of his time on Twitter shilling bitcoin. In September, Saylor compared bitcoin to “a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy.”
Stolfi also thinks that we will probably forget about several coins that were big in the past, like Bitcoin SV (BSV) and IOTA, maybe even bitcoin cash (BCH). “And we will also forget about blockchain technology.”
Frances Coppola: Crypto exchanges will become like licensed banks
Over the last week, Frances Coppola has been battling an army of bitcoin trolls and sock puppets on Twitter after suggesting that bitcoin is not scarce in any meaningful sense.
Scarcity is a key part of the myth bitcoiners perpetuate to make people think bitcoin is valuable in the same way gold is and to create a sense of buying urgency—quick, grab some before it’s all gone!—so naturally, bitcoiners responded by dog piling on her. She isn’t happy about it.
“I hope bitcoin crashes and burns because I am so bloody furious, but I think it will be a while yet before it does—maybe about June,” she said.
Coppola is a UK-based freelance writer, who spent 17 years in the banking industry. She wrote the book, “The Case For People’s Quantitative Easing,” and has 58,000 Twitter followers.
The cause of bitcoin’s upcoming crash, she believes, will be an epic battle between the Wild West of crypto and regulators, a topic she covered in a recent Coindesk article.
If the regulators win, crypto exchanges will become like licensed banks and have to comply with things like the Dodd-Frank Act, a sweeping law that reined in mortgage practices and derivatives trading after the 2008 financial crash, she said. On the other hand, if the regulators lose, she believes their next move will be to protect retail investors.
“We’d see drastic restrictions on what interactions banks can have with crypto, perhaps a total ban on retail deposit-takers having crypto exchanges and stablecoins as clients,” she said.
“We might also see something akin to a Glass-Steagall Act for crypto exchanges and stablecoins, so that retail deposits are fully segregated by law from trading activity.” By that, she means exchanges won’t be able to lend retail deposits to margin traders or use them to fund speculative positions in crypto derivatives.
David Gerard: Bitcoiners will get their big boy wish
After years of begging for bitcoin to be taken seriously as a form of money, bitcoiners will be getting exactly what they asked for, said David Gerard, a bitcoin skeptic and author of “Libra Shrugged,” a book on Facebook’s attempt to take over the money.
This year will see more regulation of crypto, as coiners discover to their dismay just how incredibly regulated real-world finance is, he said. “Just wait until someone sits them down and explains regulatory real-time compliance feeds.”
What does Gerard think about Tether? “I could predict the guillotine will finally fall on Tether, but I predicted that for December 2017, and these guys are just amazing in their ability to dodge the blade just one more day,” he said.
Since 2018, the New York Attorney General has been investigating Tether and its sister company, crypto exchange Bitfinex, for fraud. Over the summer, the New York Supreme Court ruled that the companies need to hand over their financial records to show once and for all just how much money really is underlying the tethers they keep printing. The NYAG said Bitfinex/Tether have agreed to do so by Jan. 15.
Gerard also foresees that there will continue to be no use cases for crypto that absolutely anything else does better. “Everything the Buttcoin Foundation was talking about in 2011 is still dumb and broken,” he said.
Trolly McTrollface: Crypto will go to Mars
Elon Musk says he is “highly confident” that his company SpaceX will be sending humans to Mars in six years. Naturally, Musk wants to set up a self-sustaining city on the red planet. And, come to think of it, the city will need its own crypto, something like Dogecoin or Marscoin. Otherwise, how else will its citizens pay for things?
Pseudonymous crypto blogger Trolly McTrollface has this prophecy for 2021: “Elon Musk creates its own cryptocurrency, and adds it to the $TSLA balance sheet. It ends the year in the top 10 crypto list by market cap.”
Nouriel Roubini: Bitcoin’s bubble will explode
Nouriel Roubini, an economics professor at New York University, doesn’t mince words when it comes to crypto predictions. He simply told me: “The Bitcoin bubble will burst in 2021. Triggers will be reg/law enforcement action.”
There is good reason to take him seriously. Roubini famously warned of the 2008 financial crisis, a prophecy that earned him the moniker “Dr. Doom.” He is also known for his parties, which leads a few of us nocoiners to believe that bitcoiners’ are fundamentally driven by bitterness over the fact that we have better soirées.
David Golumbia: The insanity will continue—unless it stops
If the past is any prediction of the future, bitcoin and other crypto promoters will continue to deceive the public with outright lies about “investing” in tokens until the big tokens collapse. That’s the view held by David Golumbia, known for writing about the cult of bitcoin. He is the author of “The Politics of Bitcoin: Software as Right-Wing Extremism,” and teaches at Virginia Commonwealth University.
“I tend to agree with other critics that regulators and law enforcement are going to squeeze the space, especially Tether, at some point,” he said. “And that when this happens the whole thing will deflate. But as anyone with experience in investing knows, predicting and identifying bubbles is a fool’s game.”
What Golumbia finds most interesting is that the rising price of bitcoin and other tokens sustains the lies. “I have to imagine that when the tokens collapse, the motivation to keep lying will go away as well,” he said.
Examples of those lies include: bitcoin offers an alternative finance system to the real one, bitcoin’s price movement is due to technology, the regular financial system rips people off and bitcoin doesn’t, and so on.
He continued: “Though who knows—the whole story of bitcoin and blockchain includes the worldwide embrace of conspiratorial thinking that parallels QAnon, antivax, COVID-19 denialism, climate change denialism, flat earth ‘theory,’ etc.
“None of these seem to collapse no matter what the facts do. But then again, the promoters of these theories often profit only indirectly from them, whereas cryptocurrency promoters usually have a direct vested stake in ‘number go up.’ So maybe there will be a positive development for a more realistic relationship to the world if/when prices collapse.”
My prediction: Only fools will be left hodling
As for my own predictions, I think bitcoin is on the brink of a stupendous crash. Whales and the Tether/Bitfinex triad are working over time to push the price up higher and higher. As more fake dollars flood the system, real dollars are being siphoned out by the big players.
At some point, as Weaver stated, there won’t be enough suckers left in the wings waiting to buy bitcoin—and when that happens, bitcoin holders will learn the hard way that price charts and market caps are meaningless.
When the price crashes, dropping back to early 2020 levels—or possibly even lower, the people who will get most hurt will be the retail investors who have been duped into believing they can buy bitcoin and get rich. And that, in turn, will provide justification for tighter regulations that make it difficult for exchanges to list any crypto at all.
I also believe at some point this year, Tether’s operators will be indicted, although it is hard to say when. As Gerard says, we all thought this nonsense was going to come to a grinding halt in December 2017, but here we are three years later.
The fact that Bitcoin is getting pushed to ATHs, should be a signal that the end is near for Tether, and the crooks are doing their final looting.
If you own any bitcoin, you would be best to sell what you can now, or at the very least, sell enough to get back your initial investment. Remember, two thirds of bitcoin investors in the 2017 bubble didn’t get around to getting any of the money back that they had put in—don’t be one of those guys.
Update Jan. 2: An earlier version of this story stated that bitcoin started 2020 at around $3,000. It started at $7,500.
Update Jan. 4: Edited to clarify that a state supreme court ruled that iFinex should turn over records, not the Supreme Court.
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Amy Castor 