Have you been following an extremely important debate in the cryptocurrency space? This discussion revolves around whether artificial intelligence will destroy Bitcoin or unexpectedly become its strongest supporter. Four key voices have delved into this topic.
A Thought Experiment That Shook Capital Markets
Billionaire investor Chamath Palihapitiya released a noteworthy thought experiment this week. His view is that the rapid development of artificial intelligence makes it impossible for any company to reasonably predict cash flows five years out. When this happens, the terminal value, which accounts for 60% to 80% of many current equity valuations, will collapse.
The current price-to-earnings ratio of the S&P 500 is about 22 times, with a market capitalization close to $58 trillion, which could be repriced to 2 to 7 times free cash flow. In a median scenario, the total value of the stock market would drop to $14 trillion, making such a decline look relatively mild compared to the 2008 financial crisis.
Michael Saylor of MicroStrategy responded to this with an optimistic outlook. He stated, “If AI compresses terminal value and makes every moat short-lived, capital will shift to those assets that are risk-free. Bitcoin, as digital capital, is scarce, neutral, and unaffected by AI.”
Saylor further emphasized on Twitter that this shift will make Bitcoin the primary beneficiary.
Arthur Hayes is waiting for this signal to arrive.
Counterarguments Worth Listening To
This debate boils down to one question: In a world where artificial intelligence disrupts everything, will Bitcoin be the last asset standing or the first to be eliminated?