Balaji Srinivasan's Bitcoin Bet
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Balaji Srinivasan's Bitcoin Bet is a wager made by cryptocurrency entrepreneur Balaji Srinivasan with Twitter user James Medlock in mid-March 2023 that sparked viral discourse online. Balaji bet Medlock that within 90 days of March 17th, 2023, one Bitcoin would be worth over $1 million because the dollar was about to enter hyperinflation due to a generalized financial crisis.
On March 16th, 2023, Twitter user James Medlock (@jdcmedlock) tweeted a proposal of $1 million that the U.S. would not enter hyperinflation, receiving over 7,100 likes and 540 retweets in five days (seen below).
On March 17th, Balaji Srinivasan replied to Medlock's tweet and accepted the bet to bring attention to his warning about the world financial system. He believes that years of easy money policies, followed by the mass printing of digital money during the coronavirus pandemic and then the recent ramping-up of interest rates by the U.S. Federal Reserve, has put the banking system at risk for hyperinflation and total collapse. The tweet announcing the bet (seen below) earned over 12,000 likes and almost 12 million views in four days.
After Balaji accepted the bet from Medlock, he then doubled it to $2 million.
In Balaji's view, banks are over-invested in U.S. Treasury bonds, which means they lose money when the Federal Reserve raises interest rates (that is, slows down the digital printing of money in order to slow down inflation). This was the initial problem with SVB, as the bank lost money on government bonds because interest rates went up and then didn't have enough to pay back depositors when a bank run happened.
Balaji believes that bank runs, such as those seen at SVB and Credit Suisse, will rapidly become more widespread, as more and more people withdraw their money from banks and see that these banks don't have enough in deposits to pay them back. Hyperinflation, in his view, will result from actions by the government to support these banks by giving them emergency loans of newly digitally printed money.
According to Balaji, if all this happens, he perceives the only safe asset will be Bitcoin because it is entirely outside of the financial system.
Critics of Balaji have disagreed with certain points of his hypothesis. Some have argued the real danger is deflation: The banks are losing money on bonds because the government has raised interest rates and so is printing less money. Inflation is what happens when there is too much money.
Some argue Balaji is also overestimating the amount of money the banks have lost on treasury bonds and underestimating their ability to adapt and protect themselves and their depositors.
Others have pointed out that Balaji, and libertarian-adjacent crypto moguls like Peter Thiel, have a financial stake in cryptocurrency — and getting people to leave the dollar-based financial system and invest in Bitcoin will benefit them financially.
Some also argue that there are political reasons for making "Bitcoin the new gold," as Balaji says it will be. The world's reserve currency is the United States Dollar, and if that gets replaced by Bitcoin, the American government will be weaker. The ultimate goal would be to replace the modern nation-state with a different kind of governing entity entirely. Balaji has notably written a whole book about this idea.
Some, like Twitter user @davetroy (seen below) posted about Balaji's past ties with the Trump administration and libertarian ideology.
Some critics have gone so far as to accuse Balaji of wanting to trigger a bank run and worsen the financial crisis with his warning. Most of these critics, however, point out that the financial system is currently not in good health, and a series of external stressors (war, climate change, inflation and even artificial intelligence) are threats to banking.
Bitcoin Value At Beginning
At the time of the bet, the value of Bitcoin was around $26,000.
Medlock Wins Bet
On May 2nd, 2023, James Medlock reported on Twitter that the bet had been settled. $500,00 dollars would be donated to a charity, while $500,000 would be taken by him personally (seen below). His post announcing this received almost 3,800 likes in two hours.
Balaji, however, did not admit defeat, posting a video and blog post doubling down on his theories about the US dollar and hyperinflation.
As word of his bet began to spread in mid-March 2023, some seemed to follow Balaji and think he was correct, pledging to join him in switching their deposits from dollars to Bitcoin. Others, however, argued that Balaji was overhyping the troubles of the current financial system and trying to con people.
Many users on Twitter also posted memes making fun of finance people and crypto bros, using the news as an opportunity to take up the topic (examples shown below, left and right).
 CNBC – Kelly Evans
 Twitter – @EpsilonTheory
 thenetworkstate.com – The Network State
 Twitter – @colin_fraser
 Twitter – @jdcmedlock
 Twitter – @jdcmedlock
 balajis.com – The Fiat Crisis
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Mar 21, 2023 at 06:49PM EDT
Mar 23, 2023 at 08:38PM EDT
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