Former Twitter chief executive Jack Dorsey, who recently quit the social media giant he cofounded to grow his payments company, has predicted bitcoin will eventually replace the U.S. dollar.
The bitcoin price, having surged over the last 12 months, has fallen back in recent weeks, losing more than 30% of its value in just over a month. The recent bitcoin price collapse has also hit the ethereum price, which is down almost 20%.
Bitcoin leaped higher shortly after Dorsey’s tweet, however, reversing a downward trend over the last few days that added 5% to the bitcoin price over the last 24 hour period and boosting the ethereum price and wider crypto market.
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Dorsey, replying to rapper Cardi B on Twitter—who asked “Do you think crypto is going to replace the dollar?”—replied: “Yes, bitcoin will.”
Earlier this month Dorsey left Twitter to begin working full time at his payments company, recently renamed Block, which includes Square and Cash App.
Dorsey has been a bitcoin believer for years, often talking up bitcoin’s prospects in interviews and rolling out bitcoin-based services at both Twitter and Square. Dorsey installed Parag Agrawal as the new chief executive of Twitter, previously the company’s chief technology officer who has heen heavily involved in Twitter’s decentralized technology projects.
“If I were not at Square or Twitter I’d be working on bitcoin,” Dorsey said at a Miami bitcoin conference in June. At the time, he said “both companies have a role to play.”
In August, Dorsey tweeted that “bitcoin will unite a deeply divided country. (and eventually: world).”
Following his bitcoin prediction, Dorsey joined Tesla chief executive Elon Musk in mocking the idea of a crypto-based web3, intended to be a successor to the Silicon Valley-based web 2.0 that led to the internet dominance of Google, Facebook, Microsoft and Amazon.
“Has anyone seen web3? I can’t find it,” Musk tweeted, with Dorsey replying: “It’s somewhere between a and z”—thought to be a reference to technology venture capital (VC) company Andreessen Horowitz that’s recently invested billions in the development of web3.
“You don’t own ‘web3,’ Dorsey tweeted. “The VCs and their [limited partners] do. It will never escape their incentives. It’s ultimately a centralized entity with a different label. Know what you’re getting into.”
Web3 hype has been boosted this year by the soaring price of some cryptocurrencies and non-fungible tokens (NFTs) designed to support its growth and the rebranding of Facebook to Meta.
“Just like NFTs, web3 and metaverse platforms are the next natural progression in how we interact, relate, and communicate with each other,” Meta chief executive Mark Zuckerberg said in an interview last month.
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Bitcoin, created a little over a decade ago in response to the 2008 global financial crisis, has found a niche as “digital gold,” a scarce, decentralized, digital asset that some investors and even companies and countries have begun to hold as a store of value and hedge against inflation and risk.
Last year, renowned investor Paul Tudor Jones open investor flood gates when he named bitcoin as “the fastest horse to beat” the inflation he saw on the horizon as a result of the Covid-19 pandemic and huge government money printing.
Meanwhile, business intelligence software company MicroStrategy began adding bitcoin to its balance sheet, leading to Elon Musk’s electric car company Tesla buying $1.5 billion worth of bitcoin in January 2021. This year, El Salvador adopted bitcoin as its national currency alongside the U.S. dollar and began buying bitcoin.
All of this has helped the bitcoin price soar from lows of around $4,000 per bitcoin in March 2020 to highs of $69,000 last month. The huge bitcoin price rally has though been outpaced by gains seen by other smaller cryptocurrencies including ethereum and a handful of ethereum rivals, as well as so-called memecoins such as dogecoin and shiba inu.
Last month, Hillary Clinton, the former U.S. presidential hopeful and secretary of state under president Barack Obama, warned the rise of bitcoin and cryptocurrencies could undermine the U.S. dollar’s reserve currency status.
However, others don’t see bitcoin as ever replacing the dollar and other so-called fiat, government-backed currencies.
“I think the whole conversation about bitcoin or any crypto replacing fiat currency is counterproductive,” technology investor Mark Cuban said last year.