Podcast Notes | Interview with Blockstream Co-Founder: Bitcoin's Path to $100,000
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Podcast Notes | Interview with Blockstream Co-Founder: Bitcoin's Path to $100,000
Adam believes the current market is undervaluing Bitcoin below $100,000.
Navigating Web3 tides with focused insightsCompiled & Translated by: TechFlow
In today's episode, Adam Back, co-founder and CEO of Blockstream, joins the show to share his insights on the current macroeconomic environment, Bitcoin's future, and industry dynamics.
Hosts: Michael, Blockworks Macro
Guest: Adam Back, Co-founder & CEO of Blockstream
Original Title: "The Path To $100,000 Bitcoin | Adam Back"
Air Date: November 8
Impact of Macroeconomic Environment on Bitcoin
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Adam discussed geopolitical and macroeconomic factors contributing to global financial instability, such as COVID-19, quantitative easing, supply chain disruptions, and political conflicts. He emphasized that Bitcoin is gradually gaining acceptance and understanding within traditional finance, evidenced by growing interest from major U.S. financial institutions in Bitcoin-related financial products.
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Adam noted that the recent surge in Bitcoin’s price has attracted attention from institutional investors and traditional financial experts. Now is an opportune moment for broader Bitcoin adoption, especially with the potential approval of a spot exchange-traded fund (ETF) in the near future. However, he cautioned investors about the potential risks associated with custodial ownership of Bitcoin, which could undermine its censorship-resistant nature.
Portfolios Beyond Bonds
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Adam mentioned that investors holding large amounts of long-term government bonds suffer losses when interest rates unexpectedly rise. In such cases, investors need to reassess their investment strategies and consider alternative assets capable of delivering long-term value and growth—such as Bitcoin.
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Given current bond market conditions, Adam suggested that the conventional investment strategy of allocating 40% to bonds may require adjustment. He proposed adding Bitcoin to portfolios as a long-term store of value—a function distinct from gold, which primarily serves as a hedge.
Bullish on the Lightning Network
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Adam believes Bitcoin is undergoing a maturation and stabilization cycle, increasingly recognized as a digital asset with long-term value storage and wealth preservation capabilities.
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Adam predicts Bitcoin’s price could reach $100,000. As Bitcoin gains wider adoption and more institutional investors enter the market, its value will continue to grow. Current valuations below $100,000 underestimate Bitcoin’s potential, driven by its scarcity and decentralized nature.
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Adam explained that the Lightning Network is a second-layer solution built on Bitcoin’s blockchain technology designed to enhance transaction speed and scalability. It enables users to conduct fast, low-cost micropayments without recording every transaction on Bitcoin’s main chain.
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The development of the Lightning Network impacts Bitcoin in multiple ways. First, it significantly improves transaction speed. Since confirmation times on Bitcoin’s main chain are relatively long, transactions can be slow. With the Lightning Network, transactions occur off-chain and are completed nearly instantly, greatly accelerating Bitcoin’s throughput.
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Second, the Lightning Network reduces transaction fees. Fees on Bitcoin’s main chain increase during periods of network congestion and high transaction volume. In contrast, the Lightning Network allows for low-cost or even fee-free micropayments, further encouraging Bitcoin usage and adoption.
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Additionally, the Lightning Network enhances Bitcoin’s scalability. As user numbers grow, so does the volume of on-chain transactions, leading to network congestion and delays. The Lightning Network provides a scalable solution, enabling Bitcoin to handle higher transaction volumes and accommodate future user growth seamlessly.
Bitcoin ETFs
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Adam believes the introduction of a Bitcoin ETF could bring greater liquidity to the Bitcoin market and attract more institutional participation. An ETF would allow more investors to buy and hold Bitcoin through traditional exchanges, increasing overall market engagement.
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Adam stressed that Bitcoin’s core value lies in its decentralized nature. As a decentralized digital currency, Bitcoin operates without control from any central authority or government. This grants it censorship resistance and self-sovereignty, enabling individuals to fully control their assets and transactions. He emphasized that decentralization is fundamental to Bitcoin’s ethos and what distinguishes it from traditional financial systems.
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However, Adam warned that ETFs could lead to the marketization and financialization of Bitcoin, bringing it closer to traditional finance. This shift may introduce centralization risks and regulatory compliance challenges. Therefore, while supporting market development, stakeholders must preserve Bitcoin’s decentralized essence and seek balanced paths forward.
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He noted that introducing a Bitcoin ETF would subject the asset to traditional financial regulations, including KYC and AML (anti-money laundering) requirements. Regulators must ensure ETF operations comply with these frameworks to safeguard investor funds.
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Adam emphasized that regulators need to deeply understand Bitcoin and blockchain technology to formulate appropriate policies. This understanding is crucial to ensuring the safe operation of Bitcoin ETFs and mitigating potential risks and vulnerabilities.
Which Phase Are We In Within the Bitcoin Cycle?
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Adam noted that Bitcoin’s price movements follow cyclical patterns, having gone through multiple boom-and-bust cycles since its inception. Rapid price increases are typically followed by sharp corrections, with each cycle shaped by unique drivers such as market demand, investor sentiment, adoption rates, and external factors.
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Understanding this cyclical nature is critical for investors, helping them better interpret and anticipate Bitcoin price fluctuations.
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In the current cycle, Bitcoin has experienced significant volatility. Nevertheless, its fundamentals remain strong, with rising hash rate and adoption. Miners remain optimistic about Bitcoin’s long-term value, and over time, Bitcoin continues to demonstrate robust growth trends.
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Adam stated that Bitcoin has evolved from a niche technological experiment into a widely recognized asset class, with continuous advancement in core value and technological innovation. Over time, it has gained broader recognition—particularly in traditional finance—where an increasing number of institutional investors and financial service providers are exploring and adopting Bitcoin.
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The integration of Bitcoin with traditional financial products, such as Bitcoin exchange-traded funds (ETFs), offers conventional investors an accessible and familiar way to invest in Bitcoin, further boosting its mainstream acceptance. Although regulatory environments vary across jurisdictions, the overall trend points toward greater understanding and regulation of this emerging market.
Impact of Bitcoin Ordinals
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Adam pointed out that Ordinals are a native form of NFT on Bitcoin, implemented through specially ordered UTXOs (unspent transaction outputs). Enabled by the recent Taproot upgrade, this method allows for the creation and transmission of Ordinal NFTs directly on the Bitcoin blockchain.
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The emergence of Ordinals has led to new perspectives on Bitcoin’s block space. This novel use case has sparked debate within the community—some argue Bitcoin should primarily serve financial transactions, while others believe that if the protocol allows it, such uses are valid.
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Each JPEG image, approximately 100KB in size, may displace hundreds of financially relevant UTXOs, potentially making cold storage on-chain unaffordable for users in emerging markets, forcing them to rely on custodial services or exchanges. This highlights that despite Bitcoin being a free market, limited block space ultimately favors those who can pay higher fees.
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Adam also noted that Bitcoin evolves adaptively based on user behavior, market conditions, and technical solutions developed by providers. For instance, the rise of Ordinals has compelled certain technical solutions to adapt to new economic realities, thereby enhancing the scalability and resilience of the Bitcoin network.
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