Topic: how much could bitcoin actuall gro to per coin? - page 2. (Read 3315 times)

Well personally I don't see why this is not a possibility. Given the right tools it could become just as easy to adopt two rather than just one.
And of course there will always be the allure of being one of the early adopters of a new currency.

But back to my main point: There may be many as of yet unimagined currencies and methods of exchange (How many people predicted bitcoin?), and they might not all be crypto-currencies. While in the future bitcoin may or may not be the strongest "alternative" currency, I strongly doubt it will be the only significant one.

Additionally, there may also be certain currencies where it is only possible to earn them by participating in a specific economic "ecosystem", lets say for example in peer to peer tutoring.
There is already an example of such a currency called the "Dora" which was introduced in Lithuania. I think it's an amazing concept, and I wish I had access to such a system.

Pretty much all of us tend to take for granted that there will always be ONE kind of money that you can use for trade (a currency monoculture), but I have a feeling that this assumption may soon be overturned.

Obviously this is speculation. But aren't we all speculators who buy into bitcoin  

Governments could one day make some crypto currency and make it legal tender.

What would be the rational for the global economy to accept two crypto-currencies?

Say you have currency xCoin and yCoin.
xCoin is more secure, accepted by more merchants, used by more consumers.
yCoin is less secure, accepted by less merchants, held by less consumers.

Why would a new merchant or consumer accept xCoin vs yCoin.

Before you say Gold/Silver the reason for Gold & Silver coins to coexist is the difficulty in minting small coins.  Bitcoin doesn't suffer from that problem.  Even if Bitcoin was worth $1M each trade could be conducted in Satoshis  (buy Coke only 120 Satoshis).

Before you say look at Yen vs Dollar vs Euro.  Those alternative currencies only exist because no (well most) nation would accept using foreign currency for their local economy.

Either Bitcoin takes off or something replaces Bitcoin or all crypto-currencies die on the vine but I don't see the utility of multiple "general purpose" currencies.  For an alternative to co-exist it would need to be different enough to fill a niche that Bitcoin can't handle effectively.

This idea is based on the assumption that our future economy will be rooted in a currency monoculture (as it has throughout most of history).

i.e. that there will be ONLY bitcoins, and not also other alternative currencies.

However i see no reason for this to be the case, so I think it's unlikely bitcoins will make millionaires out of early holders

But just like in nature, diversity is good for stability so there's nothing bad about it.

Heh. Right

Even so, if bitcoin reaches a certain level of ubiquity, merchants are going to spend a part of their costs in bitcoin, and consumers will get a portion of their income in bitcoin. Aside from the banking and exchange fees, you will want to keep some bitcoins to protect you from price swings. If I have an internet shop and sell my stuff all over the world, and receive payments in Yen, dollar and Euro, I will want to keep a portion of those currencies proportional to where I buy my goods in Japan, US or Europe. I might also get, say, UK pounds and not buy anything in the UK, then I will only want to sell only all of those. It wouldnt be any different with bitcoins.


Every transaction involves two parties, a buyer and a seller. In the end, as a consumer you pay both, just like we now pay for the paypal/creditcard/currency conversion costs of merchants.

Why yes.. it would rather function as a form of more accessible wire transfer.
(credit cards would still be the more serious competitor in this scenario than 'wire transfer' though I guess)
As it has some distinct advantages in speed and cost compared to the wire transfer currently offered to consumers - it doesn't seem unreasonable to think bitcoin could compete it's way to occupy some of that space.  
Yes, I did say to assume a 'highly efficient' exchange system - so the assumption is that competition has driven down  banking/exchange fees.
I don't see how a consumer is paying fees twice for their transaction. Whether they get their bitcoins in a batch up front or on the fly as needed shouldn't make much difference in a reasonably efficient system.  At the moment everyone seems to ignore the cost of acquiring bitcoins when they talk about bitcoin transactions being nearly free - but unless you're both a merchant and a consumer (or a miner), then those costs should in theory be apportioned to work out the real per transaction cost.

The argument about fast recycling of coins in the merchant-consumer loop doesn't suggest that all merchants and all consumers always use it in that fashion alone.   I chose 10% of coins to indicate that a relatively small proportion of coins involved in that fast-loop would do to provide a large amount of value for trading, and so potentially reduce interest in hoarding. Maybe another 40% are held by consumers as ready cash and merchants yet to bank.   There's still 50% left for the hoarders speculating on whether the coins looping around are enough to support the current level of activity.

Edit:
I guess we're arguing different scenarios here..    I'm considering the case where bitcoin is in widespread global use - but side-by-side with other currencies

If you are going to instantly sell every bitcoin you earn, and buy every bitcoin you need on the spot, you are taking almost no advantage of bitcoins. You are not using it as a currency, you are using it as a wire transfer.

Banks and exchanges Im sure wouldnt mind, but it would be stupid beyond belief to pay exchange fees and banking fees twice for each and every transaction when one of the key advantages of bitcoin is that transactions are essentially free. Im all for theoretical arguments, but this one is a bit over the top .

It could also be adapted by the Solar Federation to be used galaxy-wide. Or maybe not. 

I'll give some maths a go. (I might be a bit crap at it!)

Let's assume a highly efficient merchant/exchange/wallet system integrated with existing currency systems such that customers don't need to hold BTC, and neither do merchants.

If we assume 6 confirmations are required, then one set of coins could potentially come full circle and be reused 4 times per day (probably more if smart wallet services allow) 

Even if only 10% of all coins are available in the pool of actively cycled coins - we have (2.1M * 4 * $btcvalue)  in available $ for transactions per day.
Even at BTC value of $30 - we get over $90Billion worth of transaction that can be done per year - more than paypal's transaction volume in  2009.


The point is that a relatively small pool of highly mobile coins could sustain a decent size economy - which may then drive down the incentive for others to hoard and thus the value.   

It all depends on what sort of velocity of coin recycling gets going - and smart wallet/merchant software is quite likely to enable this I think.

(You'll notice I seem to be arguing two opposing cases in this thread - that's because I'm not attached to either as being more likely - just sounding it out!)

While I'd personally prefer to see them used widely in trade - I'm just not convinced it's a requirement for them to function as a store of value.

Gold has historically been used in trade - but now seems to be predominantly considered to have some magic 'intrinsic value' - even though this is wildly above it's value for use in industry.   

All bitcoins would require in order to fulfill the savings role would be a *history* of people using it as such and developing confidence in it.  The attributes that make bitcoin a theoretically good unit of trade, may in my opinion be enough to 'kick start' them as a store of value and the amount of actual trading done becomes less important.

I'm thinking here also of the 'bad money drives out good' theory... which suggests to me that there is a plausible case to be made that the hoarding eventually dominates - and they may retain value even in the face of a relatively low amount of trade and transactions.

I think the current view of how bitcoins are going to used is purely transaction based, at least for the short term. So when you when you want to buy something you convert your local currency into bitcoin, exchange it with someone else, then they convert it back to their preferred form. Doing it this way also protects against the bubbles/crashes that are bound to come, as the fluctuation in price between the two conversions should not be too much.

Then you are not seeing bitcoins as a currency, but as a scarce commodity. If bitcoin doesnt gain usefulness as a currency for trade, it has no value as commodity. You cant do anything with bitcoins other than conduct trade.

I do wonder about the often stated requirement that there be lots of trade and merchants in order for them to be worth much.
That's just one possible scenario.

Even though at the moment they are lousy as a store of value - it seems plausible to me that they *could* become primarily seen as a savings mechanism.
Under this scenario, the merchant side of the equation would be less important.

Again, the keyword here is theoretical. If I was convinced this would happen, and BTC would become the new world currency,  I wouldnt only have 100BTC. But even with its current flaws ensuring people only keep a fraction of their wealth in BTC and use only a tiny fraction of their consumption using BTC; assume your estimate is accurate, and there are 100k users today. There are over 2 billion internet users. Do the math.

I guess it depends on whether bitcoin can become seen as a good stable place to store value.   If there are enough serious bubble/crash cycles - the dominant way of using them may be to convert into them only long enough to perform an exchange. 

There is a big fallacy in your reasoning. You count me as a bitcoin user, which I am, but I hold less than 100 BTC or ~150 euro. I can definitely support a few orders of magnitude more than that (and the same will go for most other users) if bitcoins become more useful and stable. That may or may not happen, but this was a theoretical question. If it does happen, theoretically, even the same amount of users could support a price level thats orders of magnitude higher than today.

Theoretically there is no maximum price but its worth as much as people are willing to pay for it. I think 3/4 price bubbles have been predicted to develop before mining finishes in around 10 years. It is still early days but like it is said above if no-one is trading or spending them then they will be worth virtually nothing.

I don't know for sure how many people use bitcoin at the moment - but I'm guessing it's not much more than 50K
(there are about 44K users on this forum - and  people come and go, plus not all users would be here on this primarily english-language forum)

If between 50K and 100K users can't even sustain a $3 price - I expect that a million users may similarly not be able to sustain much more than $30 per coin.

Now perhaps there's no particularly good reason to assume the relationship between *sustainable* price and number of users will be linear, but if it is, then there aren't enough people in the world to sustain the 'million dollar' bitcoin some people dream of.

edit: You have to realize that many 'users' in the future may never hold coins for any decent length of time. If they use them only during exchange - and there is always a ready pool of coins available for sale, then you can't assume the crazy high valuations.

Pretty much what I was thinking. I think you hit the nail on the head.

Theoretically bitcoin could replace all existing currencies. No one really knows how much wealth there is in the world, but Ill take some guesstimate I got off google that puts the total around 2500 trillion dollars (long scale trillion, so  10¹⁸ ). IOW, 21 million bitcoins could be worth that much. That gives around $100 billion (current value) per bitcoin. But Ill settle for just a 1/1000 of that .