Topic: Maximum value of bitcoins - page 2. (Read 3208 times)
One article I read concluded that *if* bitcoins really do gain mainstream acceptance, they could represent 1-10% of the global reserve currency, which would be $100,000 - 1mil each. A Huffpost article argued that the next big "jump" for bitcoins would be when/if they surpass global silver reserves, which would put their value at around $3000 each. Will this actually happen? Who knows.
The short answer: No.
Ultimately, value is subjective. Goods or services do not have any inherent value. Value is something an individual attributes to a particular unit of a good [at a specific moment in time]. It is impossible to determine a "maximum value of bitcoins" no matter how much data you could hope to collect on how people currently value bitcoin or other goods.
Ultimately, value is subjective. Goods or services do not have any inherent value. Value is something an individual attributes to a particular unit of a good [at a specific moment in time]. It is impossible to determine a "maximum value of bitcoins" no matter how much data you could hope to collect on how people currently value bitcoin or other goods.
Whilst the maximum value is theoretically the value of all goods tradeable via bitcoin divided by the number of bitcoins, there is still a realistic possibility that a means of hacking the system as a whole (quantum computing, anyone) evetually renders them worthless as no-one trusts the system any more, so any aspiration to trend towards or acheive a theoretical maximum has to be tempered by the possibility that they all become worthless overnight, like Cyprus. Any actual value will be driven by supply and demand but will need to include the 'optionality' of a possible drop to worthlessness at an indeterminate point in the future.
Considering dollars can't be spent (by normal consumers) in increments smaller than one cent, but BTC can, I've wondered if BTC will see drastic appreciation like some suspect or if we'll simply just add more decimal places over time to prices for goods and services.
After doing some more research, i have come to the conclusion that if we consider that all money will be spent at some time and that net change in spending should be near 0% after inflation etc. is taken into account (some people will spend when others save etc.)
Global expenditure was set at $23.42 trillion by the CIA
https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html
If we consider that this value includes money which someone has saved in the past then we can say that this is all the money that bitcoins will need to cover because storing money in bitcoins at this stage will reap no benefits (at the stage when everyone uses bitcoins and its price has stabilised). That means that each bitcoin will be worth $1 million, however, businesses may push litecoins into the mainstream due to its faster verification in which case bitcoins may be worth significantly less.
Global expenditure was set at $23.42 trillion by the CIA
https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html
If we consider that this value includes money which someone has saved in the past then we can say that this is all the money that bitcoins will need to cover because storing money in bitcoins at this stage will reap no benefits (at the stage when everyone uses bitcoins and its price has stabilised). That means that each bitcoin will be worth $1 million, however, businesses may push litecoins into the mainstream due to its faster verification in which case bitcoins may be worth significantly less.
You would not be able to buy 1 billion dollar on any exchange because currently there's not enough market depth
Well...
Someone please correct me if I'm wrong, but I think the value of BTC (and therefore, how people generate it's market capitilization), is based solely on what someone will pay for it, or sell it. The bid/ask spread and depth, if you will.
So, what I'm saying -- if someone very rich tried to buy "one Billion Dollars" (with their pinky finger!) of BTC in one day (or 1 hour), the price of BTC wouldn't "double" to $200, and then have a $2B market cap. It would be worth, well, maybe 1 million USD, perhaps? Total guess, but it depends on the "depth" and prices then available on the ask side.
If so, that would mean ($1,000,000 USD * 10,966,000 BTC) a market cap of... Eleven Trillion USD. Or at least it would be for a few minutes.
I'm mostly posting this because I need more posts to get out of Newby land.
But thought it might spark more discussion...
Maybe we should consider putting some six figure ask's up at MtGox, hmm? Couldn't hurt, I suppose.
Someone please correct me if I'm wrong, but I think the value of BTC (and therefore, how people generate it's market capitilization), is based solely on what someone will pay for it, or sell it. The bid/ask spread and depth, if you will.
So, what I'm saying -- if someone very rich tried to buy "one Billion Dollars" (with their pinky finger!) of BTC in one day (or 1 hour), the price of BTC wouldn't "double" to $200, and then have a $2B market cap. It would be worth, well, maybe 1 million USD, perhaps? Total guess, but it depends on the "depth" and prices then available on the ask side.
If so, that would mean ($1,000,000 USD * 10,966,000 BTC) a market cap of... Eleven Trillion USD. Or at least it would be for a few minutes.
I'm mostly posting this because I need more posts to get out of Newby land.
But thought it might spark more discussion...Maybe we should consider putting some six figure ask's up at MtGox, hmm? Couldn't hurt, I suppose.
After reading the replies here are few ideas i have put out,
lets say bitcoins become the primary means of transactions, would that then be a feasible axiom, people could keep other currencies for storage (metals) but transactions occur in bitcoins
Also, im going to ignore lost wallets because that will only drive the value higher and no one will complain about their bitcoins being worth more than expected.
Im going to look into this more tomorrow, so feel free to add anything i should look into
lets say bitcoins become the primary means of transactions, would that then be a feasible axiom, people could keep other currencies for storage (metals) but transactions occur in bitcoins
Also, im going to ignore lost wallets because that will only drive the value higher and no one will complain about their bitcoins being worth more than expected.
Im going to look into this more tomorrow, so feel free to add anything i should look into
Would it be possible to calculate the maximum theoretical value of bitcoins by dividing the world gdp by the maximum number of bitcoins, if so then i am going to have the best retirement ever!
1st u must have a theory of Bitcoin. To have a theory u must have (an) axiom(s).
If u say, for example, that in the future Bitcoin will replace all other mediums of exchange (axiom #1) u can build a theory and calculate the max value. Unfortunately, axiom #1 looks untenable, coz we all see that Bitcoin is becoming a tool for wealth preservation. In this case it can't be a medium of exchange, so we can't build our theory using axiom #1.
Can u offer any other axiom(s)?
As you stated it would only be possible for them to acrue value equal to GWP if the world 'moved' to Bitcoin, AKA all other existing forms of currency (gold and other precious metals included) must be devalued/transferred into the BTC economy. Obvs that will never happen, because that goes against even the Bitcoin model, no?
I don't know enough about econ to verify your model but at first glance I guess you would do 21mbtc / gwp; you would however have to construct a model that takes into account the diminishing bitcoin pool [destroyed/lost wallets that are effectively unrecoverable].
I don't know enough about econ to verify your model but at first glance I guess you would do 21mbtc / gwp; you would however have to construct a model that takes into account the diminishing bitcoin pool [destroyed/lost wallets that are effectively unrecoverable].
Cool thought, but I think the assumptions needed to get the theoretical max value of bitcoins are too optimistic.
There would need to be no alternative currency in the world, right?
Not sure how to construct a better formula though.. price of final goods/services purchasable(?) in bitcoins/21million?
There would need to be no alternative currency in the world, right?
Not sure how to construct a better formula though.. price of final goods/services purchasable(?) in bitcoins/21million?
Would it be possible to calculate the maximum theoretical value of bitcoins by dividing the world gdp by the maximum number of bitcoins, if so then i am going to have the best retirement ever!
if we say the world gdp is $80 trillion (its rising so this will cover future estimates) and knowing that the maximum number of bitcoins is 21 million then we have something like $4 000 000 per bitcoin.
I am sure this number is wrong and makes some massive assumptions but if we were to find a theoretical maximum value how would be go about it, is it possible? I mean in the context of when/if the world moves to bitcoin
EDIT:
Someone asked about the total cash in the world and a very nice person gave calculations and explanations leading to a value of $46 trillion which was around the same as the GDP at the time so it seems that GDP may be an adequate estimate for the amount of money in the world. Either way, with a total amount of cash at $40 trillion we would still get $2 000 000 a bitcoin
http://answers.google.com/answers/threadview?id=480224
if we say the world gdp is $80 trillion (its rising so this will cover future estimates) and knowing that the maximum number of bitcoins is 21 million then we have something like $4 000 000 per bitcoin.
I am sure this number is wrong and makes some massive assumptions but if we were to find a theoretical maximum value how would be go about it, is it possible? I mean in the context of when/if the world moves to bitcoin
EDIT:
Someone asked about the total cash in the world and a very nice person gave calculations and explanations leading to a value of $46 trillion which was around the same as the GDP at the time so it seems that GDP may be an adequate estimate for the amount of money in the world. Either way, with a total amount of cash at $40 trillion we would still get $2 000 000 a bitcoin
http://answers.google.com/answers/threadview?id=480224
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