I was thinking about this earlier and I wonder what everyone's thoughts are on it. I think a lot of folks are trying to set an expected 'max value' on what bitcoin can and should be. I suspect it will enter the realm of something like the derivatives market where the total value of all derivatives is more than even all the money in the world.
If you think about it, the market cap is simply pegged on what folks are willing to 'part' with their bitcoin for. For that reason, it's completely possible that as it hits insane valuations, just about nobody will be willing to part with it. As this happens, at some point someone can say the current market cap of Bitcoin is so high that all the money in the world couldn't buy it all out. (and that would be just fine!) Just like the derivatives market with all the money in the world couldn't cover all the existing contracts, all the money in the world won't be enough to purchase what people are willing to sell their bitcoins for.
If you think about it, the market cap is simply pegged on what folks are willing to 'part' with their bitcoin for. For that reason, it's completely possible that as it hits insane valuations, just about nobody will be willing to part with it. As this happens, at some point someone can say the current market cap of Bitcoin is so high that all the money in the world couldn't buy it all out. (and that would be just fine!) Just like the derivatives market with all the money in the world couldn't cover all the existing contracts, all the money in the world won't be enough to purchase what people are willing to sell their bitcoins for.
Bitcoin could only reach valuations that exceed the value of all money in the world if people that own bitcoin aren't willing to sell at lower valuations. The thing I'm missing with your derivatives analogy is the fact that derivatives usually have some algorithm or equation that acts as a multiplier, this doesn't or wouldn't exist for bitcoin. No?
I'm not completely fluent in derivatives, so if my talk here is incorrect please educate me!
What I love most about Bitcoin is that due to its finite supply it'll always (relatively speaking) be worth more tomorrow than it is today, provided demand remains constant.
