Many writers of today try to analyze the price of Bitcoin as if Bitcoin had reached its steady state.
Bitcoin has not yet reached its steady state because people do not know about it.
* There are wealth managers who do not mention it as an asset class, with high risk but a huge upside potential.
* There are still retail merchants who still erroneously think that there is risk in accepting Bitcoin via a 3rd party Bitcoin Service Provider (BSP).
Bitcoin has not yet reached its steady state because people do not know about it.
* There are wealth managers who do not mention it as an asset class, with high risk but a huge upside potential.
* There are still Rich People in the world (top 1%) who understand the value of a diversified portfolio, and yet do not yet understand Bitcoin as an asset class to be compared against other asset classes: There are risks, but the eventual upside IS A FACTOR OF MORE THAN 100, warranting a small position compared to other assets.
* There are still online retailers who do not accept Bitcoin, and needlessly pay several percentage points in credit card fees out of their bottom line, and accept the risk of bad credit cards in addition to that.
* There are still retail merchants who still erroneously think that there is risk in accepting Bitcoin via a 3rd party Bitcoin Service Provider (BSP).
* There are still many people who even laugh at Bitcoin and say “But Bitcoin has no intrinsic value! It is not valid anywhere!", without regard to the many answers one gets when googling “where can I spend bitcoin”, or to the fact that a lot more places accept Bitcoin for payment than do gold.
- truly non-retractable e-payments
Bitcoin is not a tulip, to start a frenzy over nothing. It is a technological revolution that enables
- across the globe, limited only by access to the internet
- with very quick settlement
- including micropayments - a whole other chapter
The value is there, and it has already been invented. People who discover Bitcoin create startups.
The price is determined by dividing DEMAND/CAPITALIZATION over SUPPLY.
With very little education and many misconceptions out there, the price is $331.
The value is there, and it has already been invented. People who discover Bitcoin create startups.
The price is determined by dividing DEMAND/CAPITALIZATION over SUPPLY.
With very little education and many misconceptions out there, the price is $331.
Denominator/SUPPLY: The number of Bitcoin available.
The maximum amount of Bitcoin is about 22 million. There can be no more.
Bitcoin is “mined” by whoever wants to do so, and invests in the appropriate hardware. These miners get rewarded with some tiny transaction fees, plus some new Bitcoin every now and then. After all 22m has been created, it will only be the transaction fees. This process of forcing new Bitcoin to the future is in place so that Bitcoin would not be a Ponzi scheme, where the creator starts off with everything and then sells it to others.
As November 2015, about 2/3rds of all possible Bitcoin has already been mined. This number, 14.8m, is publicly visible in several places. This page http://www.bitcoincharts.com/ has it at the top center under “Total BTC”.
For the future price let's assume all Bitcoin has been mined, all 22m.
In theory, we should also remove from the denominator all Bitcoin that has been lost forever (lost mishandled passwords, etc.) We do not know what that is, and the only way to find out would be for the Bitcoin Foundation to prune the Blockchain to, say 3 years back, and require all active Bitcoin to move once every 3 years. Losses would become obvious then, but for now, we will keep all 22m in the denominator.
Using round numbers, let’s just stick with Europe (450m people) and the US (300m people), totaling 750m people. The richest 1% of this combined 750m people is 7.5m people, each worth over $10m.
The demand they create is 7.5m x $100k = $750b
So, even forgetting about the other 7 billion people on the planet who are not in Europe and the US, the price will be [ $750b ] divided by [22m BTC] = $34k/BTC
Today the price is $331/BTC.
The appreciation would be a factor of over 100 times compared to what it is today.
We are not trying to create a bubble
A bubble exists when an established asset class gets overvalued compared to its objective valuation. Bitcoin is not established as an asset class yet. Wealth managers do not mention it.
In due time, this valuation will be corrected, as education spreads. The question is only if it will take 1 year or 15. Click here for more thoughts on timing.
The earliest adopters will enjoy the highest appreciation. We hope that whoever earns the appreciation makes good use of the gain.
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