I'm going to speak up, remove all doubt that I am a fool, and do a brain dump. This will be my best attempt to guess where the price of Bitcoin could (very optimistically) land if it becomes the number one go-to cryptocurrency accepted, or at least established, throughout the world.
I'm hoping someone can check both my math and my underlying thinking on this. I've piled on so many assumptions that my final numbers are probably ridiculous, but I'm hoping that the underlying thinking is close enough to inspire someone to offer corrections.
Okay... Bitcoin as a currency:
Like some others here, I believe there is some
chance (hard to quantify) that Bitcoin will become ubiquitous, that it will propagate to at least as many people as, say, PayPal.
This is the future where Lightning and other improvements have made Bitcoin viable as a day to day currency. My friends are comfortable carrying it around in their "wallets."
Now, to come up with some numbers, I'll start by imagining that this future total number of Bitcoin users is 200 million (the same as the current number of PayPal users). I then ask myself "How much cash should I imagine each person has in Bitcoin?"
I have the idea that the average amount might be $100.
That's purely anecdotal. I could imagine a typical American might carry around $40 to $100 in cash, and would do similar with Bitcoin. I imagine that the average person has at least twice as much Bitcoin as what they "carry around." I imagine that people in less wealthy countries would carry around less.
A dozen assumptions later, I say: Okay, let's say 200 million people each want to carry around $100 worth of Bitcoin. That would require $20 billion in Bitcoin.
Since there are 21 million Bitcoin total, that means each Bitcoin would be worth about $1,000.
That hardly justifies holding it at its current price, and it doesn't justify the belief some people have that Bitcoin might reach $500,000. So I'll start adjusting my numbers.
What if there were more
people who wanted to use Bitcoin? The population of the earth is 7.5 billion people. What if 1 out of 10 wanted $100 worth of Bitcoin?
One tenth of 7.5 billion is 750 million -- similar to the total number of people with credit cards, so this seems interesting.
For them to have $100 each requires $75 billion. And $75 billion in Bitcoin would mean that each Bitcoin is worth about $3,500.
As you can see, I need some help with my assumptions. For all I know, there's an axiom that for every dollar held by individuals, there are two dollars held by the businesses (stores, restaurants, etc.) where these individuals spend their money.
I have no idea if there's anything behind this 2-to-1 ratio I invented, but if it were true, then whatever number I come up with for individuals triples. The previous $3,500 becomes closer to $10,000 per Bitcoin.
Revising a different assumption, maybe that "$100 in BTC per person" is too low. Maybe the average person spending Bitcoin will keep $500 in Bitcoin, or $1000!
I can combine these assumptions various ways, and produce values per Bitcoin more like $50,000 or $100,000. But generating a $100,000 Bitcoin this way requires 10% of the world to have an average of $1,000 in Bitcoin!
Note: My assumptions involve a future where people primarily keep their money in fiat, but use Bitcoin the way they would PayPal or credit cards. I can't picture Bitcoin totally superseding other currencies, unless a country is in real trouble.
In terms of spending, I see several other numbers I could be crunching, such as:
In 2011, Americans spent $10.7 trillion shopping.
In 2011, Americans spent $96 billion on beer. http://mentalfloss.com/article/31222/numbers-how-americans-spend-their-money
What if I grab some number in between $96 billion and $10.7 trillion? Let's say that, of the $10.7 trillion spent on shopping, $1 trillion was spent in Bitcoin?
Here's where my skills fail me. It doesn't take $1 trillion in Bitcoin floating around for $1 trillion to be spent in a year. So I need to divide by churn or turnover or something. And then multiply by something to reflect not just Americans, but the world.
So, what about... Bitcoin as a Store of Value:
That brings me to statistics like these: https://www.marketwatch.com/story/this-is-how-much-money-exists-in-the-entire-world-in-one-chart-2015-12-18
The amount of money in the world is $7.6 trillion. Or maybe it's $36.8 trillion. Or $90.4 trillion. Depending on what you're counting.
Going through each of those three numbers... What if 5% of that amount made its way into Bitcoin, and Bitcoin alone? So I'll take 5% of each number and divide that by 21 million to produce Bitcoin values of $18,000, or $88,000, or $215,000 per coin.
But is 5%, of all the money in the world,
even worth considering?
One last comparison...
I'll skip the world's $7.7 trillion in gold, and get to the stock markets, which total $73 trillion.
I don't know if it's worth talking about the stock markets, as in: People might pull money out of stocks and keep it invested it in Bitcoin, even after Bitcoin is ubiquitous.
The idea is that eventually Bitcoin will reach some kind of stasis, and the price will stop soaring, right? At least, that's the future, final state I'm trying to picture -- a future where people are simply using
If Bitcoin stops climbing, can I really assume that people will pull some percentage of their money out of stock and invest in Bitcoin as an equity? (I guess you could say the same about Coca Cola. After all, it's everywhere, but its price keeps going up.)
So, here's where the numbers get crazy. If I decide that a full 10% of the money currently in stock markets made its way to Bitcoin instead, then that alone would justify a Bitcoin price of $350,000!
And I can always combine that $350k with one of the other numbers above -- say, $88,000 or $215,000 -- to see where someone could predict a possible $500,000 Bitcoin. But to do so requires several stars to align. Bitcoin has to win out as both the store of value and the quick, transactional currency. And then it alone has to pretty much dominate the world.
And finally, going any lower on that page, things like Global Real Estate and Derivatives just make my head explode.
So... Does anyone have any feedback on my math and the huge disparity between my lowest and highest numbers?
TLDR: What's the best way to get some really good "back of the napkin" type estimates of where Bitcoin (or any given crypto) could go?
Has someone smarter than me already done a thorough write-up like this, but with really good assumptions and calculations?
I seem to find helpful information on what bitcoin is and what the surrounding terminology is (blockchains, satoshi, etc) but I don't know how people decide to buy or sell? I read that the value is so volatile because people are basically gambling on buying and selling, but the part I don't get is how do they make these decisions? submitted by
I can understand purchasing shares in say a business because analysts do have tangible methods of predicting a business's performance and therefore the value of shares, but with bitcoin it's like nobody knows and we're just buying into the hype with no knowledge and being like "ye dude its simple just buy some btc and wait for the line to go up and u make stonks lol"
can someone properly educate me on this?
Adam Back, a cryptographer and crypto pioneer predicted the value of bitcoin to soar to $3,00,000 per bitcoin in the next five years. He believes that hyperbitcoinization can lead to bitcoin reaching $10 million. "$100,000 bitcoin doesn't seem so far given we already crossed $10,000 threshold a few times when few expected even $1,000 some years back and $10,000 seemed crazy," Back said via ... Bitcoin price forecast at the end of the month $14114, change for October 31.5%. BTC to USD predictions for November 2020. In the beginning price at 14114 Dollars. Maximum price $17127, minimum price $13454. The average for the month $15005. Bitcoin price forecast at the end of the month $15323, change for November 8.6%. “The predicted market value for Bitcoin after May 2020 halving is $1trn, which translates in a Bitcoin price of $55,000,” further adding that, “gold and silver, which are totally different markets, are in line with the bitcoin model values for SF.” Aside from the aforementioned, S2F went on to support an increase in value thanks to the scarcity of BTC and how an upward trend in growth ... A new, comprehensive analysis has predicted the price of bitcoin to reach almost $20K this year and will keep rising to almost $400K by 2030. The researchers have also predicted the future prices ... A prominent investor in electric car-maker Tesla has said it expects bitcoin's total value to balloon to between $1 trillion and $5 trillion during the next five to ten years...
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