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Bitcoin comparison with Gold has become gospel. And with it a typical upper bound on the price estimate of a single coin in the ~$100K range. The assumption is

by indescions_2017 9y ago

Bitcoin comparison with Gold has become gospel. And with it a typical upper bound on the price estimate of a single coin in the ~$100K range. The assumption is that the total Gold market is about $10T globally and Bitcoin will displace some percentage of that. With the current Bitcoin market valuation based on exchange rate approaching $1T and 25% or so mining complete. But a much better estimation might arise from looking at global consumer demand for Digital Payments. By the year 2020 its conceivable that we are at 1T digital transactions. At an average value of $10 each, we are again speaking of roughly the size of the total market for Gold. The million dollar question is: What percentage of all digital transactions globally will be made in BTC? Approaching the problem from the FinServ lens, rather than FinTech, can radically alter your view ;)

rublev 9y ago
>Approaching the problem from the FinServ lens, rather than FinTech, can radically alter your view ;) What do you mean?
immad 9y ago
Bitcoin is valued at $110b with 16.66m mined out of 21m. So ~80% mined [1] 1 - https://coinmarketcap.com/currencies/bitcoin/ https://coinmarketcap.com/currencies/bitcoin/
saalweachter 9y ago
To evaluate the price of a Bitcoin from the perspective of its value as a unit of exchange you need to take into account the volume of the transactions and the time currency is held between being paid and being spent. If there were $1T of Bitcoin transactions each year and the coins were held for 1 year in between, then yes, the total value of all circulating Bitcoin need to be $1T. If the coins are held on average for a week, you only need $20B worth of circulating Bitcoin. When you leave out that last number, you implicitly assume whatever interval you're talking about is the transaction duration, which is usually a bad assumption.
altern8tif 9y ago
How does Bitcoin make the transition from a gold-like store-of-value to a medium-of-exchange then? If the general consensus is that Bitcoin's value will continue to appreciate, it makes more sense for one to hoard it rather than to use it as digital currency.

rublev 9y ago

>Approaching the problem from the FinServ lens, rather than FinTech, can radically alter your view ;) What do you mean?

immad 9y ago

Bitcoin is valued at $110b with 16.66m mined out of 21m. So ~80% mined [1] 1 - https://coinmarketcap.com/currencies/bitcoin/ https://coinmarketcap.com/currencies/bitcoin/

saalweachter 9y ago

To evaluate the price of a Bitcoin from the perspective of its value as a unit of exchange you need to take into account the volume of the transactions and the time currency is held between being paid and being spent. If there were $1T of Bitcoin transactions each year and the coins were held for 1 year in between, then yes, the total value of all circulating Bitcoin need to be $1T. If the coins are held on average for a week, you only need $20B worth of circulating Bitcoin. When you leave out that last number, you implicitly assume whatever interval you're talking about is the transaction duration, which is usually a bad assumption.

altern8tif 9y ago

How does Bitcoin make the transition from a gold-like store-of-value to a medium-of-exchange then? If the general consensus is that Bitcoin's value will continue to appreciate, it makes more sense for one to hoard it rather than to use it as digital currency.