Bitcoin Forum

its stupid to try to give an exact number. One person I respect said it should 3 times itself a year for the next 10 years i.e 3^5=243 times increase 243X200=48,600 in 5 years. other estimates I heave heard is between 1-10 percent of gold which could be anywhere between 4,115-41,150. based on 6.9 trillion of gold and 16,756,000 bitcoins. Anyone else have any good ideas?

I like to think that bitcoin is already worth at least 4 digits but its undervalued due to negative sentiment...

I'll throw my hat into the ring here. I think that the price of bitcoin will be $55,000 in 5 years. This is based on a $1 trillion total market cap for 18 million coins mined at the time.

$1 trillion is really just a nice round number, but it is more the order of magnitude that is important for the sake of discussion here. In five years, bitcoin is going to be an international payment system that is widely accepted everywhere in the world. It will be the number two currency in every market, second to the local fiat. Merchants will prefer to accept bitcoin because of the low fees, 0 fraud risk, potential for keeping some of the money off the books, and of course the international utility; as a result, they will incentivize customers to pay with Bitcoin by offering a discount when paying in Bitcoin, maybe upwards of 5%.

The seeds are still being planted, but the reality is that we have at least four well capitalized payment processors internationally who will be busting ass to get merchants accepting bitcoin: Bitpay, Coinbase, BIPS and now Circle (launched today in the NY Times article). This time next year there will be a number of large companies that accept bitcoin as payment, including a large gaming company like Valve or Blizzard, and there will be neighborhoods throughout the world that will have 20+ brick and mortar businesses within a 5 block radius of each other that all accept and prefer bitcoin. Berlin already features one such neighborhood, and New York City is next; the New York City neighborhood will be highly successful because of all of the Satoshi Square momentum, and on the heels of NYC, SF, Austin and Boston will quickly follow.

I think the price is going to be around $400. It may have topped at several k$ in the meantime, but I don't see how the scalability issues could be handled in time for BTC to continue on its current exponential trajectory.

(I believe the current rally is an outlier and we are going to see much lower prices before seeing much higher prices, as well.)

What scalability issues?

The 1 MB block size limit.

Why would this be difficult to resolve? I am betting all my bitcoin on this getting resolved before it becomes an issue  :).

Because to solve it requires a hard fork and there are members of the community who are strongly against removing the limit.  Bitcoin could potentially fork into two separate, incompatible protocols who will fight over the bitcoin name.

It depends on the ASIC sellers imho. A lot of Hardware was payed by customers in bitcoin, raising the price since the beginning of this year. They needed coins to pay upfront for the ASICS, so bitcoin went upwards.

The ASIC-sellers have to eventually sell those coins to pay their $-Bills of the chip foundries and all their suppliers. To make an operative gain, they have to sell the bitcoins of their margin, too.

Can the markets absob those massive sell orders or will they go down to pre-preorder levels? If they can absorb it and the chinese people really get interested, then bitcoin can go to 400-4000 in 5 years. If the markets crumble... well, btc at 20 bucks again for a long time.

I'm not well enough read on the subject to comment on the technical aspects of this particular scalability issue, but I refuse to believe that this will not be resolved. Bitcoin is designed such that eventually the mining block reward will be zero and the only thing that will keep people mining will be the transaction fees, which means that there will need to be an astronomical number of transactions at this time, especially as the transaction fees continue to move the decimal place over in the face of a growing price of BTC.

I got some feedback on this from Gavin in a thread here: https://bitcointalk.org/index.php?topic=322748.msg3455664#msg3455664

Very much not concerned...

I'm guessing that the ASIC mfgs already sold most or all of their coin to pay the bills for parts and labour. We can only speculate of the supply and demand for BTC in the future.

Yea ASIC manufacturers all used Bitpay, I would be very surprised if any of them kept a substantial portion of the charges in bitcoin rather than having it autodeposited as fiat next day. BFL didn't keep any in BTC.

+1 That's a great scenario you have painted, and very similar to what I see down the road, based on what is happening right now and our history so far. And your number is as good as any. Anything is pretty much a wild guess at this point. Actually I think $50,000/btc is conservative (as crazy as that sounds when I say it out loud). Who would guessed in 2005 that FB would have a billion users (a billion!! - holy shit!)

I also believe the scalability issues will be resolved. I'm not the tech expert to make that conclusion, I just watch and listen to the most knowledgeable, experienced people I can find - particularly those who have had previous success in seeing the future before most others, and have proven themselves over the years - and make my conclusions based on that. Guaranteed? Of course not.

First, it is probably going to be at least year or two before we start facing block size as a real limitation, the growth of the ecosystem will have been tremendous by then, with serious players and big money invested across the board. Although not perfect obviously, Gavin has been very confident and consistent around this issue for a long time now. I just believe there will just be too much incentive from so many sides to figure it out, and resolve the problems. Of course this can play out in lots of ways, but that is the nature of speculation...a percentage game...and I think the odds are heavily in bitcoin's favor as a triumphant, massively disruptive technology, and that means...well you all know what that means.  :o

That's exactly why we need a limit of some sort.  Unlimited transactions means no competition for block space and so fees will be limited to generosity.  I doubt we can stick with 1 mb too much longer, but we need sensible rules about the growth of the limit that are nonmanipulable.  Just removing it entirely will turn a limited resource into an unlimited resource, and that resource is supposed to pay for the security of bitcoin once the subsidy tapers off.  When we lift it we need sensible rules and near perfect consensus.  It will be a hard fork, so there is always the potential someone will keep a chain going on the old rules.  This will cause mass confusion among people who barely understand bitcoin in the first place.

I'm not saying it is a showstopper, I'm just saying how the transition is handled will play a huge role in where bitcoin is in 5 years.  It's everyone always trying to sweep it under the rug that worries me.

Great post geofflosophy!

Haha, I love how you basically just thought "fuck it, I'll just ask Gavin".

Also, his answer is mildly surprising (to me at least).

Last time I looked into the (block size limit) topic, it seemed to me that the point was still very much contentious. But Gavin's reaction now sounds like that phase is over

(yes, I know, Gavin =/= Bernanke, and his word isn't final, but I don't expect him to describe the situation as relatively clear cut when in reality he has to have serious doubts if some form of increase will be accepted without a hard fork)

You just lost all your bitcoin then. It is already an issue, we have hit 1MB blocks before, and no it haven't been resolved.

Everyone realizes it will have to be raised at some point. It is essential to keep it low as long as possible only raising it multiple times as it is absolutely necessary.

please keep this thread for speculation on price in 5 years, block size debates should be held in the tech section were qualified people can answer and not noobz like us trying to make a quick buck. Thanks

Wow.

Although, I don't really think you think best scenario that BTC is worth 1 million in 5 years. In 20 years maybe? Best case scenario, maybe. In the wildest wildest wildest imagination.  But 5 years? I don't think you think that.

Either $1000 or $10 in 5 years, reason because if nothing happen it would continue to grow steadily, well if something happen then DOOOM....

Except I still have my bitcoin...

For some reason I'm having trouble putting the train of thought together to get this point rolling, so excuse the shitty transition as I start here.

I don't think that at scale, mining incentives will be an issue, even with fees that are significantly lower in USD conversion value than today. If bitcoin is as successful as what I'm predicting; with a $1 trillion market cap in five years; we are literally talking about millions of transactions per block. So you imagine that the fee in a few years is on the order of 10e-6 BTC, but there are 10e7 to 10e8 transactions per block, and now all of the sudden we have miners incentivized to secure the network with tens or hundreds of coins per block, where each coin is worth $55k+. This seems like a great incentive to secure the network IMO...

Yes, I'm pulling those 10e7 to 10e8 numbers out of my ass, but it's not that far fetched. We're talking about a world where bitcoin replaces a large percentage of credit card transactions, but also "becomes the credit card" for lack of a better phrase for hundreds of millions of unbanked individuals, replacing cash as a means of exchange for some meaningful percentage of the population. I googled around a few minutes and came up with around 20 billion credit card transactions per year, which is about 380k per block, so that's the order of magnitude of the lower limit. 7 billion people each doing multiple transactions per day; sky is the upper limit.

Max Keiser makes an interesting argument for why he sees 5-6 figures in a few years: https://www.youtube.com/watch?v=A2Cjo7CHh6w&feature=youtube_gdata_player

Basically around the 3 minute mark of the above video they are discussing hedge funds and how that will be driving the price. The whole opening segment though is quite an interesting discussion about price.

Here's another scenario that I have been thinking about, based purely on adoption by the masses. Bitcoin has seen huge strides in adoption rates by number of businesses this past year, but there is a long way yet to go. As more businesses adopt it, however, the incentive for everyday users grows. Couple thus with the advances by the W3C Web payments group and initiatives from companies like Moneero in trying to provide a user friendly interface and I think we are likely to see adoption by the masses in the next few years.

What does that mean though? Current estimates of users range up to a million currently, so let's say the adoption in the next couple of years gets to 10,000,000. Each of them will need bitcoin, so let's say there are 1,000,000 coins liquid (not lost/forgotten/holding/invested). That averages to 0.1 BTC per user. Now what kind of purchasing power does each user need to justify wanting the bitcoin in the first place? No idea, but let's say $500 per person. So that means their 0.1 BTC is worth $500, or we have $5000 per coin.

Personally I think these assumptions are low. There will either be more than 10m users or they will average more than $500 per person. Liquidity is anyone's guess but I would presume as the value goes higher more people would sell. Interestingly if you use 100m users and 10m BTC you get the same result.

$10000, by then everyone would know Bitcoin and start buying it just for the sake of owning some....

Speculation about bitcoin price is really funny because if you listen what people say, they are certain (including me) the bitcoin price will be high. Lets assume $10000 in 5 years. It is doable. But it means bitcoin price should increase by $166 per month. Then why people are screaming about bubbles when price jumps by $30 in one month?

In 5 years the design flaw pointed out by Microsoft research can become relevant.

If you can't remember what that was about:
Without a sufficient block reward nodes will stop broadcasting transactions because by not doing it they increase their chance of getting the fees contained in them if they are mining.

it feels like we just got started, everyone is jumping aboard and we are ready to go! I can only imagine what the bitcoin world will look like in 2018

Exactly. If you look at price charts for any commodity, equity or currency you won't find many straight lines. They move in patterns but never go from A to B without pullbacks.

That sounds interesting. Do you have a link to more information?

http://research.microsoft.com/apps/pubs/default.aspx?id=156072

You could have googled it yourself though.

Yeah sorry, I'm being lazy, watching England beat Australia at Rugby and surfing at the same time was just too much for me  ;)

Thank you kindly Sir.

Actually prices are more likely to go up by percentage - 7% per month would bring us over $10K in 5 years.

If the trend holds it might be at 6.25. The transaction fees might make the difference between break-even and profit. What you are saying the problem will not arise because of altruism (which is running a node without a financial incentive)
People running a node because they provide some sort of service and do not mine might want to sell their transaction data.

Read the paper a solution to this problem along these lines is actually proposed in there. When it was published it was harshly criticized but maybe people have become more receptive.

I'm guessing around 1k a coin

I'm with you 100% in this estimation.

It won't be a smooth ride but I am optimistic that Bitcoin will scale enough to handle a significant percentage of world transactions. Right now it is still clunky for the average person to use, consider 1990s websites compared to today's or 1990s cellphones compared to today's touchscreen smartphones. Wallet security is a concern. The zero-confirmation problem needs more work for face-to-face shop sales.

However, I expect a lemming-like stampede from fiat when a critical mass of widespread Bitcoin acceptance and usage occurs. When the average person realizes they risk being left holding the bag they will exit their fiat savings with a vengeance. There will be a massive psychological push as well if Japan explodes its yen or the euro finally cracks up.

It bears revisiting this.

Were getting to the next hurdle in the bitcoin dialogue.

1) The network hash rate is increasing tremendously, and looking at all the major players coming to market by December/January, we are looking at another 10PH added in the next several months.
2) This is going to push the difficulty up as well.
3) As the network hash rate increases, the PPS rate is going to drop dramatically. Whereas a few months ago you could be pulling in a few BTC a day with 100GHs machines, you are lucky to pull in 0.1 now. What this is going to do is push smaller miners to other currencies and the rise of pools like multipool and middlecoin. This is going to create a situation where there are a lot of hashes being pulled from the BTC network, and the difficulty is going to level back off - however because the rate is too high for most small miners (anything less than 0.001% of the hashing pool), a lot of them are going to stay away.
4) There is going to be a rush to liquidate hashing hardware, reducing the pool further, and consolidating the "generators" to a smaller and smaller group.
5) As the other currencies start to become as acceptable, BTC is going to come into the sites of day traders and forex investors - allowing them to make money day trading while the market is still young. This influx is going to boost the price of BTC phenomenally.
6) Disruptive technologies are around the corner which are going to push the hash rate even higher. Only those with BTC reserves at this point will be able to purchase the new machines.
7) A new class of BTC elites will arise and the hashing battles ensue. Other Crypto Currencies will start to look a lot more attractive, and the pool will shrink again.
8) As we near the 1M block size limit, transactions are going to become more and more costly, so BTC to other currencies will replace straight BTC to BTC transactions. Intermediary currencies will start to see their valuation rise the same.
9) At this point, it becomes cyclical - fully mined crypto currencies become the "gold standard" and other currencies are simply orders of magnitude smaller. You might see a structure something like this.

BTC as the root gold standard -> LTC as an intermediary fund for scryptcoins -> Next 3-4 fully mined cryptocurrencies -> next 3-4 fully mined scryptcoins -> Intermediary transaction mechanisms

You'll also see the generation of OTU wallets with fixed amounts of BTC, and the conversion from digital trading currency into physical trading bits - verifiable via local tools. The need for a BTC encapsulation mechanism is going to arise - something that allows these physical BTC to maintain their value and not be counterfit nor copied - something like a RFID inside with a read only verification combined with a biometric database and bitbook...

But before we get there, we still need to mine the rest of the coins. And $55k per coin is a very, very low estimate in my appraisal.

However, there are a few things which could damper this.
1) Disruptive technologies which break the encryption of the BTC wallet keys
2) More undergound trading haulted by regulation
3) Regulation and governmental oversight (two way street)
4) Passing fad where investors and money leaves the market - remember, BTCs are only as valuable as they can be exchanged for tangible goods (or means to get tangible goods).
4) Internet explodes, WWIII, Zombie outbreak

Missed the third reason?

Er, why?  You do realize that, because 1MB is way too big to be a practical constraint at the moment, that it might as well not exist.  And yet, we've all been getting along just fine without a central diktat as to what we should be doing?

It's amazing how, when left to their own devices, people just figure things out and get on with it, like adults.

If the value of bitcoin is the same in 5 years that it is now, it will likely have out-performed all fiat currencies.  If it is the same in 20 years, it almost certainly will have done so.  That alone makes it a bargain at today's prices.

How rational is the exuberance?

“The market can stay irrational longer than you can stay solvent.” - John Maynard Keynes