Bitcoin Forum

To understand the purchasing power of 1mBTC in the future, one way to do it is to group the possible outcomes into a few scenarios, describe what must happen in order for them to take place, and then assess the probabilities to each of the scenarios.

By multiplying the percentage probabilities with the future values and summing up, we have the weighted average future value ("expected value", EV). We may discount it to present value if we like, however in this model I don't do it but rather assume that the sums measured in dollars represent the purchasing power in today's dollars.

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A. Money becomes ubiquituous coupled with the proliferation of altcoins (thousands of them, perhaps everybody having his own coin), yet continues to have its functions in value storage, measurement and transactions as much as applicable. The world will be very much different and nobody anywhere will be poor in the sense of not having his basic needs met. In this utopian and hard-to-desribe scenario it does not really matter what the price of mBTC is, and it may have evolved to other forms. At any rate, we can evaluate that mBTC buys minimum $1,000. Dollars have of course been forgotten in this scenario.


B. Bitcoin totally replaces fiat worldwide and becomes the sole reserve currency. Since the valuation of the world is $400T, and most of it is financial assets, which lose their raison d'etre in the non-inflationary Bitcoin-based economy, we can conservatively estimate that the hard monetary stock of bitcoins is worth $100T and thus a mBTC is $5,000. Maybe more, but if more, then it just means that the world will be different than what it is now and conventional valuations (I want a new car!) don't hold, due to the rapidly advancing technology.


C. Bitcoin becomes an important independent world currency or a reserve currency with real bills, moderate fractional reserve, etc. Then it can go to the same value as the stock of world's gold, which is in the same ballpark as the M1 money of USD, EUR or JPY. This would put 1mBTC=$300.


D. Bitcoin's ascent is somehow stopped so that it spends a longer amount of time valued "something in between", not going up, but not losing its potential either. This I don't think can be a permanent situation, but then again - I never believed in 2006 that the fiat money system could be extended for 7 more years (even though there was no Bitcoin then)! Sometimes imbalance persists. A logaritmic midpoint between $1 and $300 (the following target) is $17.


E. Bitcoin fails, resulting in its value going to zero or near zero. It is actually very hard to think of a credible scenario where Bitcoin would do just this :) But let's have it just as a reminder that it is in beta and also that the world is just becoming so interesting that negative as well as positive things may happen unexpectedly.

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If all the scenarios receive equal probability of 20%, the future (2015-2020) value of 1mBTC is $1,263.

- Are there possible outcomes that are not groupable to existing scenarios and thus require an additional one?

- Should the percentage probabilities be adjusted and if so, how?

Congratulations on the ingenious approach. I like it.

My thoughts:
Scenarios A and E can be statistically ruled out (percentage wise) due to their extreme nature. I'd give both of them 1-10% at best.
Scenarios B and D have more possibilities to exist than A and E since there's already evidential data for both of them. I'd give both 10-30%.

The most possible scenario is IMHO the C. This is happening already and we're witnessing every day. More data will value it with more percentage in the future, but I strongly believe that this will be the case. I'd give it a 40-80% of existence.

I have already posted in the very beginning here of a thought I had about a world wide currency. This was a case study among friends back then. You might find it entertaining...

Excellent analysis by both of you.  Well done.  Great reading.

Great post.  I actually would give the 5th option ( bitcoin fails) A much higher probability, maybe 50%.

All 4 other options mean bitcoin has succeeded with different outcomes so they get 50% together.

Bitcoins have various uses.  An arbitrage argument implies that the values derived from all uses equalize.  One use is as a circulating currency.  In that use, the value is described by PQ=MV.   In this case, M can be taken as the fraction of the bitcoin which is in use as a circulating currency.  In that application V is approximately 6, which is consistent with fiat economies and the current blockchain turn-over.  Gresham's law dictates that bitcoin are hoarded in preference to fiat.  My best first estimate of M therefore is 10% of supply.  Let's be conservative in valuation and lazy in math, and allow it to be 1/6 to balance V.  PQ is the volume of goods and services transacted times the price at which they are transacted, using bitcoin.  On this basis, the market cap of bitcoin should be approximately equal to the bitcoin annual GDP.  As a best-effort first guess, I would call it, say, France, about 2.6 tln USD2013.  For a semi-durable bound, we take the all-uses bitcoin supply at 18mn.  Thus, 1 mBTC = $15.

The parameters of the model are up for debate, but the model itself is inescapable.

You can already rule out scenario A and B because China expressed as openly as they possibly could that Bitcoin is NOT a currency and is NOT money. Good luck trying to be the worldwide anything without China's backing.

+1
Statistically speaking, your bitcoin-as-currency assumptions are fairly adequate. Chances are it's missing a strong point here. This is the physical meaning of BTC. This is the most important aspect IMHO. IF (and that's a strong one) it evolves to a currency the approach you've came along with, will be possible. If it remains as a vague multi-system (as it is now) then the parameters are totally different and it requires *a lot* of work to be done in order to predict a realistically fair price... ;)

This is nothing but a political statement IMHO. Political statements can be different from one day to another (especially to political systems like the Chinese). So, I wouldn't hold my breath on the todays announcement. After all, it's a vague one. People are free to use it; while monetary corps are not? Something is *REALLY* fishy here if you change the optical angle you're looking at it...
Hint: Ever tried to make a *corporate* exchange account on Gox or Kraken? ;)

Fantastic intelligently calculated analysis repietilla, was a good read.

C seems like the likely scenario at the moment, D sounds like gold in the past 2 years.

Very informative post. As things are right now, I would be inclined to believe that Option C might prevail:

C. Bitcoin becomes an important independent world currency or a reserve currency with real bills, moderate fractional reserve, etc. Then it can go to the same value as the stock of world's gold, which is in the same ballpark as the M1 money of USD, EUR or JPY. This would put 1mBTC=$300.

Time will tell though, and in the meanwhile it's usefull to have a summary of possible scenario's

Nice approach!

Still, while I accept the existence of scenarios B (sole currency) and E (failure), it seems to me the other scenarios are variations on X, which is co-existence; I'm not quite sure what to make of A!

I'm pretty sure $100T of money stock is an over-estimate in a non-inflationary world. The world's 2010 money supply (http://money.howstuffworks.com/how-much-money-is-in-the-world1.htm) was only put at $55T. I suspect we might get by with only $20T.

I would break failure down into three possibilities resulting in low/zero value ($0.1): technical failure/limitation: 5%; political suppression: 10%; commercial/competitive failure: 15%.

I see two possibilities yielding high value success (somewhere between $1,000 - $5,000): competitive/Darwinian domination: 15%; political adoption with the suppression of alternatives: 10%.

Successful co-existence is another possibility, as per cases C and D ($300 and $17): 45%, yielding a middling value.

So I'd calculate 1mBTC's expected value to be $0.03 + ($250 to $1250) + $142.6 = $393 to $1393, depending on the likely value of bitcoin as the world's exclusive currency.

Bank of America analysts just said that C has a maximum valuation of $1300 ($1.30 per mBTC).

I don't believe that of course, just wanted to make everyone on here laugh.

I think that rpietila's per coin dollars are inflated.  I think in a C to C- scenario (C- being where bitcoin replaces major functions of PayPal, WU and MG) that we would see a valuation of about $30-$40 per mBTC.  That's an order of magnitude difference from the $300 that rpietila is saying.

I see A and B as very remote (less than 10% together) and E as about 10% as well.

I would put C-/D , as the most probable scenario. Given the technology and goverment regulatory risks.
i.e.,
a) Bitcoin handles the same volume as Paypal, but both have different areas of application
b) Bitcoin is a major player in international remittances , Western Union and Money gram are wounded but still limp along as the lower end customer base still use them.
c)  As a store of value Bitcoin captures 10% of the market share of gold.


Why just 10% of gold and not 100%.
a) After 15 years, online sales are just 10% of retail sales
b) There will be some medium to small size govt that will ban bitcoin.
c) The greater the market cap of Bitcoin, more incentive for creation and propagation of viruses, botnetworks etc...
d) Inflation from Altcoin's in the future.

That still puts it at at around 30k per coin.

Someone has to play the devils advocate.

Everybody here is painting a mostly good to great future for bitcoin.

Risto's E option (bitcoin fails) seems to be almost not an option to most of you. There are so many reasons that this
option will play out that it's not even funny. I'll leave the technical reasons out of this. The most threat is from the current elite of the world that basically control everything. Sure, they might just climb on the bandwagon and try to make even more wealth with bitcoin but the chances are not small that they will come down hard if it looks like bitcoin is "upsetting". It's not a matter of the U.S.  or U.K. banning bitcoin. If this happens it will be practically a worldwide ban. The bitcoin technology will continue to exist of course but not as anything we wish it would be.

For this reason I suggested in my 1st post  a 50% possibility for option E.

I wouldn't try to guess a future valuation, but C feels like a realistic scenario. As an asset class its future would be pretty peaceful and secure.

There would be a dedicated attempt at all-out eradication if it ever came close to completely upending a major currency. I've no idea whether such an attempt could ever succeed, but the wars on drugs and terrorism don't make a whole load of sense either and they're piffling sideshows in comparison.

What's worth taking into account are the uses that are still to be fully explored. It's possible previously unthought of new economic opportunities could be created.

http://www.zerohedge.com/news/2013-12-05/bofaml-sees-bitcoin-fair-value-1300

$1300 apparently is a fair value... seems a bit plucked out of thin air, but there you go!

The tackling of this question is commendable since answering it is not something that many (or any) of us are up to individually.

Option A seems rather unlikely in the near future. In order for us to not have a lower class "poor in the sense of not having his basic needs met" we would need a massive technological change, ala Star Trek's replicator, transporter, etc. Scarcity of basic resources such as food, clean water and adequate shelter for the masses who still don't possess a smart phone is not a trivial problem to overcome. Without some incredible change in technology and/or motivation by those with means, I can't see worldwide distribution of wealth as a benefit for any digital currency - maybe I'm just missing something. In my opinion money may become ubiquitous, but the value of money in relation to resources will still challenge those who struggle today.

Option B seems unlikely since there is going to be a massive tug of war between the desire for the government to maintain control and the ability for technological advances to thwart such control, without either side being able to declare ultimate victory. It would be like the Pirate Bay buying out and taking over iTunes/Apple - it gives one giggles to think about an awesome day like that, but it's hard to envision a reality where this is the case.

In my opinion, Option E is also unlikely under any scenario except for technical failure. The world has just barely discovered peer to peer financial transactions. Even if bitcoin fails because of a technical reason, how do you put the desire to perform these transactions back in the bottle? Most likely bitcoin is adaptable to technical failures and if it isn't then bitcoin 2.0 takes its place. Considering that there is a likely point where you can exchange the value of bitcoin 1 for bitcoin 2, I don't see that as a failure. Similar to the war on drugs or peer to peer file sharing, the government can have an impact, but it never really is able to fully stamp out the public's desire for drugs or the spread of information.

Options C and D seem plausible. I can't fathom what kills the momentum when bitcoin reaches perhaps the value of $17/mBTC mentioned in Option D but then again the future is always hard to see before you get there. I'll take a stab at it though:

TL;DR version:

Option D happens ($17/mBTC) and at that point, major governments decide to adopt the components of distributed currencies making officially sanctioned competitors for bitcoin that the elite of the world can get behind and embrace. This mollifies the masses into being provided with officially endorsed cryptocurrencies without banning bitcoin. Bitcoin is overly regulated and becomes a tool for only the technologically capable, the criminals or fringe anarchist/libertarians (no offense intended). I could see bitcoin managing to stay valuable but not be accepted by the masses due to fear of being scrutinized or persecuted for choosing to use the 'shady' version of digital currencies. Back to the bit torrent comparison again, how many users don't choose to use torrent for fear of being prosecuted and instead go with iTunes? Between fear and ease of use, the majority choose the sanctioned version, I wager.

And yet the US Treasury and FBI have REPEATEDLY said that there are legitimate uses of bitcoin.  The more senators, Second Market customers, hedge fund managers and billionaires that get involved in bitcoin, the less likely this is.

Since we are seeing a fair amount of this, I'm setting the government ban possibility as very low.

Alternative A is utopistic, some people have explained it to me but it was above my understanding. Similar as the Internet is now, compared to the life in the 1980s. The change has been so profound, yet so gentle.

As 100x cleverly pointed out, the expected value (weighted average of the outcomes) does not change significantly whether the zero case is weighed with 3% or 50%. It is much more important that there are realistic scenarios with enough zeros after the significant digits. And based on sound mathematics and economical thinking, this is the case. This drives level-headed investors to take Kelly bets and many more take smaller bets.

This new fiat pushes the prices higher. Compare this to an old thread from last March. Price was about $50 and we run the same thought experiment. We arrived at the conclusion that the EV is $2200 or so. The background was that price had quickly risen 5x after several months of flatlining, so essentially identical to our situation. It was scary to buy more after such a runup, but this analysis was irresistible.

It is self-fulfilling. If 9 months ago Bitcoin was undervalued by 1:44, now it is undervalued by 1:100, 1:300, 1:1000 or so, depending on the weights. If Bitcoin is considered as even more sure bet now than it was then, it is all the more probable that 9 months from now we estimate that the most positive scenarios are the most realistic.

As long as bitcoin price relentlessly rises (and we are already seeing about 50% awareness among general population), everybody is faced with the decision whether to buy or not. Oh, I had so much to talk to you from last night's conversations :)

interesting reading, I would like to share my imagination for these scenarios

A- If I understood this right than I think this is happening already, we have so many worthless coins out there I mean really so many that we have a coin for every word in the dictionary (sarcasm) but this really worries me, I thought of having 2 mx 3 alts as a backup but this went out of control now I am starting to think what is the point of alts.

B- I personally think that is the last thing to happen, even to think about it is hard for a simple reason, this could be a scenario only if a big revolution start to take down all currepted systems and replace them with a system who adopts the concept have.

C- I think this is the most realistic scenario and the closest to what we are at now, and I personally believe on this one, in fact just few minutes ago I posted something about it, feel free to read it   https://bitcointalk.org/index.php?topic=358943.0;topicseen

D- to be honest I really do not understand how can this happen exactly.


F- I didnt like seing it on the list but for the sake of the argument it is a possible scenario, but there is really a small chance of this happening.

Nice argument.

It's a prediction, not for now.

My probability distribution (for a not so remote future when I am still alive)
A: 0
B: 0
C: 5%
D: 45%
E: 50%

So the expected value of mBTC is 300 * 0.05 + 17 * 0.45 = 22.65.
Not too bad, it seems I have a good chance to be a millionaire without doing anything. :)

Am i misunderstanding something here? It seems that your prices are based on a total amount of fiat going to bitcoins divided by the number of bitcoins. Isnt the price based on available supply vs demand. The fiat in bitcoins - doesnt it make a only a fraction of a price?

I don't see any possibility of half-measures, ultimately. If Bitcoin gets established in the mainstream as anything, it will inevitably become everything (or the basis for everything). It's simply way too superior to fiat for any other possibility to play out. And if it becomes anything, it will be a store of value. With its properties it will be irrestistable as a store of value and will command insane prices. A ban would just push it to other countries and a coordinated ban would just push it underground and to holdout countries. It might take a few years but eventually it would become so powerful there that it resurges onto the world scene and continues as before.

Or it fails. (Death by altcoin dilution is probably economically impossible, but I haven't reasoned it out conclusively.)

Hence we have the old binary bet. Bitcoin will either be nothing or everything. Either nothing will be denominated in Bitcoin, or the percent of outstanding coins you control will command roughly that same percentage of all the goods, property, and services in the world.

As to the probabilities, I used to give it 90% chance of failure and 10% chance of success (still a staggeringly good investment), but now I'm leaning toward 50/50 or maybe even 60/40 in favor of success. It only makes sense that as upside is reduced (by 100x this year) the probability of success is increased.

You are making something of a Pascal's Wager style argument here.  Sure, Bitcoin, like believing in God might bring ultimate happiness and for the small entry costs set against the eternal damnation of Hell or the eternal damnation of missing out it might be logical to believe and buy in even if the odds in favor are tiny, but it is not an argument that ever made me want to go to Church or take out a loan for Bitcoin.  You should add an option for gradual decline over time as people find other things to obsess over.

The odds in favor aren't tiny or even particularly small, so it's nothing like Pascal's Wager.

Actually, I can see bitcoin failing, but subtly.

There is no reason that Bitcoin can't be used to prove the concept and get the legislation worked out, and then it gets upgraded to a Government controlled version.

This could easily happen in the same way that the people who bought all those great domain names found themselves being called domain squatters and eventually had to hand everything over for free.

Rather than calculate where bitcoin will be in 7 years, why not work out where it may be in 25 years - that is the sort of time frame the finance industry works to.

 

Interesting approach.

I distinguish bitcoin adoption by speculators apart from bitcoin adoption by the underlying economy. In 25 years I expect bitcoin to completely replace the legacy financial infrastructure and extend its utility through a disruptive combination of lower cost and software-defined features. I expect network effects to strongly favor keeping bitcoin, and to favor amending the consensus protocol to forestall otherwise competitive cryptocurrencies. Bitcoin is the TCP/IP of money in that regard.

Furthermore, consider that bitcoin is not minted by central banks in response to credit demand, rather individuals and commercial entities requiring an amount of bitcoin for working capital, e.g. for ordinary bitcoin-denominated expenses, will have to purchase that bitcoin from some holder. I am beginning to believe, and will look for evidence, that speculative holders are selling bitcoins to transacting users very dearly. Thus using a metric such as world M2 monetary base to figure the extreme high end of bitcoin adoption may be too low a target.

I take a similar view on the idea that government versions of crypto currency might compete with bitcoin and thus keep it from gaining further value/adoption.
https://bitcointalk.org/index.php?topic=358521.msg3839368#msg3839368

A government issued crypto currency would necessarily be much more centralized than bitcoin - otherwise what would be the point? No large government is going to want transactions that they cannot track, block or reverse. They aren't going to want a finite supply since the central banks would be largely pointless. They sure as hell aren't going to support mining to be the mechanism for controlled distribution.

The question then ends up being whether citizens accept or reject government issued digital currency vs bitcoin. To that answer, I'm not sure - the press has managed to get it mostly wrong about bitcoin so I'm dubious about whether they would do a decent job of educating people on the difference between centralized and decentralized currencies.

In the end, do customers always choose the superior product? I'd say that the answer is no, especially when the product is as complicated to understand as bitcoin is. I'd have to warrant that centralized digital currencies will be a threat at some point.

I would add one scenario:
F - BTC becomes illegal in many countries, although it has implemented more anonymity tools. Bitcoin becomes black market currency, especially for international transactions. It's not widely used, but because it transactions are secure can't be traced. BTC can be exchanged for gold or fiat in little tax-heaven countries. It's hard to asses mBTC value in this case.

Personally I think in that case F is more probable, than E.
I vote for C as most probable, although might be B in optimistic case.

This is a very interesting thread, as usual for rpietila :)

I don't know whether this has been discussed elsewhere, but has anyone tried to estimate a value (or stated differently, a market cap) at which the US government (and/or other governments) would feel threatened by bitcoin? People like Ben Bernanke probably do not currently view bitcoin as being particularly dangerous to the dollar. But if they did, then I imagine they could and would do whatever was needed to maintain the dollar's supremacy over bitcoin. Perhaps this will be what determines the steady-state valuation of mBTC for the foreseeable future.

One does exclude the other, in my opinion. Dollar/Fiat and Bitcoin can coexist since they each serve a different purpose. Nevertheless, I presume the exact opposite. That is; the BTC-Banks bond getting stronger with banks fulfilling the "escrow" side of things.

Chances are they already at it (it was reported at the senate hearing). I have mentioned it previously in the troll-thread (urm... I mean wall observer :P ) that there's a strong possibility men like Bernanke are using BTC to absorb a part (or the whole) of the inflation around the world.

If they succeed, BTC has an enormous crash and everyone stays away for about 100 years. If they fail, BTC gets its throne as the primary international coin around the globe. Win-Win situation... It's an extreme scenario; but yet one that we cannot rule out.

Early bitcoin enthusiasts, myself included, have a natural tendency to envision an inevitable struggle between bitcoin (the good) and fiat (the bad), with one ultimately conquering the other. Perhaps. But lately I have become interested in thinking about how they may coexist symbiotically; at least in the short term, and maybe in the long term. After all, it is not in anyone's best interest if bitcoin becomes so overwhelmingly popular so quickly (as some would imagine) that the fiat system collapses; this could be too destabilizing and lead to war and chaos. And the destruction of the internet, and then of bitcoin ... unless Jeff Garzik's bitcoin node satellites are up and running by then ;) ....

Ideally, imho, existing institutions like paypal, amazon, banks, credit cards, Western Union, etc will find ways to make use of bitcoin and in so doing, will strengthen bitcoin (maybe even make themselves richer) in a way that does not destabilize the current system. However, a side effect will be that in a time of localized chaos (e.g.: war in Syria, economic isolation like Iran, hyperinflation in Zimbabwe), bitcoin will make it easy for the population to build a capitalist / free economy from the ashes, and to do so *quickly*. Bitcoin would be as important as social media was to the Arab spring, but better. Imagine if this vision of bitcoin were presented to Congress or the CIA. They would then be in a position to promote and protect bitcoin!

I had not considered that Bernanke might be using BTC to absorb inflation. It is an interesting idea, although I'm not sure I follow what his thought process might be. The USD monetary base has roughly tripled; however, broad measures of the money supply have not expanded, at least not nearly as much as the monetary base, and inflation is not (so far? ...) very high. So how exactly does bitcoin fit into that? (At least, from Bernanke's point of view. Assuming he has even given it much thought.) 

I didn't say it's small, just not widely used, a slight difference. Anyway, it's hard to guess black market cap, that could be using bitcoins.

What is wealth? I mean litterally what is it? Imagine someone you know with a lot of money. Do you think you can read about him on the news papers? Most big-cash guys are staying low and that's for a good reason. Their "job" is to control wealth. Being bombed by inflation tools like derivatives, bailouts, stock market bubbles etc, it's rather difficult for them to control things like they used to...

Bitcoin may be able to "fix" this. Imagine some of them holding a great amount of coins (this accumulation is happening as we speak). One who controls the wealth, can control the price; isn't it? I really don't know if they can make it happen. They certainly have the financial tools and resources to do so. I really don't know what to wish for; I want them to succeed or not? I guess in a future not far away from now; they will be ones of the rich (bitcoinwise) as they used to be in their previous monetary life.

Besides of that; there's a strong possibility that these guys see a grave danger coming from bitcoin. This will cause the mother of all storms to its price. People who believe in it though; must be wise and keep their positions. In either case, they won't have to lose anything... the ones who came to short some cash out on the other hand... well I feel sorry for them. ::)

I have few ideas to unlock the btc value for everyone.

1. top 100 holders give away certain amount of btc to as many individuals as possible when btc price increases every 2 folds.
this enhances the principle of btc. if mbtc wants to be recognized as USD 5000, it needs to convince everyone on the earth, btc represents ethic of freedom, transparency and fairness far beyond low-cost and anonymity. This will also distinguish btc from other alternative copy-cat coins.

2. open eCommerce site for chinese folks to accept btc, which I would open such service

3. educate all the hookers, massage, escort female or other service providers to start accepting btc, service providers who don't need to buy merchandise for resale are most likely to be btc adapter.

more ideas are coming...

Why does everyone seem to think Bitcoin is a threat to government?

Its not!

Its a big threat to the banking industry though, and because of that, its actually something that government finds very useful.

I would not be surprised that in 20 years, Bitcoin, the protocol, will be used to do all small value internet transactions but it won't be bitcoin, the coin we are currently trading - that will never actually hit the big time, with the government releasing their own version, a bitdollar or bitsterling as soon as it becomes idiot proof to use. This will be the cash of the future, and be linked in value to the fiat its representing.

The banks, on the other hand, are going to find that Bitcoin removes their unique relationship with governments, and will find that they will start losing their huge protected profits as people can start doing crowd sourced mortgages at real free market low rates.  This does the same to the banks that email does to the postal service.  It doesn't kill it, it just makes it irrelevant to the public.

However, for Government, bitcoin offers automatic taxation on all trades, the removal of the need to chase debts, and the costs of having to do so. The only problem is knowing where its borders are - much like the issues that the US has with knowing who it can spy on and who it can't - and what it does about it!

Personally, I don't see my current Bitcoin investments having any value by 2030!

LOL @ 3...  ;D

By the way; all of the above should be obsolete ONLY IF *one* company incorporates btc... Paypal.

did you put a computer power (i.e Quantum physic's) being implemented in future to break even the SHA256 code? i think it's just a question of time to see real power's that realy affect BTC in his root's, bad news also included like the Chinese Gov. banning it from institutional bank, maybe even a worldwide hacker (group?) knowing a bug and stolen all the bitcoins...

I like the BTC concept to send and do payment's at high speed but it seam's BTC has a long range target mixed with computational power, witch is translated in "Loss"

There's always the possibility that the quantum computer is already there for mining purposes as well... ;)

rpietila, Thank you for your work. This is good speculation.

I would like to take it 1 step back toward the origin of the value of 1BTC. What is the value of 1BTC most equivalent to? A % of mining equiment energy cost? A % of BTC transactions per second? A % of users? A % of the brand?

If these can be established at all, can they be charted into all the factors that make up the value of 1BTC and by how much?

Actually, this is already happening and could result in Scenario F : a new "new economy bubble". Look at the zillions of altcoins already in existence. I've got some Doges (http://dogecoin.com/) barking in my pocket (mobile phone) worth a couple of dollars. Mooncoin (http://mooncoin.wordpress.com/), issuing coins by the billions, is still worth something. Even Bytecoin (http://bytecoin.biz/), a complete 1:1 copy of Bitcoin and totally dead for a long period, is back and has always remained to have some value.

But don't take it from me, just look it up yourself (http://www.cryptocoincharts.info/v2/markets/show/cryptsy).

The altcoins already play an essential role in the adoption of cryptocurrency and the exploration of its use. I do not see it as a danger to the prospects of this technology, but as an essential requirement thereof. Money (currency) will be freely available, but the value will be established by the free market. Hell, even now you can already buy your own altcoin (http://coingen.bluematt.me/) for 100 mBTC.

_{I seriously think rpietila should create his own altcoin and use it for his services/endeavors as a token of trust/admiration/connection/whatever.}  ::)

To me, this rise of the altcoins proofs (http://www.devtome.com/doku.php?id=what_does_dogecoin_teach_us) that central command of money is not absolutely necessary for currency to work. Apparently, the concept of cryptocurrency has sufficient properties for the coins to be accepted as currency very easily. Of course, it's not that serious when its about fractions of a dollar, but the baby steps do not prove difficult. I bet non-tech people will have no problem using crypto in day to day life if the first 3 transactions clear and result in the groceries in their fridge. Apparently, the construction of agreement between participants that the coin has value is not that hard to achieve.

My exposure to Bitcoin is not as much as it has been. It may still rise to unbelievable heights but I see more value in the protocol itself and the use thereof that has not been established or even invented yet. Micro payments will be possible due to this technology and together with contextual computing (http://boombustblog.com/blog/item/9146-why-tech-is-far-and-large-the-biggest-thing-this-millennium-lehman-eu-crisis-included), decentralising tendencies and crowdfunding/working, will mark a change in how we do things and get paid.

Society is moving from institutions (http://greatestinstruments.net/breaking-down-the-pyramids-that-govern-part-1-of-2/) (initially started as instruments) to emergent networks (http://greatestinstruments.net/the-rise-of-emergent-networks-part-2-of-2/). The way money works will change (or... is changing already) as well from token to programmable software.

All this combined, the options are limitless.


Something much closer to the reality of tech than eternal faith in that what is now. Invest acccordingly.

A. Money becomes ubiquituous coupled with the proliferation of altcoins (thousands of them, perhaps everybody having his own coin),

this is a senerio I have also stated before in similar terms.

there is one proven way to crack bit coin private keys. Make an alt, and the wetware (human brain) will retrieve private keys and send you BTC.

The wetware is forced to conclusion they have to diversify.

To me it looks like everyone will be running their own chain, pos, to some extent, plus several side chains like chaf to ne attacked at cost to the attacker, who then will in turn face attack as they have had to divert hash, resources.

several larger chains/pos will emerge, as the main carriers, of wealth, but its not going to be a winner takes all. The BTC  decsion making process, while excellent cannot afford to agile enough to evolve fast enough due to market cap/importance. However alts can rise and die quickly with little repercussion.

The UN estimated the global black market economy at $2tln USD 2008, which I think was very conservative.   Probably in half of those transactions both parties would benefit from using BTC.

+1

Scenario F has a high probability > 50% IMHO for Bitcoin but not for Cryptocurrencies as a whole.
It has become incredibly easy to trade Cryptocurrency a for Cryptocurrency b.
Scrypt is a major reason why Litecoin may be here to stay.
There is an endless possibility of new Cryptocurrencies with desirable features, possibly linked to different communities (just look at DOGE, without the meme it is nothing)
Bitcoin has plenty of room to grow but to think that there will be only one unifying Cryptocurrency is a Dream in my oppinion.

(yeah, the TCP/IP argument ... just look at DirectX vs OpenGL.)
There is no serious pressure to stick to one standard as the effort for adding Cryptocurrency X to your services is quite low, especially if services can exist that auto-trade to your preferred Cryptocurrency)

Hi

i think option C is best realistic option (mBTC 50-500$)

C. Bitcoin becomes an important independent world currency or a reserve currency with real bills, moderate fractional reserve, etc. Then it can go to the same value as the stock of world's gold, which is in the same ballpark as the M1 money of USD, EUR or JPY. This would put 1mBTC=$300.  (50-500$)

If 1 mBTC will ever be 10, I will do a naked skydive with a huge Bitcoin logo on my parachute and a small Bitcoin logo on my dick.

Guys... be realistic. Bitcoin is fun but going at 300,000 will make some people own what? 3,000,000,000!!? And that's just in Bitcoins.

Nobody has access to that kind of liquidity. Nobody. Bill Gates is rich, but he has buildings, jets, computers, wallpapers. Everthing is added and sum = his wealth.

It is true that bitcoin's ascent will generate interesting stories about people who want to diversify their holdings. I cashed out about $3 million starting November and still none of the money has been used to buy the final product (real estate), and only half of it is in my bank. The current banking system is designed for maximum $50k transfers, and it takes really long to verify yourself in every nook and transfer in that small increments.

Don't want to hijack your thread but I'm very curious, and asked you on pm also (but no answer*):

Don't you feel unsafe with that amount of money in banks? And by real estate, you want one property or a whole building of apartments / condos (investing so you can take rent)

*Also don't want to step the line

Most people think that there are "safe" investments and "unsafe" investments. This is a fallacy. Every investment has a profile of risks and uncertainties, and they differ among asset classes, jurisdictions etc.

Ok guys, you can stop guessing. My sources(*) have confirmed case B is actually correct. BTC will replace fiat globally and be worth the aequivalent of todays $100T! This will happen precisely in October the 20th in the year 3514!

(*) Source: "The worst investment tips of all time", Year 3600 edition, BTC with a avg interest rate of 0.6%.