Bitcoin Forum

I was trying to explain bitcoin to a friend today and they asked "how can it be worth anything when there will only be like 20 million of them ever?"  That's when I went into explaining how bitcoins can be divided down to the eighth decimal place which makes a single bitcoin worth a LOT of money.

How much is a lot?

Well, I couldn't answer because I forgot the basic math behind it! So, assuming we're dividing a single bitcoin down to the eighth decimal place, what is the maximum value of a single coin? Yes, I realize that might not be a totally easy to answer statement because they value fluctuates but let's talk generally.

Thanks!
Rage

The maximum amount of mini-bits Happy-bits can be determined, but not the maximum value.
Maximum value relative to what?
For example: BTC/Gold might eventually stabilize, much more than BTC/USD.


EDIT
The answer:
0.00000001  "=" 100 Million mini-bitsHappy-bits/BTC
If I'm wrong I'm sure someone will let us know.

i think you forgot the two places to the left of the decimal... no?

EDIT:  oh - sorry - "single Bitcoin".

that doesn't make much sense.... they're worth something if there are not many of them (or the demand is huge).

Zero added to the left, thanks.
I also added "=" around the equal sign, so now it doesn't look so much like an equation.   :D

I think there is an upper limit in the current implementation of bitcoin
1 BTC @ 1Million USD makes 1 Satoshi worth 1 USD which makes commerce difficult.
Imagin if you couldn't buy anything under $1 or somthing worth $1.50 would have to be rounded to $2.

.00000001BTC = $1 means .00001BTC = $1000 means .01BTC = $1M

Satoshi was no dummy.

That's worth completing:
0.00000001BTC = $1 means   1BTC = $100Million USD ($100,000,000)  

Bit more realistic:
If 'pennies' are still needed:
0.00000001BTC = $0.01 means   1BTC = $1Million USD ($1,000,000)  

"Still needed" as if anything has cost a penny in two decades. :)

^^^
pennies: Micropayments to people in poor countries who somehow have computers.
...or, you prefer to not see the upper-limit of $1Million USD ($1,000,000)/BTC   ;D 

World monetary mass estimated by the International Monetary Fund in 2009 was 4 trillion dollars or 4,000,000,000,000,000,000 $

4,000,000,000,000,000,000 / 21,000,000 btc = 190 billions dollars for 1 btc
 ;D

I actually used the debt of 14 + 3 Trillion and got 17,000,000 / 21 or about $809,523,809,520 USD per BTC.
Now if you ask me, I really want it to be quickly adopted. That way I can be added to the "Richest man" on earth along with the 10K BTC pizza guy. :P

You've got a tad too many zeros in there. 4 trillion / 21 million is around $190,000 per bitcoin.

This is a kind of interesting question. At some point in time, we thought there would never be to few ip-adresses either Some factors to take into acount:

Ofcourse, you need to be able to pay really small/specific amounts of money.
The world economy is growing a few percent every year.
A lot of coins will get lost along the way.

The last one I think is the most important, people are fuckups and lose money, specially coins. In fiat currencies, lot's of coins get printed every year.

A trillion is the number that has more and more zeros until you get bored. Public school, I assume?

Sorry for being a jerk :)

I don't know the answer to this but here is one way to look at it.  Imagine if BitCoin only replaced Paypal (Preypal) and nothing else.  Now figure out about how many dollars are in the Preypal system.  Let say that is 600 million (I do not know the real number), and there are 6 million bitcoins out there......
using that logic a BitCoin could be worth $100 if it replaced Preypal and Preypal only.  One BitCent to a Preypal dollar.  This does not set a maximum of course but it gives you an idea. 

These are interesting mind exercises ... I do them all the time to keep the grey matter clicking. :)

But think of the wider ramifications. Imagine all those people currently sitting on hundreds of millions and billions of dollars of wealth, Buffet, Gates, Ellison, bankster CEO's, the Paris Hiltons, old money families, Tiger Woods, Mark Zuckerberg, etc ... there are quite a few but not innumerable, for guestimates sake lets say around 200,000 people who control 90% of global wealth or something like that.

Now, imagine if bitcoin become the new denomination of wealth. Suddenly we have world turned upside down where the new holders of big wealth are cyperpunks, linux hardware nerds, extreme gamer college students and various other programming geeks, libertarian anarchists and etc who got in early. Even a few tens of bitcoins could represent a massive holding under the new system.

And that other former ruling elites are suddenly grasping at straws trying to get into bitcoin at any cost as they see their power evaporating away in the collapse of the old discredited monetary system.

Those people's wealth is measured in dollars so that we can compare sizes. Their wealth is not actually dollars. When we measure their holdings in Bitcoins they will still measure well. Maybe not as well since surely some of their holdings value is deeply tied to the current establishment. Bernank et al actually derive their wealth from the dollar machine, they won't fare so well.

Ask a woman "How much is a single diamond worth ?"

Then you can add in imponderable variables like
"What size/color/carats is it ?"
"Is it in the pawn shop, or the window at Tiffany's ?"
"Is it attached to a Engagement Ring?"
"Who's offering the ring ?  Bill Gates, Fred Astaire, Tom Jones or Joe Bloggs ?"

As with everything, Bitcoins are worth whatever someone is willing to pay for them.

Water is free from the tap, unless you are in the middle of the Sahara in which case, you might find that bottle of H2o in your pack suddenly acquires a heck of a lot of value to a dying thirsty man on foot.

So was your friend asking about perceived *value* or coding limitations in the current software ?

None of the people you mention have their wealth evaporate due to BitCoin.  Wealth is not just in currency but in actual material things that are valuable to people.  Having a company that is capable of producing a lot of things people want is valuable.  Having a lot of property is valuable.  It doesn't matter what it's enumerated in.

Some of this wealth is in currency, but the majority of it isn't.  The people that hold a lot of currency tend to be the poorer people and the elderly.  They don't need Bitcoin to sell insurance, sell software, sell databases, manage hotels, play golf, sell ads on a social network, etc...  The bankers do get hurt, of course.

Before anything of that level, you'll see a thousand clones.  Some will survive, some won't.  Geeks typically find something first.  Businessmen find something geeks created and actually find a way to make money on it by getting it to the general public.  The odds that anyone ever gets a mere billion dollars of wealth from Bitcoin has to be several million to 1 against it.  It's nice to dream, but it's also good to be grounded in reality.

It may be wishful thinking, but I strongly disagree with your opinion..

You are assuming the "experienced businessmen" will be able to easily create a viable alternative to Bitcoin that will suddenly, (or gradually) devalue the current version that the "geeks discovered first".

As if they could just use their capital to muscle on it and hand out a "thanks guys, but we professionals will take it from here" and we would all give up and go home ?

It Bitcoin was a private company that could be "bought out" like Hotmail was by Microsoft (for a mere 400 million, while they just paid 6 billion for Skype), then I might agree with you.

But its not.  

Bitcoin is an open-source cooperative, community effort that has taken years to get where it is today, and build the trust it now has in its early adopters.   It has taken millions of kilowatt hours of sustained distributed cryptographic hashing power to build the blockchain.   Ownership is distributed across thousands (or more) of geeks across the world

No corporation is ever going to be able to build a superior equivalent *overnight* (or even in the medium term) no matter how much money they throw at it.  It has taken millions of man hours of coding, debugging, developing, testing and slowly growing support..  No corporation in the world is rich enough to develop that again from scratch.  Not even the Microsofts, Apples, Billionaire "Business Leaders", Goverment Authorities, CIA, Evil Dictators, Market Manipulators or any other perceived opponents.   And they cannot buy just this already-developed one out from under us.

Microsoft can buy Skype or Hotmail.   They *cannot* buy "Linux".  How much do you think they would willingly pay to be able to rid the world of the free operating system for the forseeable future ?  Mere Billions ?  More I would estimate..  It threatens their future monopoly.   But they cannot buy it, and they cannot kill it.  Its distributed community-owned nature makes it unkillable (by any "power" action of theirs).

Bitcoin is the same..  Even if Corporation "X" offers $25/BTC tomorrow and convinces 40% of people sell theirs and take their profit (in a collapsing fiat currency) and to stop using it, from my understanding, it *will* survive and go on mainting and growing in Value.  This is P2P networking, it doesnt need majority support to survive.

Enough geeks, visionaries and revolutionaries will hold onto theirs to make to make the system still viable and continue to grow and offer a valuable service.  Even if it does not become "mainstream"

Especially if the "New and Improved "*"coin Ultimate Edition" version offers little benefit over the established system.. and what benefit could a later privatised version of bitcoin offer people that the current one does not have ?  Less Fees ?  Better Anonymity, more confidence that it wont go under (like companies and governments never do ?), more transparency/open sourceness ?  Like any company/government/organisation is going to enhance the users freedoms even more than BTC already does ?  Not likely.

The only two lacking areas I see in the current BTC system is ease of use (being worked on) and convenience.   (which is where Apple makes it over some of Microsofts potential customers), But neither the familair to the majority windows, nor the "easier-for-non-geeks to use" polish of Apples can offer those who value the open-ness and freedom of Linux *anything* that convinces them to abandon their freedom.

It is like a stark white walled prison cell with an open door, and a nicely decorated prison cell with an open door..  Polish it as you will, but once the users have tasted freedom, no amount of decorating the cell will convince them allow themselves to be voluntarily locked up again.

I think Bitcoin is the same.   Once people get used to their first taste of a freedom based community currency with no overseers, then no amount of polish or wallpaper will convince them to return to a controlled by someone else financial environment, no matter what "big name" is backing it.

So as long as Bitcoin does not need to become the *biggest* / default currency in order for it to continue to have value in what it does and enables, then it will never be superceded or replaced by a "business owned" version.

Just my opinion of course, but I would like to hear what you think "GovCoin" or "Facebook Credits" might offer *people who love freedom* and untouchable value (not just the masses) that will convince them to move, *and* why you think Bitcoin will fail if not eventually adopted by the majority in favour of something else (as if there can only be one successful digital currency network).

Big question I know, but its a critical perception point I think.

the only way i could see bitcoin fall in to such hands.. is if they decided to throw processing power at it, enough to crush the processing power of the mass of miners.. even if they got 2 blocks for every 1.. that would put alot of power in to their hands.

Off topic but I thought they paid only $20 million, quite early. It wasn't HoTMaiL for very long.

Well that was a real soap-box thumper .... thanx for that.

Yes. But if they are going to do that they better get moving quick (won't happen, too big, not nimble enough, too risk averse).

At the current rate of network growth they are going to have to start running pretty soon or they'll just be bit players.

http://en.wikipedia.org/wiki/Hotmail, 400 mill in 1997 dollars according to Wikipedia and what I read elsewhere years ago

If you're defining bitcoin as the leading product for "people who love freedom", I might agree with you.  However if you think a large corporation can't fork the project and have a much more widely accepted (and thus more valuable) payments competitor in a very short time then I'd disagree.

Facebook Credits, or Google bits, or MSFTMoney or whatever would have 10-100x the acceptance almost immediately.  Most of the 600+ million users of Facebook don't care about Libertarianism, anarchy, anonymity, deflation or whatever else drew most of us to bitcoin.  However if they can transact on Facebook easily, quickly and with little transactions cost then they will be very satisfied with the FacebookBits.  And if Facebook expands their payments system to the rest of the web, as they seem inclined to do with their other offerings, then bitcoin will lose a lot of it's raison d'etre.

Until Facebook/MSft,Paypal or whoever decides that "their" payment system isnt allowed to be used to buy porn, hate speech hosting, items from uzbeksitan, anti government speech, stock in the competitions parties or companies or anything that they dont approve of.

This freedom is a big part of what is driving Android's meteroic rise..  Developers and Manufacturers are tired of having to pay tribute to, or have their creations vetted by a central authority before getting to air them.

Currency should (and I believe *will*) eventually be free of anyones idealogical control.

Yes and then there is the question of who the corporates would get to mine for them and secure their payments network.

If they had 200 million users (huge wealth store) but only a few thousand miners the thing would be ripe for the pluckings of some of the more nefarious types. They need proportional adoption at mining back-end as well to have a proportionately secure system relative to the size of the payments network.

(As an aside, I think Bitcoin is currently gold-plated security wise given the size, spread and competency of the mining back-end relative to the size of the current bitcoin transaction volume and wealth stored)

They wont care that *their* savings are now worth half what they used to be (in terms of spending power), whilst those using the "alternative" currency's saving are now worth more than they used to be ??   

I'll bet they *do* once they realise what controlled deflation vs hyper inflation means.