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May 06, 2013, 08:01:38 PM |
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I've seen many posts that are attempting to value bitcoin relative to global GDP. I don't think this is correct way to look at the price of a bitcoin, but rather it's more correct to look at it's value relative to cash. I chose to use M3 because I think it's a good representation of the true money supply (even though it's not really officially tracked at the moment, and is much larger than the actual paper money supply). I had to estimate global M3. I think 40 Trillion is a reasonable guesstimate.
If BTC gains a 1% share of the value of global M3 in the short term, my target is $33,333/BTC. This estimate is predicated on the value going to 1% soon, as down the road the additional coins would obviously affect this value.
Breakdown as follows:
$40 Trillion estimated global M3
1% of 40 T == $400 billion
Nice round number of 12 million bitcoins
12 million BTC divided by $400 B:
$33,333/BTC @ 1% of global M3
$166,666/BTC @ 5% of global M3
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