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Author Topic: What percentage of the world are you willing to buy?  (Read 1689 times)
benjamindees
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August 19, 2012, 12:53:25 PM
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So I've been thinking a little about this paradox of Bitcoin's valuation, that Bitcoin is at the same time dependent upon both hoarding (in order to drive up the exchange rate) and spending (in order to attract new participants).  In the process, I came up with an interesting metric to think about.

First of all, let's assume that a few tens of thousands of people currently own all of the Bitcoins in the world.  This is not an insignificant sum, nearly half of all Bitcoins that will ever exist.  Because of this, we can guess that this puts an upper limit on the number of people willing to own the other half of (future) Bitcoins.  I think we have seen evidence of this already, in fact.  So, whatever the number of people who will eventually buy into Bitcoin may be, it is limited to some fraction of the world population.  Maybe a billion people?  Maybe only a few million?  Regardless...

What are these people like?  How do they tend to act?  Do they naturally tend to hoard, or to spend?  Where do they sit on the economic spectrum?  Are they relatively wealthy, or relatively poor?  Where do they live?  Are they concentrated in a few geographic locations?  What do they eat?  How adventurous are they?  How willing are they to change, to adapt to the big picture?

I think, if we ask these questions in regards to the current group of Bitcoin holders, a clear trend emerges.  Bitcoin participants are overwhelmingly first-world savers, living in urban areas, with moderate consumption patterns, adverse to holding and managing tangible assets, and likely unwilling to deviate significantly from this even if they were to win the lottery.

So, I want to know what the ultimate valuation of Bitcoin could possibly be.  And my question is, basically, not only "how much wealth do Bitcoin participants bring to the Bitcoin economy?" but "how much wealth are Bitcoin holders willing to purchase using their Bitcoins?"

Are Bitcoin holders willing to go to China in order to spend their Bitcoins?  To Africa?  Are they willing to purchase all types of assets?  Derivatives contracts?  Government bonds?  Corporate bonds?  Real estate?  Physical businesses?

If the answer to any of these is substantially "no," then that could place a very real limit on the amount of wealth controlled by the Bitcoin economy, on the number of people who ultimately end up adopting Bitcoin, and on Bitcoin's ultimate value.

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drakahn
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August 19, 2012, 01:11:15 PM
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Bitcoin participants are overwhelmingly
first-world savers - Never saved anything but bitcoins, but sure

living in urban areas - Yes, but working on buying rural land

with moderate consumption patterns - I over and under consume, overall it could be called moderate on average, but its more... chaotic

adverse to holding and managing tangible assets - I like stuff...

and likely unwilling to deviate significantly from this even if they were to win the lottery. - I wouldn't change much, just have more things.




Are Bitcoin holders willing to go to China in order to spend their Bitcoins?  To Africa?  Are they willing to purchase all types of assets?  Derivatives contracts?  Government bonds?  Corporate bonds?  Real estate?  Physical businesses?

Yeah sure, if its profitable to do those things then anyone would right? - If I could buy land in bitcoins that would make me sooooo happy.

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August 19, 2012, 11:54:57 PM
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Maybe im wrong but the market cap with all 21 million bitcoin out at a bitcoin price of 5$ is 105,000,000 $ in words - hundretandfivemillion us dollars.

For a really big investor or hedgefund for example this could be a realistic sum i think. So if theoretically one investor could buy up the whole market pretty much everything is possible. Or in other words, if 105 million people want to own 1 bitcoin @ 5$ there are no coins left.
I had also recognized a fx like exchange for bitcoins (which i think failed), if there is ever trade on margin a market cap of 105 mil isnt that much.

Taking into account that there are a lot more potential users in countries with questionable leaderships with no internet access yet or simply don't know about bitcoin, all the people currently engaged in bitcoin and the people attracted by services that offer bitcoin now and in the future, and what else will get people in contact with bitcoin.
Also, bitcoins are not generated out of thin air, the electricity costs and mining hardware, i simply can not imagine somebody who payd for example 3, 5 or whatever to mine his coins is willing to give them away for much less.

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drakahn
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August 20, 2012, 12:50:39 AM
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Maybe im wrong but the market cap with all 21 million bitcoin out at a bitcoin price of 5$ is 105,000,000 $ in words - hundretandfivemillion us dollars.

For a really big investor or hedgefund for example this could be a realistic sum i think. So if theoretically one investor could buy up the whole market pretty much everything is possible. Or in other words, if 105 million people want to own 1 bitcoin @ 5$ there are no coins left.
nope, as he buys, the coins get 'rare' so more expensive, cheap coins will run out before he even gets a good percentage

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August 20, 2012, 03:42:42 AM
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Maybe im wrong but the market cap with all 21 million bitcoin out at a bitcoin price of 5$ is 105,000,000 $ in words - hundretandfivemillion us dollars.

For a really big investor or hedgefund for example this could be a realistic sum i think. So if theoretically one investor could buy up the whole market pretty much everything is possible. Or in other words, if 105 million people want to own 1 bitcoin @ 5$ there are no coins left.



1. Sure there will be 21 million coins eventually, but right now there are only less than half in existence. Will take another 12 years or so to reach about 20 million bitcoins.

2. Only 21 million people could own 1 bitcoin at a time. If they were divided equally amongst all individuals, 105 million people would only have about .2 bitcoins apiece.



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August 22, 2012, 06:01:19 AM
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its really not too difficult to fork a new blockchain...  just takes awhile for adoption...  and there must be a real need for the migration
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