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Author Topic: Great explanation of just how rare Bitcoin really is  (Read 508 times)
solid12345
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November 04, 2015, 04:29:10 PM
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Courtesy of Brian Kelly, author of the Bitcoin Big Bang

http://bitcoinbigbang.com

Is It Sustainable?
In short, yes.  There are two reasons why BK thinks the bitcoin rally will last 1.) Limited Supply 2.) Halving Day. First lets address the limited supply – the total amount of bitcoins that will ever exist is 21 million, but there are currently only 14.8 million in circulation. The remainder of the coins will be minted over the next few decades as payments to miners who confirm and process transactions.  The positive news-flow has certainly increased price speculation and the limited supply exacerbates the move.  One way to look at the limited supply is to look at how many people could amass a stake of $100,000 worth of bitcoin.  At current prices (~$400) $100k is 250 bitcoins. Since there are only 14.8 million in circulation, this means that only 59,200 people in the entire world could own $100k worth of bitcoin.  When one considers there are 11,000 hedge funds and 7,000 mutual funds (total 18k), if they all wanted to buy a tiny stake of $100k they would take up 30% of the total supply.


One thing to add, of those 14.8 million "in circulation" remember 1 million belongs to Satoshi and are locked up, potentially as many as 2-3 million maybe be lost forever on dormant hard drives, a few million are held in strong hands leaving only a couple million for actual trading and up for grabs by weaker hands.

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Asrael999
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November 04, 2015, 04:33:27 PM
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Courtesy of Brian Kelly, author of the Bitcoin Big Bang

http://bitcoinbigbang.com

Is It Sustainable?
In short, yes.  There are two reasons why BK thinks the bitcoin rally will last 1.) Limited Supply 2.) Halving Day. First lets address the limited supply – the total amount of bitcoins that will ever exist is 21 million, but there are currently only 14.8 million in circulation. The remainder of the coins will be minted over the next few decades as payments to miners who confirm and process transactions.  The positive news-flow has certainly increased price speculation and the limited supply exacerbates the move.  One way to look at the limited supply is to look at how many people could amass a stake of $100,000 worth of bitcoin.  At current prices (~$400) $100k is 250 bitcoins. Since there are only 14.8 million in circulation, this means that only 59,200 people in the entire world could own $100k worth of bitcoin.  When one considers there are 11,000 hedge funds and 7,000 mutual funds (total 18k), if they all wanted to buy a tiny stake of $100k they would take up 30% of the total supply.


One thing to add, of those 14.8 million "in circulation" remember 1 million belongs to Satoshi and are locked up, potentially as many as 2-3 million maybe be lost forever on dormant hard drives, a few million are held in strong hands leaving only a couple million for actual trading and up for grabs by weaker hands.



however scarcity is possibly the least useful argument for explaining why bitcoin has value.  There are only two keys for the locker under my desk - making them much much rarer than bitcoin - they are however entirely without value as the locker is empty.
solid12345
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November 04, 2015, 04:35:13 PM
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however scarcity is possibly the least useful argument for explaining why bitcoin has value.  There are only two keys for the locker under my desk - making them much much rarer than bitcoin - they are however entirely without value as the locker is empty.

True, supply is nothing without demand, I found this out in the antique and collectibles world where you may have some really rare piece but if no one wants it it is just a big paperweight. But if the demand exceeds the supply then you can expect what will happen.
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