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Author Topic: Growth Rate of Bitcoin Value  (Read 3004 times)
Bruce Wagner
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June 07, 2011, 01:43:11 PM
 #1


Is this math correct?

http://bitcoinme.com/forum/viewtopic.php?id=38
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June 07, 2011, 01:47:19 PM
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I ate one egg yesterday. Today I ate two. Will I eat 74 eggs this Sunday?

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Bruce Wagner
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June 07, 2011, 01:50:46 PM
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I ate one egg yesterday. Today I ate two. Will I eat 74 eggs this Sunday?

No.

64 eggs on Sunday

....at the current growth rate extrapolated.

That's what I am asking.
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June 07, 2011, 01:52:38 PM
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I ate one egg yesterday. Today I ate two. Will I eat 74 eggs this Sunday?

No.

64 eggs on Sunday

....at the current growth rate extrapolated.

That's what I am asking.

You're right and I'm mistyping. Anyway, point is, there's no way to know. The math is correct, in that if you extrapolate like that, you get those results, but why would you think the market will follow that logic?

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Bruce Wagner
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June 07, 2011, 01:56:34 PM
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I ate one egg yesterday. Today I ate two. Will I eat 74 eggs this Sunday?

No.

64 eggs on Sunday

....at the current growth rate extrapolated.

That's what I am asking.

You're right and I'm mistyping. Anyway, point is, there's no way to know. The math is correct, in that if you extrapolate like that, you get those results, but why would you think the market will follow that logic?

Well, that's not the point.   In fact, I don't.   Personally, I expect the growth rate to go up exponentially....   But again, that's beside the point.

Are you sure that my math is correct....   at....   "annual return on investment of about 50,000%"   .....?
sirky
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June 07, 2011, 02:12:27 PM
 #6

It doesn't work that way.

If it just about doubles every month (which it has so far to get from .06 to 19 in 8 months that would mean almost a million percent gain), I think.

Month         AGR   824578%
1   0.06              MGR   127%
2   0.1362         
3   0.309174         
4   0.70182498         
5   1.593142705         
6   3.616433939         
7   8.209305043         
8   18.63512245         
9   42.30172795         
10   96.02492245         
11   217.976574         
12   494.8068229         

Does this look about right?

Of course, note that I don't believe that this is a realistic model.
justusranvier
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June 07, 2011, 02:13:31 PM
 #7

If you believe that Bitcoin will grow until it displaces all other currencies in the world then eventually the value of a Bitcoin will reach $70 trillion / 21 million = about $3 million and then steadily appreciate with world GDP growth.

In that scenario you'd expect an S curve to describe the trajectory.
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June 07, 2011, 02:16:05 PM
 #8

don't laugh.   several early adopters got btc at $.003 for a 633,333% rise given a 19 btc/shr.

Bruce, the growth in price has been parabolic and won't continue like that forever or even for the intermediate term.  no one knows for sure tho Cool
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June 07, 2011, 02:20:53 PM
 #9

I'm looking for an ANNUAL increase.... expressed an a %....

jerfelix
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June 07, 2011, 02:52:44 PM
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I'm looking for an ANNUAL increase.... expressed an a %....

You asked a very simple question.  Not sure why everyone misunderstood!

In 8 months: 20/0.06 = 33333% (or 33332% GAIN)
That's a monthly compounded rate of:

0.06 x (1+ n ) ^ 8 = 20
or
n= (20 / 0.06 ) ^ (1/8) -1
n=1.06, or a 106% gain every month

In other words, your value is 206% of last month's value (or approximately doubling every month.)

Proof:  0.06 * 2.06 ^ 8 = 20

so to answer your question, doubling every month, for a year....  
2.06 ^ 12 = 5839, which is 583,900%

You were off by a factor of 10.

**note, I did monthly compounding.  Continuous compounding will yield a different answer, but pretty close.**
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June 07, 2011, 03:28:59 PM
 #11

I'm looking for an ANNUAL increase.... expressed an a %....

You asked a very simple question.  Not sure why everyone misunderstood!

In 8 months: 20/0.06 = 33333% (or 33332% GAIN)
That's a monthly compounded rate of:

0.06 x (1+ n ) ^ 8 = 20
or
n= (20 / 0.06 ) ^ (1/8) -1
n=1.06, or a 106% gain every month

In other words, your value is 206% of last month's value (or approximately doubling every month.)

Proof:  0.06 * 2.06 ^ 8 = 20

so to answer your question, doubling every month, for a year....  
2.06 ^ 12 = 5839, which is 583,900%

You were off by a factor of 10.

**note, I did monthly compounding.  Continuous compounding will yield a different answer, but pretty close.**

LOL, this is precisely why we believe in Bitcoin!
Bruce Wagner
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June 07, 2011, 03:54:36 PM
 #12

Awesome.  Thanks!  You guys rock!   

@jerfelix     Can I quote you on http://BitcoinMe.com ?
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June 07, 2011, 03:59:03 PM
 #13

Awesome.  Thanks!  You guys rock!   

@jerfelix     Can I quote you on http://BitcoinMe.com ?

You can't predict future. Tomorrow bitcoin could crash down to 0.01$/btc.

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jerfelix
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June 07, 2011, 04:00:48 PM
 #14

Awesome.  Thanks!  You guys rock!   

@jerfelix     Can I quote you on http://BitcoinMe.com ?

Sure.  I did the math pretty quickly, but I think I got it right.
It'd be embarrassing if I got it wrong. 
I have a reputation to uphold, as if I know something about compound interest!
jerfelix
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June 07, 2011, 04:05:50 PM
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Awesome.  Thanks!  You guys rock!   

@jerfelix     Can I quote you on http://BitcoinMe.com ?

You can't predict future. Tomorrow bitcoin could crash down to 0.01$/btc.

No one is predicting the future.  He is trying to calculate the PAST rate of return over an 8 month period, expressed as an ANNUAL figure.
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June 07, 2011, 04:10:33 PM
 #16

I ate one egg yesterday. Today I ate two. Will I eat 74 eggs this Sunday?

I can eat 50 eggs.

insert coin here:
1Ctd7Na8qE7btyueEshAJF5C7ZqFWH11Wc

Open an exchange account at CampBX: options, lowest commissions, and best security
https://campbx.com/register.php?r=0Y7YxohTV0B
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June 07, 2011, 04:25:46 PM
 #17

I calculate it would take 49 days at 10% growth rate per day to gain 100X (10,000%). Is this right? This is
extremely unlikely, but a much better bet than a lottery ticket. Much much better. I took my entire poker-playing bank roll and dumped it into Bitcoin AT $9-12/btc.   Kinda nice not having to grind out winnings hour after hour.

insert coin here:
1Ctd7Na8qE7btyueEshAJF5C7ZqFWH11Wc

Open an exchange account at CampBX: options, lowest commissions, and best security
https://campbx.com/register.php?r=0Y7YxohTV0B
jerfelix
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June 07, 2011, 05:01:36 PM
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I calculate it would take 49 days at 10% growth rate per day to gain 100X (10,000%). Is this right? This is
extremely unlikely, but a much better bet than a lottery ticket. Much much better. I took my entire poker-playing bank roll and dumped it into Bitcoin AT $9-12/btc.   Kinda nice not having to grind out winnings hour after hour.
Your math looks correct, but your logic can be questioned.
Past performance is not necessarily an indicator of future success, but the 8 month average gain has been about 2.45% gain per day.  (This is still very respectable, but nowhere near the 10% per day that you predicted.)  At that rate, it will take 190.3 days for you to get 100x gains.

math:
past 8 months it went from .06 to 20 (approx).  So 20/.06 = 333.33
so that's a compounded average daily gain of 2.45%  (333.33 ^ ( 1 / 240 ), which is 1.0245, or a 2.45% gain.
it will take you 190.3 days at that rate:  log( 100 ) / log ( 1.0245 ), which is 190.3


On the other hand, if we hit a knee in the curve, then 49 days might be correct.  Who knows!
You nearly doubled your money; you should be happy, and get out.
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June 07, 2011, 05:22:55 PM
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I calculate it would take 49 days at 10% growth rate per day to gain 100X (10,000%). Is this right? This is
extremely unlikely, but a much better bet than a lottery ticket. Much much better. I took my entire poker-playing bank roll and dumped it into Bitcoin AT $9-12/btc.   Kinda nice not having to grind out winnings hour after hour.
Your math looks correct, but your logic can be questioned.
Past performance is not necessarily an indicator of future success, but the 8 month average gain has been about 2.45% gain per day.  (This is still very respectable, but nowhere near the 10% per day that you predicted.)  At that rate, it will take 190.3 days for you to get 100x gains.

math:
past 8 months it went from .06 to 20 (approx).  So 20/.06 = 333.33
so that's a compounded average daily gain of 2.45%  (333.33 ^ ( 1 / 240 ), which is 1.0245, or a 2.45% gain.
it will take you 190.3 days at that rate:  log( 100 ) / log ( 1.0245 ), which is 190.3


On the other hand, if we hit a knee in the curve, then 49 days might be correct.  Who knows!
You nearly doubled your money; you should be happy, and get out.

Um, why would I want to get out and by implication get into a fiat currency that can be diluted at the whim of a central banker?  sure, bitcoin price could plummet, but so could dollars. This is my gambling bankroll and I'm going to let it ride.

insert coin here:
1Ctd7Na8qE7btyueEshAJF5C7ZqFWH11Wc

Open an exchange account at CampBX: options, lowest commissions, and best security
https://campbx.com/register.php?r=0Y7YxohTV0B
jerfelix
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June 07, 2011, 06:07:47 PM
 #20

Um, why would I want to get out and by implication get into a fiat currency that can be diluted at the whim of a central banker?  sure, bitcoin price could plummet, but so could dollars. This is my gambling bankroll and I'm going to let it ride.
Sorry, it was a poorly worded joke.
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