If Bitcoin was an IPO

[cbeast]

If Bitcoin was created and owned by a corporation instead of being a grass-roots open source project, things would be different. Obviously it would fail going that route, but I beg your forgiveness for this one indulgence. If Bitcoin were a corporation and it had premined half the coins and then released the currency as a stock it would be valued quite differently. Granted, this corporation would have to sell you all of your mining equipment (at a discount of course) and take pre-orders. They would spend a great deal of money advertising this act. The press would then herald such a bold move as revolutionary and the hype cycle would begin. Bitcoin would become the next MasterPal. It would leak to the press that the IPO would be valued between $500-1000 per Bitcoin for anyone that just wanted to jump in at the outset instead of buying the mining gear themselves. They believe that the mining gear will likely generate a profit initially, and will also play cool video games when they are not mining. Excitement mounts as the IPO release date nears.

Finally, the mining equipment pre-orders are filled. The IPO buying frenzy begins with Bitcoins selling for $800 or more. Then the hype fizzles. Scandals emerge about how the mining gear is manufactured by children of unwed mothers in Antarctica. The stock plummets and Bitcoins drop in price to $140, then to $50, and finally to $2. People claim that Bitcoins are just overpriced tulips and comic books that you can't buy anything with. Fans however know better. After the prices bottom out over the course of two years, it begins to once again climb. The corporation that created Bitcoin has gone bankrupt long ago and is now replaced by a grass-roots open-source organization that innovates Bitcoin into something even beyond what had been intended by the corporation that invented it.

[mai77]

an IPO like the one by Suckerberg and FECESBOOK 

[genuise]

analogy with IPO is relevant I think - and IPO is longing for several years?

[herzmeister]

Good thread. Exactly.

[justin321]

For the purposes of this discussion, lets just say that Bitcoins have no value by themselves.

Bitcoin however is more than just a currency, it's also a payment system. A pretty large, robust, and worldwide payment system.
There are companies that process payments as well. (PayPal, Visa, Mastercard, American Express, Banks, Western Union, etc.)

So, how much would each Bitcoin be worth if it were valued like a company? (and if all 21 million were available)
Now, I know there are differences between Bitcoin and a company, but there are also many similarities.

To a large extent, Bitcoin does what many companies do. It stores value and processes transactions instantly, all over the globe through a network of computer servers.
There are people working around the clock (and around the world) to keep the system running. (24/7/365)
There are thousands of servers connected.
Millions of dollars and thousands of man hours have gone into creating this infrastructure.
There are tons of websites that exist to supplement the system and perform specialized functions & services to users (clients).
There are people advertising Bitcoin by word of mouth (sales people) and through their business endeavors.  
Many people invest in Bitcoin, in hopes of making a return on their money - just like they do in companies.

All of this adds value.
So what if we compared it to similar companies?

Let's compare with Discover Card. (They really only hold a small share of the payment processing market anyway.)

Collectively, all of their stock holders have invested $19.2 Billion into Discover Financial Services.
So what if people collectively invested the same amount of money into Bitcoin hoping for a return on their money?
How much would each Bitcoin be worth then?
The answer:   $914 ea     ($19,200,000,000 / 21,000,000 Bitcoins = $914/BTC)

But not only does Bitcoin process the payments , it also stores wealth. And deposits have a huge impact on the value of bank stocks.
Could it ever be as large as say Bank of America?
If so, each Bitcoin would be worth - $5,714 ea  

Not too shabby considering  BoA was worth 5 times that a few years ago!

But what if people really got excited - the way they do with technology stocks? Say Microsoft or Google.
If so, each Bitcoin would be worth $10,952 ea.

So do you think it's possible that some people will invest the same amount of money into Bitcoin that they would into a similar company or investment?
I already have... and it's doubtful that I will be the last.

Justin



Just some other examples I calculated on Jan-20-2013:
Mastercard - $3,081
Visa - $5,047
Paypal - $3,333
Western Union - $380
Microsoft - $10,952
Citibank $5,809
Wells Fargo - $8,761

NOTE: I originally drafted all of this on Jan 20-2013 so the numbers are from that time and may have changed somewhat by now.