Bitcoin Forum
July 23, 2018, 04:10:55 PM
 News: Latest stable version of Bitcoin Core: 0.16.1  [Torrent]. (New!)
 Home Help Search Donate Login Register
 Pages: 1 2 [All]
 Author Topic: Fun Calculation For The Day  (Read 2736 times)
Hero Member

Offline

Activity: 833
Merit: 1000

"How do you eat an elephant? One bit at a time..."

 July 09, 2011, 12:09:18 PM

Here's a fun calculation: There are 166,000 tonnes of gold in the world (source: World Gold Council). Each tonne consists of 32,150 troy ounces for a total of 5,336,900,000 ounces. Divide that amount by the eventual total number of bitcoin (21,000,000) and you get 254 ounces of gold per bitcoin. With gold at a US dollar value of \$1,600 that would equate to \$406,400 per bitcoin.

32150 x 166000 = 5,336,900,000 oz / 21,000,000 = 254 oz per 1 BTC or 254 x \$1,600 gold = \$406,400 per BTC

Do I think a bitcoin will eventually be worth \$406, 400? I have no idea... What do you think?
1532362255
Hero Member

Offline

Posts: 1532362255

Ignore
 1532362255

1532362255
 Report to moderator
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
wareen
Millionaire
Legendary

Offline

Activity: 910
Merit: 1001

Revolutionizing Brokerage of Personal Data

 July 09, 2011, 12:40:18 PM

Most probably not - as with Bitcoin's intrinsic value due to the properties making it suitable for online transactions, gold has intrinsic value due to its perceived beauty and its industrial applications. Therefore neither gold nor Bitcoin will drop to zero for the foreseeable future and they also won't replace each other fully, as your calculation seems to imply.

But if Bitcoin ever reaches a mainstream reputation similar to gold regarding its usefulness as a store of value, we can probably expect price increases at the cost of the gold price.

 ▄▄▀▀▄▄    ▄▄▀▀▄▄██▄▄▀▀▄▄▄▄▀▀▄▄█████▄████▄▄▀▀▄▄█ █▀▀█▄█████████████ ██ █▄▄████▀   ▀██████ ██ ███████     █▄████ ██ █████▀█▄   ▄██████ ██ █▄█████▌   ▐██████ ██ █████▀█     ██████ ██ ██▄███████████████ █▀▀▄▄▀▀█████▀████▀▀▄▄▀▀    ▀▀▄▄▀▀██▀▀▄▄▀▀        ▀▀▄▄▀▀ .PDATA...TOKEN.. ██████   ████   ████   ████   ████   ████   ████   ████   ████   ██████ ██████  ████  ████  ████  ████  ████  ████  ████  ████  ██████ ██████   ████   ████   ████   ████   ████   ████   ████   ████   ██████ TELEGRAM     BITCOINTALK     FACEBOOKMEDIUM    SLACK    TWITTER    YOUTUBE▬▬▬▬▬▬▬   E M A I L   ▬▬▬▬▬▬▬ ██████  ████  ████  ████  ████  ████  ████  ████  ████  ██████ PRE-SALE     [ April 10th ]
Steve
Hero Member

Offline

Activity: 868
Merit: 1000

 July 09, 2011, 12:50:26 PM

Here's a fun calculation: There are 166,000 tonnes of gold in the world (source: World Gold Council). Each tonne consists of 32,150 troy ounces for a total of 5,336,900,000 ounces. Divide that amount by the eventual total number of bitcoin (21,000,000) and you get 254 ounces of gold per bitcoin. With gold at a US dollar value of \$1,600 that would equate to \$406,400 per bitcoin.

32150 x 166000 = 5,336,900,000 oz / 21,000,000 = 254 oz per 1 BTC or 254 x \$1,600 gold = \$406,400 per BTC

Do I think a bitcoin will eventually be worth \$406, 400? I have no idea... What do you think?
This calculation implies bitcoin completely replacing gold.  I think that's unlikely.  However, bitcoin will take market share from gold and other forms of money.  And it will eventually be valued higher than gold due to its utility for commerce, it's decentralized nature, and its secure design (assuming we don't find any fatal technical flaws).  So, I like to think in terms of bitcoin reaching parity with gold, which would put its value at half the figure you came up with (or ~\$200,000/btc).  But I think it will take at least 10 years to get there.

(gasteve on IRC) Does your website accept cash? https://bitpay.com
Hero Member

Offline

Activity: 833
Merit: 1000

"How do you eat an elephant? One bit at a time..."

 July 09, 2011, 01:00:52 PM

Here's a fun calculation: There are 166,000 tonnes of gold in the world (source: World Gold Council). Each tonne consists of 32,150 troy ounces for a total of 5,336,900,000 ounces. Divide that amount by the eventual total number of bitcoin (21,000,000) and you get 254 ounces of gold per bitcoin. With gold at a US dollar value of \$1,600 that would equate to \$406,400 per bitcoin.

32150 x 166000 = 5,336,900,000 oz / 21,000,000 = 254 oz per 1 BTC or 254 x \$1,600 gold = \$406,400 per BTC

Do I think a bitcoin will eventually be worth \$406, 400? I have no idea... What do you think?
This calculation implies bitcoin completely replacing gold.  I think that's unlikely.  However, bitcoin will take market share from gold and other forms of money.  And it will eventually be valued higher than gold due to its utility for commerce, it's decentralized nature, and its secure design (assuming we don't find any fatal technical flaws).  So, I like to think in terms of bitcoin reaching parity with gold, which would put its value at half the figure you came up with (or ~\$200,000/btc).  But I think it will take at least 10 years to get there.

My thoughts exactly.
RogerR
Member

Offline

Activity: 102
Merit: 10

 July 09, 2011, 04:06:32 PM

Why do you guys assume that the value of gold will stay at \$1500/ounce? Bitcoin could easily exceed \$10mio if the USD lost its global credibility.

Whether or not it ever reaches market share parity with gold is another issue... who knows. Perhaps one day the digitial nature will be seen as a boon rather than bane.
Hero Member

Offline

Activity: 833
Merit: 1000

"How do you eat an elephant? One bit at a time..."

 July 09, 2011, 04:39:09 PM

Why do you guys assume that the value of gold will stay at \$1500/ounce? Bitcoin could easily exceed \$10mio if the USD lost its global credibility.

Whether or not it ever reaches market share parity with gold is another issue... who knows. Perhaps one day the digitial nature will be seen as a boon rather than bane.

No assumption here. I'm certain the money-printing will continue and these calculations could very well be understated!
Jalum
Hero Member

Offline

Activity: 692
Merit: 500

Revolutionizing the Real Estate Market

 July 09, 2011, 04:43:12 PM

You all had some education at some point.  Did you skip out on critical thinking class?  You think it's reasonable for bitcoins to reach \$200,000 each in ten years?

 IAT |   |   |     |   | Instant Assets Tokens ▸▸  https://www.iatokens.com/Providing Real World Solutions & Utilities
Hero Member

Offline

Activity: 833
Merit: 1000

"How do you eat an elephant? One bit at a time..."

 July 09, 2011, 05:05:05 PM

You all had some education at some point.  Did you skip out on critical thinking class?  You think it's reasonable for bitcoins to reach \$200,000 each in ten years?

Why not?
wareen
Millionaire
Legendary

Offline

Activity: 910
Merit: 1001

Revolutionizing Brokerage of Personal Data

 July 09, 2011, 05:16:56 PM

Well, we already witnessed 100-fold increases within 7 months - would it have been reasonable to predict that back then?
Nobody knows the future - we can only try to make good use of the historical data we have and of the mechanisms we believe to be at work for the future.

And yes, it is of course reasonable to assign a non-zero probability for a 200,000 USD Bitcoin in ten years. Same goes for all other values of course...

 ▄▄▀▀▄▄    ▄▄▀▀▄▄██▄▄▀▀▄▄▄▄▀▀▄▄█████▄████▄▄▀▀▄▄█ █▀▀█▄█████████████ ██ █▄▄████▀   ▀██████ ██ ███████     █▄████ ██ █████▀█▄   ▄██████ ██ █▄█████▌   ▐██████ ██ █████▀█     ██████ ██ ██▄███████████████ █▀▀▄▄▀▀█████▀████▀▀▄▄▀▀    ▀▀▄▄▀▀██▀▀▄▄▀▀        ▀▀▄▄▀▀ .PDATA...TOKEN.. ██████   ████   ████   ████   ████   ████   ████   ████   ████   ██████ ██████  ████  ████  ████  ████  ████  ████  ████  ████  ██████ ██████   ████   ████   ████   ████   ████   ████   ████   ████   ██████ TELEGRAM     BITCOINTALK     FACEBOOKMEDIUM    SLACK    TWITTER    YOUTUBE▬▬▬▬▬▬▬   E M A I L   ▬▬▬▬▬▬▬ ██████  ████  ████  ████  ████  ████  ████  ████  ████  ██████ PRE-SALE     [ April 10th ]
bluefirecorp
Legendary

Offline

Activity: 882
Merit: 1000

 July 09, 2011, 05:19:40 PM

Well, we already witnessed 100-fold increases within 7 months - would it have been reasonable to predict that back then?
Nobody knows the future - we can only try to make good use of the historical data we have and of the mechanisms we believe to be at work for the future.

And yes, it is of course reasonable to assign a non-zero probability for a 200,000 USD Bitcoin in ten years. Same goes for all other values of course...
0% probability for bitcoin value to fall under 0 USD. :p

 ▄▄█████████▄▄    ▄█████████████████▄  ▄██████████ ██████████▄ ▄██████████   ██████████▄▄██████████▀   ▀██████████▄██████████▀  ▄  ▀█████████████████▀▀▀  ▀▀▀  ▀▀▀██████████████▀▀▀▀▀▀█▀▀▀▀▀▀███████▀███████  ▄█ █ █▄  ███████▀ ▀█████  ▄██ █ ██▄  █████▀  ▀███▄▄▄███▄█▄███▄▄▄███▀    ▀█████████████████▀       ▀▀█████████▀▀ .LATOKEN. TRADE REALASSETS IN CRYPTO . ..JOIN ICO.......NOW......
wareen
Millionaire
Legendary

Offline

Activity: 910
Merit: 1001

Revolutionizing Brokerage of Personal Data

 July 09, 2011, 05:28:44 PM

0% probability for bitcoin value to fall under 0 USD. :p
Oh what limited imagination you have
But I'll give you that - I think we can round those cases to 0%

 ▄▄▀▀▄▄    ▄▄▀▀▄▄██▄▄▀▀▄▄▄▄▀▀▄▄█████▄████▄▄▀▀▄▄█ █▀▀█▄█████████████ ██ █▄▄████▀   ▀██████ ██ ███████     █▄████ ██ █████▀█▄   ▄██████ ██ █▄█████▌   ▐██████ ██ █████▀█     ██████ ██ ██▄███████████████ █▀▀▄▄▀▀█████▀████▀▀▄▄▀▀    ▀▀▄▄▀▀██▀▀▄▄▀▀        ▀▀▄▄▀▀ .PDATA...TOKEN.. ██████   ████   ████   ████   ████   ████   ████   ████   ████   ██████ ██████  ████  ████  ████  ████  ████  ████  ████  ████  ██████ ██████   ████   ████   ████   ████   ████   ████   ████   ████   ██████ TELEGRAM     BITCOINTALK     FACEBOOKMEDIUM    SLACK    TWITTER    YOUTUBE▬▬▬▬▬▬▬   E M A I L   ▬▬▬▬▬▬▬ ██████  ████  ████  ████  ████  ████  ████  ████  ████  ██████ PRE-SALE     [ April 10th ]
kloinko1n
Full Member

Offline

Activity: 378
Merit: 100

IAC - MULTILEVEL CASHBACK SERVICE

 July 09, 2011, 05:33:42 PM

You all had some education at some point.  Did you skip out on critical thinking class?  You think it's reasonable for bitcoins to reach \$200,000 each in ten years?
They are dreaming to get rich

Jalum
Hero Member

Offline

Activity: 692
Merit: 500

Revolutionizing the Real Estate Market

 July 09, 2011, 05:39:54 PM

And yes, it is of course reasonable to assign a non-zero probability for a 200,000 USD Bitcoin in ten years. Same goes for all other values of course...

Do you think he was talking about non-zero probability when he said:

"So, I like to think in terms of bitcoin reaching parity with gold, which would put its value at half the figure you came up with (or ~\$200,000/btc).  But I think it will take at least 10 years to get there."

And then someone else jumped in to say that value might be understated?  I think we're talking about what's realistic and probable, not what's not-impossible.

 IAT |   |   |     |   | Instant Assets Tokens ▸▸  https://www.iatokens.com/Providing Real World Solutions & Utilities
molecular
Donator
Legendary

Offline

Activity: 2520
Merit: 1006

 July 09, 2011, 05:42:39 PM

Here's a fun calculation: There are 166,000 tonnes of gold in the world (source: World Gold Council). Each tonne consists of 32,150 troy ounces for a total of 5,336,900,000 ounces. Divide that amount by the eventual total number of bitcoin (21,000,000) and you get 254 ounces of gold per bitcoin. With gold at a US dollar value of \$1,600 that would equate to \$406,400 per bitcoin.

32150 x 166000 = 5,336,900,000 oz / 21,000,000 = 254 oz per 1 BTC or 254 x \$1,600 gold = \$406,400 per BTC

Do I think a bitcoin will eventually be worth \$406, 400? I have no idea... What do you think?

It might happen that bitcoin grabs quite a share from gold as globally accepted store of value, but at that time, I predict we won't be measuring it's value in \$. We would generally measure value of stuff in BTC.

So when will 1 BTC equal one BTC?

PGP key molecular F9B70769 fingerprint 9CDD C0D3 20F8 279F 6BE0  3F39 FC49 2362 F9B7 0769
wolftaur
Member

Offline

Activity: 112
Merit: 10

 July 09, 2011, 05:44:37 PM

So when will 1 BTC equal one BTC?

Shortly after the world finally realizes that credit cards should be abolished for the good of society.

"MOOOOOOOM! SOME MYTHICAL WOLFBEAST GUY IS MAKING FUN OF ME ON THE INTERNET!!!!"
CurbsideProphet
Hero Member

Offline

Activity: 672
Merit: 500

 July 09, 2011, 05:45:30 PM

Here's a fun calculation: There are 166,000 tonnes of gold in the world (source: World Gold Council). Each tonne consists of 32,150 troy ounces for a total of 5,336,900,000 ounces. Divide that amount by the eventual total number of bitcoin (21,000,000) and you get 254 ounces of gold per bitcoin. With gold at a US dollar value of \$1,600 that would equate to \$406,400 per bitcoin.

32150 x 166000 = 5,336,900,000 oz / 21,000,000 = 254 oz per 1 BTC or 254 x \$1,600 gold = \$406,400 per BTC

Do I think a bitcoin will eventually be worth \$406, 400? I have no idea... What do you think?

Isn't Bitcoin supposed to be a next gen currency?  I'm not understanding why it's being compared to a commodity.  And specifically, gold.  Why not silver?  Or copper?  All which have real world uses and thousands of years of history as a store of value.

Believing one Bitcoin will be at parity with 254 ounces of gold is beyond delusional.

1ProphetnvP8ju2SxxRvVvyzCtTXDgLPJV
cypherdoc
Legendary

Offline

Activity: 1764
Merit: 1002

 July 09, 2011, 05:45:31 PM

You all had some education at some point.  Did you skip out on critical thinking class?  You think it's reasonable for bitcoins to reach \$200,000 each in ten years?
They are dreaming to get rich

everytime i look at your name i see "groinkoin".   must be my twisted nature.

anyways its doesn't hurt to dream!
molecular
Donator
Legendary

Offline

Activity: 2520
Merit: 1006

 July 09, 2011, 05:51:27 PM

You all had some education at some point.  Did you skip out on critical thinking class?  You think it's reasonable for bitcoins to reach \$200,000 each in ten years?

Do you think it's reasonable for the earth to be spherical? Do you really think humans could survive travelling at speed greater than 30 kilometers per hour? Do you think it's reasonable for information to travel through air without a wire?

I'm not saying it will happen, but man, if you see no possibility that it might, you seriously lack some imagination. Did your mother not tell you about having dreams? Or maybe hollywood?

p(btc >= 200,000\$) > p(btc == 0\$), I would say

PGP key molecular F9B70769 fingerprint 9CDD C0D3 20F8 279F 6BE0  3F39 FC49 2362 F9B7 0769
wareen
Millionaire
Legendary

Offline

Activity: 910
Merit: 1001

Revolutionizing Brokerage of Personal Data

 July 09, 2011, 06:19:49 PM

I think we're talking about what's realistic and probable, not what's not-impossible.
People do tend to overestimate the probability of some very rare events (that's why they play the lottery) but then again, market prices often reflects psychology as well, so - who knows...

I was just pointing out that your claim of some estimation being "unreasonable" is as hard to justify as everyone's else. Nobody knows the future, but if you already experienced a very rare event (dramatic price increase in short time) it is at least reasonable to think about possible underlying mechanisms which might have made the event not so improbable as you initially thought it to be.

Anyway, I personally don't think Bitcoin will ever be valued that high.

p(btc >= 200,000\$) > p(btc == 0\$), I would say
Finally we're talking numbers

 ▄▄▀▀▄▄    ▄▄▀▀▄▄██▄▄▀▀▄▄▄▄▀▀▄▄█████▄████▄▄▀▀▄▄█ █▀▀█▄█████████████ ██ █▄▄████▀   ▀██████ ██ ███████     █▄████ ██ █████▀█▄   ▄██████ ██ █▄█████▌   ▐██████ ██ █████▀█     ██████ ██ ██▄███████████████ █▀▀▄▄▀▀█████▀████▀▀▄▄▀▀    ▀▀▄▄▀▀██▀▀▄▄▀▀        ▀▀▄▄▀▀ .PDATA...TOKEN.. ██████   ████   ████   ████   ████   ████   ████   ████   ████   ██████ ██████  ████  ████  ████  ████  ████  ████  ████  ████  ██████ ██████   ████   ████   ████   ████   ████   ████   ████   ████   ██████ TELEGRAM     BITCOINTALK     FACEBOOKMEDIUM    SLACK    TWITTER    YOUTUBE▬▬▬▬▬▬▬   E M A I L   ▬▬▬▬▬▬▬ ██████  ████  ████  ████  ████  ████  ████  ████  ████  ██████ PRE-SALE     [ April 10th ]
MatthewLM
Legendary

Offline

Activity: 1092
Merit: 1000

 July 09, 2011, 06:22:49 PM

So the price of gold is completely based on how much there is?

Bitcoin Extra Wallet | Peercoin Android Wallet
BTC: 1D5A1q5d192j5gYuWiP3CSE5fcaaZxe6E9  PPC: PH7fVn1Xs7nkUFmdwCX2ZRYfLPCSwGxAq9
Jalum
Hero Member

Offline

Activity: 692
Merit: 500

Revolutionizing the Real Estate Market

 July 09, 2011, 06:28:12 PM

Isn't Bitcoin supposed to be a next gen currency?  I'm not understanding why it's being compared to a commodity.

There are a few people who hope it one days becomes a currency.  Right now it's just a pump and dump.  Note all the threads that were talking about how boring it was when the price was "stable" for 2-3 days.  And the biggest activity in the marketplace subforum here are gambling ponzi schemes.

Quote
Believing one Bitcoin will be at parity with 254 ounces of gold is beyond delusional.

Whats the harm in promoting that a worthless set of characters in a text file will soon be able to buy you entire cities?  I mean, it's not like people bought \$50,000 worth of hardware specifically to...oh nm.

 IAT |   |   |     |   | Instant Assets Tokens ▸▸  https://www.iatokens.com/Providing Real World Solutions & Utilities
evoorhees
Legendary

Offline

Activity: 994
Merit: 1000

Democracy is the original 51% attack

 July 09, 2011, 06:33:22 PM

So when will 1 BTC equal one BTC?

Shortly after the world finally realizes that credit cards should be abolished for the good of society.

Plastic is not the problem, fiat currency is. We'll still have credit cards in a bitcoin world - one will always be able to borrow now for higher repayment in the future. And a plastic card you can swipe at a store is extremely convenient, thus the market will demand it (unless mobile credit payments become easier which is very probable).
Jalum
Hero Member

Offline

Activity: 692
Merit: 500

Revolutionizing the Real Estate Market

 July 09, 2011, 06:35:48 PM

I am still trying to figure out how much a Bitcoin weighs... It's not in the wiki.

It weighs thousands of forumposts.

 IAT |   |   |     |   | Instant Assets Tokens ▸▸  https://www.iatokens.com/Providing Real World Solutions & Utilities
RogerR
Member

Offline

Activity: 102
Merit: 10

 July 09, 2011, 10:35:09 PM

I am still trying to figure out how much a Bitcoin weighs... It's not in the wiki.

It weighs thousands of forumposts.

Close. It weights the internet. Plus a few mining rigs.
kloinko1n
Full Member

Offline

Activity: 378
Merit: 100

IAC - MULTILEVEL CASHBACK SERVICE

 July 10, 2011, 12:20:44 AM

You all had some education at some point.  Did you skip out on critical thinking class?  You think it's reasonable for bitcoins to reach \$200,000 each in ten years?
They are dreaming to get rich

everytime i look at your name i see "groinkoin".   must be my twisted nature.
Yes, must be
Think of 'kloink!' every time a bitcoin enters my account.
'KLOINK'! There's another coin ('koln')

Quote
anyways its doesn't hurt to dream!
Of course it doesn't, it's fun! And dreaming is necessary for a happy life.

Steve
Hero Member

Offline

Activity: 868
Merit: 1000

 July 10, 2011, 12:52:50 AM

So, here's some more fun with the numbers...one post asked whether it's simply the amount of gold that determines its value...the answer is no, it's the amount of gold (the supply) as well as the demand.  Another post mentioned that the dollar would have a very different value in 10 years, but when we talk about a bitcoin being worth \$200,000 in 10 years, we are talking about its purchasing power as measured in today's dollars.  So, that statement means that in 10 years you would be able to purchase with 1 bitcoin what can be purchased today for \$200,000.

So, let's suppose that people did eventually come to value bitcoin similarly to gold (there are plenty of reasons one could argue that bitcoin is a pretty good gold substitute, but I won't here).  Based on the OP's numbers and assuming a worldwide population of 7 billion, the amount of gold held on average by each individual is ~0.76 ounces.  At \$1500 that's a value of \$1140.  If everyone we're to take half of that gold wealth and put it into bitcoin, that's \$570 of gold and \$570 of bitcoin on average for everyone on the planet.  \$570 * 7,000,000,000 / 21,000,000 = \$190,000.

So, yeah, I guess you're right, it probably won't be worth \$200,000 in 10 years.

(gasteve on IRC) Does your website accept cash? https://bitpay.com
Legendary

Offline

Activity: 1904
Merit: 1001

Trusted Bitcoiner

 July 10, 2011, 01:05:14 AM

if you assume it will replace all money....

this means
each bitcoin is worth ......... 1 / 21,000,000 of the worlds "money"

StewartJ
Sr. Member

Offline

Activity: 392
Merit: 250

 July 10, 2011, 02:10:11 AM

Silver has been charted for the last 650 years, as a form of currency:
http://www.goldsilverchat.com/BBchat/viewtopic.php?f=23&t=9396&start=0

Before that, it was used for over 500 years by the Roman Empire as Denarius:
http://en.wikipedia.org/wiki/Denarius

So, for over a 1000 years, this amazing malleable metal has carried its precious weight in coinage. It has been very consistent throughout history in maintaining a monetary value of exchange, whether for bread, for timber, or for dollars.

As we enter into the virtual sphere of currency exchange, perhaps Bitcoin is the new Silver of the Millennium.

 Pages: 1 2 [All]
 « previous topic next topic »