1. If you look at a chart of AAPL over the last 5 years you'll see it went from about 100 to a high of 700 - so 700% increase.
2. Over this period, AAPL revenue grew about 4-fold, from $40 billion to $170 billion. AAPL is one of the success stories of our time
3. How does AAPL differ from bitcoin here? (Its an honest question, and no vague comments please)
----------------
So now we look at bitcoin, which many people say could go to $100,000+
1. Obviously bitcoin doesn't have "revenue" and so it's hard to compare. But what we can do is look at its market capitalization which I read is around $6 billion in terms of value out there.
2. So for bitcoin to really grow like people say, people who think they'll become millionaires off bitcoin buying now, its cap must grow to $600 billion
- What could cause bitcoin to have such a high capitalization?
- How likely do you think it is that this capitalization is reached?
- What time frame would you give it?
- How is bitcoin massively different from the true success stories of companies like AAPL? Why is there an expectation that it should grow 100 fold or something like that?
1. If you look at AAPL from 2003 it went from about 8 bucks to $700+. I will let you do the math.
2. Why are you selecting that time frame, and not going from either AAPL inception or at least the lows in '03? AAPL was around a long while before it stumbled into iMoney (no disrespect it was a good company under Jobs for sure, but timing was everything too)
3. AAPL is a company and bitcoin is essentially a currency. People seem to differentiate it as a "digital currency" which is redundant. I see maybe 1% of my money in cash form, ever. All the rest is digital. I think about 98% of all USD is digital currency via debit/credit. You are not expecting a profit on revenues, you are expecting demand for the currency to increase as supply decreases. As global central banks hyperinflate their currencies by creating infinitely more of it in both cash and digital form, the relationship of equilibrium between BTC and USD or CYN etc forces relative values upwards for BTC which is (allegedly) not going to expand infinitely.
----------
1. "Market capitalization" is the wrong term, that is the perceived value of a company based on its share price. That would be like calling M1 the market capitalization of the US. More prefer notional value of USD $6 billion, if you say so (I haven't checked lately). You aren't buying the company when you buy a stock, you are buying a proxy on the company's performance. For a less opaque example, Facebook (FB) is valued near $50 billion market cap. Their 2013 earnings estimate is around $500 million. Ignoring anticipated growth it would take a hundred years to recoup your share price on earnings alone. You are buying anticipated growth in earnings, a future desire for others to acquire a limited supply of shares at a higher price. In this way, especially in the world of quantitative easing, shares can be viewed as a kind of currency. FB and AAPL can and will issue more shares when they wish, will BTC? I have no idea. They claim they will only issue a fixed amount, but I am completely ignorant as to how set in stone that is or is not, and see that as an undefined risk.
2. Yes, notional value of all BTC at $600 billion would approximate the rise of AAPL stock from '03 to the highs.
- What could cause bitcoin to have such a high capitalization?
Devaluation of the USD as QE printing of trillions and trillions of new dollars eventually flows from the banks into the real economy. This is almost inevitable.
- How likely do you think it is that this capitalization is reached?
Assuming big assumptions of a fixed supply, a genuinely secure medium, and lack of legal constraints (outlawed), I think it is entirely possible...
- What time frame would you give it?
Less than 5 years. Or never.
- How is bitcoin massively different from the true success stories of companies like AAPL? Why is there an expectation that it should grow 100 fold or something like that?
At inception they were worth 0 or close to it. Now they are $1,000 and people are clamoring to get in. How much of the dollar-yuan-euro-yen invested public has thus far found their way into bitcoins? 1%? I would bet fewer given the intricacies and geekdom nature of it. But say 2%. It took 2% of the population making a small investment in BTC to increase the value from 0 to $1,000. The rate of increase is clearly nonlinear, thus a 1% or .1% increase in demand is adding X to the price over Y time, parabolically.
There will (allegedly) be 21 million BTC total at culmination. Counter with central banks, USD increase of 2.5 trillion newly created in the last 4 years. $USD2 trillion new yen with $USD3 trillion more at least on the way. This creates both an impetus for a fixed currency (demand) and creates a relative value increase in total BTC vs total any other outstanding currency.
