1% of offshore tax haven bank accounts in bitcoin = $2.8million/btc -trace mayer

[Anon136]

"If you moved just 1% of the cash balances from off shore tax haven bank accounts, which currently hold estimated 30 trillion dollars of value, if you move just 1% of that into bitcoin you are looking at 2.8 million dollars per bitcoin"

That was a quote from trace mayer from (http://www.youtube.com/watch?v=TZwmgeeFB-E&t=7m15s)

Is this right? Can anyone point out a flaw in this reasoning? That 1% figure makes 2.8 million dollars per bitcoin sound oddly conservative and saying 2.8 million dollars per btc is conservative makes me feel like i sound like I'm out of my mind. What do you guys think?

[beetcoin]

at those rates, we'd have multiple trillionaires holding BTC. that kind of seismic wealth redistribution would really upset the wealthy elite i'd think.

simple math: 1% of 30 trillion is .3 trillion, or 300 billion dollars for the market cap... so isn't that only about 12x present day value of BTC if the market cap is $300 billion? then again, we have to add that amount to our current market cap, but that wouldn't even be enough. there may be something wrong in my math though.. feel free to correct me anyone.

[drnick]

I think the error is in saying "Just 1%", which IMHO is more than would be allocated to bitcoin even at it's prime.

If you have an offshore account you have some wealth. You won't be putting a large % of your cash into bitcoin. Let's say you'd be ok with 3% of your offshore wealth in bitcoin.

Then, assume that only 2% of offshore accounts would actually do so. 2% is a reasonable adoption level.

So now you have 3% of 2% of offshore wealth in bitcoin, which is 0.06% of that 30 trillion dollars. That would be about $168k/BTC.

You can revise what you feel is more realistic, but your equation should account for (level of adoption %) x (% allocation in bitcoin given adoption).

[beetcoin]

I think the error is in saying "Just 1%", which IMHO is more than would be allocated to bitcoin even at it's prime.

If you have an offshore account you have some wealth. You won't be putting a large % of your cash into bitcoin. Let's say you'd be ok with 3% of your offshore wealth in bitcoin.

Then, assume that only 2% of offshore accounts would actually do so. 2% is a reasonable adoption level.

So now you have 3% of 2% of offshore wealth in bitcoin, which is 0.06% of that 30 trillion dollars. That would be about $168k/BTC.

You can revise what you feel is more realistic, but your equation should account for (level of adoption %) x (% allocation in bitcoin given adoption).

well if you have those many rich people competing with one another, that 2% adoption rate looks mighty conservative, especially when BTC is booming into a difference universe.

[drnick]

well if you have those many rich people competing with one another, that 2% adoption rate looks mighty conservative, especially when BTC is booming into a difference universe.

What % of those rich people do you think actually own gold? (for the record I have no idea). If we knew that, we might get a better idea for what an appropriate adoption % might be for bitcoin.


EDIT: this link estimates 1-2% of americans own gold.
http://www.youtube.com/watch?v=Qoj-s-Hhfgs

[beetcoin]

well if you have those many rich people competing with one another, that 2% adoption rate looks mighty conservative, especially when BTC is booming into a difference universe.

What % of those rich people do you think actually own gold? (for the record I have no idea). If we knew that, we might get a better idea for what an appropriate adoption % might be for bitcoin.


EDIT: this link estimates 1-2% of americans own gold.
http://www.youtube.com/watch?v=Qoj-s-Hhfgs

is your assumption that whatever %2 of peoples wealth from gold would be transferred to BTC? i don't think that's enough.. there would be a huge bullish fervor and greed will lead the way.

at the top of the food chain, people participate in the rat race to have the most money.. "just because they can." at some point when you have that much money, your assets are just like toys and you want to have the biggest one in town.

[Anon136]

at those rates, we'd have multiple trillionaires holding BTC. that kind of seismic wealth redistribution would really upset the wealthy elite i'd think.

simple math: 1% of 30 trillion is .3 trillion, or 300 billion dollars for the market cap... so isn't that only about 12x present day value of BTC if the market cap is $300 billion? then again, we have to add that amount to our current market cap, but that wouldn't even be enough. there may be something wrong in my math though.. feel free to correct me anyone.

your math seems right to me.

[beetcoin]

at those rates, we'd have multiple trillionaires holding BTC. that kind of seismic wealth redistribution would really upset the wealthy elite i'd think.

simple math: 1% of 30 trillion is .3 trillion, or 300 billion dollars for the market cap... so isn't that only about 12x present day value of BTC if the market cap is $300 billion? then again, we have to add that amount to our current market cap, but that wouldn't even be enough. there may be something wrong in my math though.. feel free to correct me anyone.

your math seems right to me.

yeah, so i don't know where he got that $2.8M number, but it doesn't seem right.

[Anon136]

I think the error is in saying "Just 1%", which IMHO is more than would be allocated to bitcoin even at it's prime.

If you have an offshore account you have some wealth. You won't be putting a large % of your cash into bitcoin. Let's say you'd be ok with 3% of your offshore wealth in bitcoin.

Then, assume that only 2% of offshore accounts would actually do so. 2% is a reasonable adoption level.

So now you have 3% of 2% of offshore wealth in bitcoin, which is 0.06% of that 30 trillion dollars. That would be about $168k/BTC.

You can revise what you feel is more realistic, but your equation should account for (level of adoption %) x (% allocation in bitcoin given adoption).

The reason they would want to allocate their offshore reserves in bitcoin is so they DONT have to keep them offshore.

[pera]

At the current price that would be around 250000BTC there is not enough supply for that, the price would jump exponentially

[Anon136]

at those rates, we'd have multiple trillionaires holding BTC. that kind of seismic wealth redistribution would really upset the wealthy elite i'd think.

simple math: 1% of 30 trillion is .3 trillion, or 300 billion dollars for the market cap... so isn't that only about 12x present day value of BTC if the market cap is $300 billion? then again, we have to add that amount to our current market cap, but that wouldn't even be enough. there may be something wrong in my math though.. feel free to correct me anyone.

your math seems right to me.

yeah, so i don't know where he got that $2.8M number, but it doesn't seem right.

not sure. i looked up the 30 trillion number and that number seems right. even the whole 30 trillion devided into 21million is only 1.4 million. He is active on these forums, maybe he will stop by here and weigh in.

[beetcoin]

at those rates, we'd have multiple trillionaires holding BTC. that kind of seismic wealth redistribution would really upset the wealthy elite i'd think.

simple math: 1% of 30 trillion is .3 trillion, or 300 billion dollars for the market cap... so isn't that only about 12x present day value of BTC if the market cap is $300 billion? then again, we have to add that amount to our current market cap, but that wouldn't even be enough. there may be something wrong in my math though.. feel free to correct me anyone.

You can't just dump 300 billion into btc, though. You have to compete with others in order to buy in because it's a finite supply.

The price and 'market cap' goes up faster than the total amount of money coming in. Value is created out of thin air. There is nothing wrong with this, however. You are paying a premium to own a rare piece of revolutionary technology, and those who came before you are rewarded.

that's what i was thinking too.. 300 billion would leave the offshore accounts, but that would drive the price up and so new wealth is created. but the whole thing would be a mess though.

but there's no data or anything to suggest that 2.8 million would be the outcome. at least no data that i have access to.

[sunnankar]

Is this right? Can anyone point out a flaw in this reasoning? That 1% figure makes 2.8 million dollars per bitcoin sound oddly conservative and saying 2.8 million dollars per btc is conservative makes me feel like i sound like I'm out of my mind. What do you guys think?

It actually is very conservative given the small amount of Bitcoins float due to unrecoverable private keys or bitcoins that for whatever reason are not 'salable'. Because of how prices are set at the margin and the large amount of private keys lost therefore it is possible for Bitcoin's market cap to be many trillions of USD.

To get a comparison to other currencies, assets, etc. see this infographic from RunToBitcoin.com:

[Zangelbert Bingledack]

There's every reason to believe offshore account figures are hugely inflated for political reasons. "Look at all those fatcats cheating you out of your tax dollars! This is why we need AML/KYC and more tax laws and FBAR and FATCA." Still makes for good advertizing though.

However, it doesn't matter because if 1% goes to Bitcoin, 90% will follow soon after. Who in their right mind would stake BILLIONS on trust and jurisdictional stability (with extremely limited ability to access it, compared to Bitcoin). You don't get to be rich by taking unnecessary risks. Once the word gets out, this thing is gonna blow.

[beetcoin]

at those rates, we'd have multiple trillionaires holding BTC. that kind of seismic wealth redistribution would really upset the wealthy elite i'd think.

simple math: 1% of 30 trillion is .3 trillion, or 300 billion dollars for the market cap... so isn't that only about 12x present day value of BTC if the market cap is $300 billion? then again, we have to add that amount to our current market cap, but that wouldn't even be enough. there may be something wrong in my math though.. feel free to correct me anyone.

You can't just dump 300 billion into btc, though. You have to compete with others in order to buy in because it's a finite supply.

The price and 'market cap' goes up faster than the total amount of money coming in. Value is created out of thin air. There is nothing wrong with this, however. You are paying a premium to own a rare piece of revolutionary technology, and those who came before you are rewarded.

that's what i was thinking too.. 300 billion would leave the offshore accounts, but that would drive the price up and so new wealth is created. but the whole thing would be a mess though.

but there's no data or anything to suggest that 2.8 million would be the outcome. at least no data that i have access to.

Yeah, I really have no idea how you would go about calculating something like this, or if it's even possible. But I do think that the sometimes quoted price of 1 million is conservative, so this did catch my eye. I think most people try to be conservative in their estimates of future btc pricing because even the conservative estimates sound ridiculous to most people. 

i think it would be more predictable if that 300 billion were moved all at once, with a swift blow.. but there's obviously not enough liquidity to go around for that to occur.

[cr1776]

Given that the Cayman Islands and Costa Rica announced a deal yesterday (Friday, Nov 29, 2013 - http://www.theguardian.com/world/2013/nov/29/cayman-costa-rica-us-tax ) that they will begin sharing data with the US IRS under FACTA, if I were a US citizen with that amount of undeclared wealth in either jurisdiction, I would be considering what to do to remedy that before the reporting begins.

The so called tax havens are disappearing to the control-freaks worldwide who believe the fruits of your labor are their's by right, so bitcoin provides a solution if people are aware.

[DeathAndTaxes]

There isn't $30T in cash in off shore accounts.  there are $30T in ASSETS in offshore accounts.  Big difference.

Globally the entire M2 is roughly $25T, there is only ~$5T of M0 (currency).   However total global wealth (stocks, bonds, precious metals, property, patents, land, etc) is ~$240T.

[Sindelar1938]

Good point DeathandTaxes

[tutkarz]

good thing is we don't need to rely only on offshore tax heavens, there are many more things that will drive the price.

[xxnewbiecoinerxx]

good thing is we don't need to rely only on offshore tax heavens, there are many more things that will drive the price.

+1