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Author Topic: Could it be the market is under estamting BTC Price?  (Read 1323 times)
adamstgBit
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January 14, 2012, 04:31:48 AM
 #1

so i was thinking,

it's very easy to argue that bitcoin prices are higher then they should be, due to speculation....

how would you argue that the market is wrong and prices should be well above the current going rate?


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bittenbob
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January 14, 2012, 04:36:51 AM
 #2

I believe at latest count there are approximately 7 billion people on earth. Let's assume 1% (I know I know) use or are interested in having a bitcoin.

1% of 7 billion = 70 million people

The maximum supply ever of bitcoins is 21 million.

That means roughly 0.3 BTC available per person assuming even distribution. The numbers alone make you wonder how easily the price could skyrocket.
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January 14, 2012, 04:45:53 AM
 #3

I believe at latest count there are approximately 7 billion people on earth. Let's assume 1% (I know I know) use or are interested in having a bitcoin.

1% of 7 billion = 70 million people

The maximum supply ever of bitcoins is 21 million.

That means roughly 0.3 BTC available per person assuming even distribution. The numbers alone make you wonder how easily the price could skyrocket.
Exactly, BTC's are way undervalued. Anyone telling you ANY different is trolling.

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Stephen Gornick
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January 14, 2012, 05:24:38 AM
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how would you argue that the market is wrong and prices should be well above the current going rate?

Quote
As of October 2009, gold exchange-traded funds held 1,750 tonnes of gold for private and institutional investors.
- http://en.wikipedia.org/wiki/Gold_reserve

Currently the value of bitcoin is worth roughly about the same as 1 tonne of gold does.  38.6% of all bitcoins have been mined already.  So all bitcoins that will ever be produced are valued today the same as what 2.59 tonnes of gold are valued (ignoring factors like future gold production levels).  1% of all gold ETFs would be 17.5 tonnes.

So if bitcoin were to be substituted for just 1% of what gold ETFs represent, the valuation would need to increase about 6.7 times, or about a BTC/USD of $42.

Ean
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January 14, 2012, 07:24:08 AM
 #5

The Answer to Life, The Universe, and Everything is ...

$42.

Quote from: Douglas Adams
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Stephen Gornick
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January 14, 2012, 08:08:30 AM
 #6

The Answer to Life, The Universe, and Everything is ...

$42.

Ha!  I hadn't thought of that.  Wow, what a coincidence!

Ean
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January 14, 2012, 08:25:38 AM
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Wow, what a coincidence!
Can't be!

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druid
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January 14, 2012, 02:17:22 PM
 #8

At this very moment, maybe 1% of total planet population could only be amount of people who ever heard about bitcoin.
People actually using BTC are well under 1‰ imho...
realnowhereman
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January 14, 2012, 07:07:19 PM
 #9

I just read in the news that that ferry that capsized was worth 450 million euros. I.e. significantly more than the entire bitcoin market cap.

Now imagine that people were using bitcoins to buy, insure or book trips on assets of that sort of value.

Seems to me that there is plenty of scope for bitcoin growth yet.

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sgbett
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January 14, 2012, 09:52:51 PM
 #10

I believe at latest count there are approximately 7 billion people on earth. Let's assume 1% (I know I know) use or are interested in having a bitcoin.

1% of 7 billion = 70 million people

The maximum supply ever of bitcoins is 21 million.

That means roughly 0.3 BTC available per person assuming even distribution. The numbers alone make you wonder how easily the price could skyrocket.

this 'statistic' never fails to disappoint. It's classic ignorance of wtf is really going on in the world.

Pop quiz how many people on this earth live on < $10 a day?

A source from 2005 puts that figure at around 80%, lets assume that nothing has changed and the richer haven't got any richer  Wink

So that 5.1 billion people who probably aren't going to be spending any of that $10 on accumulating bitcoin.

At what point does someone have enough disposable income to start saving/investing/speculating? That's the real question.

Lets assume everyone on minimum wage is investing. so say $15,000pa income. about 12.5% of the world earn that or more. That would put you viable candidates for bitcoin at 875m rather than 7b. Quite a difference.

I would go so far as to say that $15k isn't really enough. You are probably going to need to be earning twice that which makes your sample about 500m. That's more like 4 BTC a person, its still not a lot, but at least its a bit more realistic than 1% of *everyone*.

Now to play devils advocate...

So lets assume that each of the people invested only have 1% of their total NW invested. Given that these people own most of the money in the world between them. Assume 800billion (real) dollars exist, so 8bn of that in bitcoin gives us ~$380 a coin.

If BTC was to replace 1% of the $40 trillion well thats more like $19,000 per BTC.

Right now though there is huge, and incalculable risk that the whole marketplace could become worthless overnight, so maybe $6 is about right. Who knows.

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January 14, 2012, 10:14:25 PM
 #11

Quote
As of October 2009, gold exchange-traded funds held 1,750 tonnes of gold for private and institutional investors.
- http://en.wikipedia.org/wiki/Gold_reserve

Currently the value of bitcoin is worth roughly about the same as 1 tonne of gold does.  38.6% of all bitcoins have been mined already.  So all bitcoins that will ever be produced are valued today the same as what 2.59 tonnes of gold are valued (ignoring factors like future gold production levels).  1% of all gold ETFs would be 17.5 tonnes.

So if bitcoin were to be substituted for just 1% of what gold ETFs represent, the valuation would need to increase about 6.7 times, or about a BTC/USD of $42.

2 things I see wrong with this arguing:

  • gold is undervalued itself
  • the 1,750 tons some people playing monopoly with have are not all the gold that's out there. you're not talking only the bitcoins that are stored at exchanges either, so that's unfair. let's say all gold is something like 175,000 tons

So if bitcoin were to be substituted for just 1% of all gold and the gold-price rose 10-fold, the valuation would need to increase about 6,700 times, or about a BTC/USD of $42,000.

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Stephen Gornick
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January 14, 2012, 10:29:16 PM
 #12

At what point does someone have enough disposable income to start saving/investing/speculating?

When I have greenbacks in my wallet, they are not there because I am saving/investing/speculating.  They are there because I plan to use them in making purchases.

Simple use for monetary exchange regardless of your disposable income creates demand for bitcoins. 

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