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Author Topic: Interesting view of what BTC value could be in 2022  (Read 2191 times)
PulsedMedia
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March 04, 2012, 03:03:00 PM
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I started this by comparing to Paypal, and by finding some statistics of Paypal.
Please note that all of this is based on the assumption Bitcoin will have very conservative success - but success over the long term nevertheless.

350mil+ Paypal users, from 2009 data we can estimate that that 135million of them are active users.
Active account average balance was 45$ in 2009, we shall use that without correction for expected growth.
This means 6 075million USD in just active account balances on Paypal in 2011.

So by 2022, if Bitcoin achieves just 5% of the current mass of Paypal, which could be very conservative, especially if Bitcoin is made easier for Joe Averages and some kind of Killer application becomes reality, ie. eBay + Craigslist type of events. Technological advances will make a huge influence as well to make this a reality, think about how things were in 2002.

If i calculated right there will be already ~19.03mil BTC in the wild by 2022.
That seems too much, but i based it on the halving of mined return per 210,000 blocks or 4 years.
If it's too much, it only makes this even more conservative.

If we assume 5% get lost forever by this time, that leaves us with 18.08mil BTC.

If even 5% of Paypal's mass today is reached by 2022 this means these will represent 303.75million USD, or 16.80USD/BTC. Seems far too conservative? Because it is.

Due to nature of Bitcoin, people will be inclined to hoard and keep them, in hopes of future gains. Bitcoin is also a value store, unlike with Paypal you are mad to keep any significant balance there for any period of time.

So we can assume safely people will keep atleast 4 times more, ie. 180$ or more in their balance.
This already leaves us with 67.20USD/BTC. That looks a lot more realistic - still conservative tho

But it remains extremely conservative STILL.  It does not account for new people getting connected, the growth of eCommerce, and that many wants to use Bitcoin also as a offline transaction medium, which AFAIK is happening to some degree already? ie. cash based exchanges, actual coins & bills etc. Which is impossible with Paypal.
We will buy more and more stuff online, and for many parts of the world internet is just beginning to see widespread adoption in some parts of the world. There still remains billions to be connected to internet. With the raise of better and better mobile devices, these people will get connected.

Just from eCommerce growth we can assume at least 50% growth by 2022, which is probably off by order of magnitude.
Add to that it's quite likely we will probably see nearly double the internet users by 2022, let's say 80% for a total of 58% of current world population using internet.

eCommerce growth will bring us to 100.80USD/BTC
Internet user growth will bring us to 159.26USD/BTC.

Unlike credit card companies, and almost any method of transactioning out there has fees of at least % for merchants. Only cash, and in most parts of the world bank wire transfers are free, neither of which is easy to automate for some portions.
This will mean a lot of Merchants will choose to support BTC when value slightly stabilizes, easy to automate, no transaction fees, likely to just increase in value - what's there not to like?
Assume this adds an conservative 10% to the % using BTC.

Russia, United Arab Emirates, Asia, are pretty much blocked off Paypal - In real world this would easily triple the amount of user base. We will choose an very conservative 50% for this figure too. This too would of course increase adoption within Merchants but we are not adjusting for that separately.

Merchant adoption increase: 175.19USD/BTC
Russia, UAE, Asia: 262.79USD/BTC

Add that to other potentially disrupting technologies: Think pre-paid Bitcoin "Credit cards" to use @ grocery stores, this "CC" would store the keys required for the grocery store to make the transaction from your wallet. Remember that with real cards merchants are trusted like this too. And this isn't even that hard to do.For short term someone could offer regular prepaid Mastercards which are prepaid using BTC Smiley

To recap the percentages of increase from 16.80$/BTC Are:
Hoarding/Investing into bitcoins: 400%
eCommerce Growth: 50%
Internet userbase Growth: 80%
Merchant Adoption: 10%
Russia, UAE, Asia Access: 50%
IMHO, these should be calculated in exponential fashion as in described above.

The 16.80$/BTC came from:
5% of Paypals mass 2011
135mil active users with 45$ average balance representing 6 075million USD.
18.08Million BTC in circulation
(135mil * 5%) * 45$ = 303.75Million USD
303.75 / 18.08 = 16.80$/BTC

Using 25%:
1 518.75million USD
84$/BTC.
Growth factors:
Hoarding: 336$/BTC
eCommerce: 504$/BTC
Userbase: 907.2$/BTC
Merchants: 997.92$/BTC
Russia, UAE, Asia: 1496.88$/BTC

My instinct is telling me however that we are going to see somewhere in vicinity 1000$/BTC.

If we use the 45$ average balance figure, and 10% of internet users are actively using BTC in 2022:
408million users.
18 362million USD.
1015$/BTC.

This holds better with my instincts Smiley

I did do some heavy assumptions here, but please do point out if i had blatant mistakes. Just remember on this i assumed mainstream success if the value seems too high to you.

If you did like my speculation, please donate something: 1983sUSuHXAWSMnYCX1ZJ2RFZBPPQwNVYD


References:
http://wiki.answers.com/Q/How_many_members_does_PayPal_have
http://statspotting.com/2011/09/paypal-statistics-one-fifth-of-global-e-commerce-conducted-via-paypal/
http://www.quora.com/What-is-the-average-users-PayPal-balance
http://techcrunch.com/2011/01/03/j-p-morgan-global-e-commerce-revenue-to-grow-by-19-percent-in-2011-to-680b/
http://www.internetworldstats.com/stats.htm

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PulsedMedia
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March 04, 2012, 03:09:57 PM
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just realized i forgot to adjust for inflation.

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March 04, 2012, 03:14:15 PM
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Good analysis, and although I like it, I think you're being a bit naive about how things will play out. Don't forget that there is going to be a few bad events down the road as well. For starters, governments may try to interfere with Bitcoin, and although they won't be successful, this will certainly stall the growth of Bitcoin. Also consider that there will likely be a big crash coming up soon, similar in magnitude to the one that happened in June of '11. Once a significant number of merchants (or one or two big merchants) start using Bitcoins, the price will be overinflated and likely crash, causing panic. We'll recover of course, but you have to take these and other negative considerations into account.

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March 04, 2012, 03:23:10 PM
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Good analysis, and although I like it, I think you're being a bit naive about how things will play out. Don't forget that there is going to be a few bad events down the road as well. For starters, governments may try to interfere with Bitcoin, and although they won't be successful, this will certainly stall the growth of Bitcoin. Also consider that there will likely be a big crash coming up soon, similar in magnitude to the one that happened in June of '11. Once a significant number of merchants (or one or two big merchants) start using Bitcoins, the price will be overinflated and likely crash, causing panic. We'll recover of course, but you have to take these and other negative considerations into account.

If anybody accepts your analyses the price will skyrocket- 1000$ in ten years...whoopie! 20,000% !

To do that only in 10 years.... the climbs will have to be very fast. Who will want to sell bitcoins with
the price going up so fast?

"We are just fools. We insanely believe that we can replace one politician with another and something will really change. The ONLY possible way to achieve change is to change the very system of how government functions. Until we are prepared to do that, suck it up for your future belongs to the madness and corruption of politicians."
Martin Armstrong
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March 04, 2012, 03:30:58 PM
 #5

Good analysis, and although I like it, I think you're being a bit naive about how things will play out. Don't forget that there is going to be a few bad events down the road as well. For starters, governments may try to interfere with Bitcoin, and although they won't be successful, this will certainly stall the growth of Bitcoin. Also consider that there will likely be a big crash coming up soon, similar in magnitude to the one that happened in June of '11. Once a significant number of merchants (or one or two big merchants) start using Bitcoins, the price will be overinflated and likely crash, causing panic. We'll recover of course, but you have to take these and other negative considerations into account.

I assumed completely "averaging" it out.
Single events are too hard to estimate, no one can guess those. Hence, assuming success, ie. all the problems can be worked through.
Every startup has issues, sometimes very critical ones, even Paypal had their share of those.

If governments try to interfere with Bitcoin, it has already seen success, and people will resist because interfering with Bitcoin would interfere with other rights too.


If anybody accepts your analyses the price will skyrocket- 1000$ in ten years...whoopie! 20,000% !

To do that only in 10 years.... the climbs will have to be very fast. Who will want to sell bitcoins with
the price going up so fast?

Which would push the price up even faster.
Thing is, more there is adoption that much more the price HAS to increase. There won't be sudden increase of BTC around, so only way for it to work is for price to increase. Which will cause some people dumping their BTC, but in overall people will keep on hoarding.
If you notice, the first thing i did was to adjust for hoarding. Conservatively, but still.

The 20$+ prices last year was a bubble very obviously, but i think we are now at somewhere around the "real value" of BTC.
So yes, next year this time, price could be in 40$+ range, but unlikely, the value growth is likely to be more "exponential" of nature, the first few years value climbing up slowly, starting to get more speed next summer, and ~5½ years from now on, as the amount of new BTC coming around is getting lower, and adoption rate increases over time, reaching huge velocities when critical mass is reached, therefore huge increase in value very short period of time, followed by a short crash due to people cashing out, a moment of conservative investment into BTC followed by steady value growth (Assuming adoption does not keep increasing) until finally stabilizing.

**EDIT: The numbers are there, you don't need to be a rocket scientist to understand what happens to the value of 18million BTC if there is 408million users wanting piece of the cake.

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March 04, 2012, 03:35:26 PM
 #6

this post sounds like a bearish   Undecided

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PulsedMedia
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March 04, 2012, 03:41:29 PM
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this post sounds like a bearish   Undecided
You mean bullish? Smiley

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farfiman
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March 04, 2012, 03:59:12 PM
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**EDIT: The numbers are there, you don't need to be a rocket scientist to understand what happens to the value of 18million BTC if there is 408million users wanting piece of the cake.

The opposite side of the coin:

Bitcoin fails and 1 of 2 things happens

1) Its worth 0 ( and maybe a different cryptocurrency takes over)
2) It stays as a novelty low used means of exchange between geeks and freaks..... ( like today)

"We are just fools. We insanely believe that we can replace one politician with another and something will really change. The ONLY possible way to achieve change is to change the very system of how government functions. Until we are prepared to do that, suck it up for your future belongs to the madness and corruption of politicians."
Martin Armstrong
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March 04, 2012, 05:27:48 PM
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this post sounds like a bearish   Undecided
You mean bullish? Smiley

no is bearish like hell

for the average facebook user will much better to have this parity 1 satoshi=0.01USD to much calculus will require additional neurons and survival neurons should be left alone doing their job, also we need cows

Ah yes, cows, he forgot the cows variable.  BUY BUY BUY!
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March 04, 2012, 05:51:31 PM
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**EDIT: The numbers are there, you don't need to be a rocket scientist to understand what happens to the value of 18million BTC if there is 408million users wanting piece of the cake.

The opposite side of the coin:

Bitcoin fails and 1 of 2 things happens

1) Its worth 0 ( and maybe a different cryptocurrency takes over)
2) It stays as a novelty low used means of exchange between geeks and freaks..... ( like today)

3) and the arms dealers \ drugs \ Gambling \ pornography ... This is such a small market (sarcasm) ..
  But the post looks like a bearish ..  Grin

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PulsedMedia
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March 22, 2013, 12:25:24 PM
 #11

Revising the estimates for 2022.
We have already reached 67USD/BTC, so it starts seeming my estimates are overtly conservative.

Also, i never made an estimation for the event that adoption for BTC will become easier and cheaper than currently (Bitpay... We didn't want to support them for multiple reasons) and thus taking over most online payment gateway services, such as Paypal, OKPAY, Payza, Moneybookers/Skrill, Liberty Reserve, 2checkout etc.
For the bulk of it, it's very feasible and easy. From my business experience: Moneybookers/Skrill killed our merchant account of more than 12 years because our service could potentially be used for illegitimate uses. OKPAY makes it impossible for us to verify our account, and similar experience with Payza. 2checkout TOS bans gift card purchasing, among other things, putting many requirements on how the merchant conducts their business.

Paypal has the obvious issues, CC Chargebacks, Disputes, insanely high fees, ie. PP TRX fees exceeded our PR/Advertising plus Clerical overheads (Accounting, office supplies etc.) COMBINED by a big margin last fiscal year. They hide the majority of the fees, while they claim low pct and 0.39$ flat per transaction, they don't tell you that if the payment is from abroad you get extra fees which can tally up to more than 5% of the total payment. They don't tell you which countries counts towards that either, and since we are european but bulk of our market is in Australia, US and Asia ....
Plus they take HUGE hidden currency exchange fees, visible most easily when purchasing things, while the USD:EUR is around 1.31 they grant 1.24 ...

That kind of risks will make bitcoin the choice in the future when things get a bit easier. Such as direct CC to BTC payment gateway, inexpensive etc.

All of this leads me to believe that we should account at least for 1500$/BTC 2022.
I will need to do the maths again one day, for now i just wanted to add that my estimates back then were overtly conservative.

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