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 Author Topic: Maximum value of a single bitcoin  (Read 7488 times)
Rage
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 May 13, 2011, 03:53:19 AM

I was trying to explain bitcoin to a friend today and they asked "how can it be worth anything when there will only be like 20 million of them ever?"  That's when I went into explaining how bitcoins can be divided down to the eighth decimal place which makes a single bitcoin worth a LOT of money.

How much is a lot?

Well, I couldn't answer because I forgot the basic math behind it! So, assuming we're dividing a single bitcoin down to the eighth decimal place, what is the maximum value of a single coin? Yes, I realize that might not be a totally easy to answer statement because they value fluctuates but let's talk generally.

Thanks!
Rage

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Bit_Happy
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 May 13, 2011, 04:03:52 AMLast edit: May 13, 2011, 05:39:10 AM by Bit_Happy

The maximum amount of mini-bits Happy-bits can be determined, but not the maximum value.
Maximum value relative to what?
For example: BTC/Gold might eventually stabilize, much more than BTC/USD.

EDIT
0.00000001  "=" 100 Million mini-bitsHappy-bits/BTC
If I'm wrong I'm sure someone will let us know.
Jaime Frontero
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 May 13, 2011, 04:37:06 AM

The maximum amount of mini-bits Happy-bits can be determined, but not the maximum value.
Maximum value relative to what?
For example: BTC/Gold might eventually stabilize, much more than BTC/USD.

EDIT
.00000001  = 100 Million mini-bitsHappy-bits/BTC
If I'm wrong I'm sure someone will let us know.

i think you forgot the two places to the left of the decimal... no?

EDIT:  oh - sorry - "single Bitcoin".
vuce
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 May 13, 2011, 04:42:24 AM

"how can it be worth anything when there will only be like 20 million of them ever?"
that doesn't make much sense.... they're worth something if there are not many of them (or the demand is huge).
Bit_Happy
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 May 13, 2011, 05:38:53 AM

The maximum amount of mini-bits Happy-bits can be determined, but not the maximum value.
Maximum value relative to what?
For example: BTC/Gold might eventually stabilize, much more than BTC/USD.

EDIT
0.00000001  "=" 100 Million mini-bitsHappy-bits/BTC
If I'm wrong I'm sure someone will let us know.

i think you forgot the two places to the left of the decimal... no?

EDIT:  oh - sorry - "single Bitcoin".

Zero added to the left, thanks.
I also added "=" around the equal sign, so now it doesn't look so much like an equation.
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 May 13, 2011, 06:17:39 AM

I think there is an upper limit in the current implementation of bitcoin
1 BTC @ 1Million USD makes 1 Satoshi worth 1 USD which makes commerce difficult.
Imagin if you couldn't buy anything under \$1 or somthing worth \$1.50 would have to be rounded to \$2.

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FreeMoney
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 May 13, 2011, 06:28:33 AM

I think there is an upper limit in the current implementation of bitcoin
1 BTC @ 1Million USD makes 1 Satoshi worth 1 USD which makes commerce difficult.
Imagin if you couldn't buy anything under \$1 or somthing worth \$1.50 would have to be rounded to \$2.

.00000001BTC = \$1 means .00001BTC = \$1000 means .01BTC = \$1M

Satoshi was no dummy.

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Bit_Happy
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 May 13, 2011, 07:32:12 AM

I think there is an upper limit in the current implementation of bitcoin
1 BTC @ 1Million USD makes 1 Satoshi worth 1 USD which makes commerce difficult.
Imagin if you couldn't buy anything under \$1 or somthing worth \$1.50 would have to be rounded to \$2.

.00000001BTC = \$1 means .00001BTC = \$1000 means .01BTC = \$1M

Satoshi was no dummy.

That's worth completing:
0.00000001BTC = \$1 means   1BTC = \$100Million USD (\$100,000,000)

Bit more realistic:
If 'pennies' are still needed:
0.00000001BTC = \$0.01 means   1BTC = \$1Million USD (\$1,000,000)

FreeMoney
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 May 13, 2011, 08:21:07 AM

I think there is an upper limit in the current implementation of bitcoin
1 BTC @ 1Million USD makes 1 Satoshi worth 1 USD which makes commerce difficult.
Imagin if you couldn't buy anything under \$1 or somthing worth \$1.50 would have to be rounded to \$2.

.00000001BTC = \$1 means .00001BTC = \$1000 means .01BTC = \$1M

Satoshi was no dummy.

That's worth completing:
0.00000001BTC = \$1 means   1BTC = \$100Million USD (\$100,000,000)

Bit more realistic:
If 'pennies' are still needed:
0.00000001BTC = \$0.01 means   1BTC = \$1Million USD (\$1,000,000)

"Still needed" as if anything has cost a penny in two decades.

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Bit_Happy
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 May 13, 2011, 08:32:26 AM

^^^
pennies: Micropayments to people in poor countries who somehow have computers.
...or, you prefer to not see the upper-limit of \$1Million USD (\$1,000,000)/BTC
Enky1974
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 May 13, 2011, 09:19:38 AM

World monetary mass estimated by the International Monetary Fund in 2009 was 4 trillion dollars or 4,000,000,000,000,000,000 \$

4,000,000,000,000,000,000 / 21,000,000 btc = 190 billions dollars for 1 btc

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fabianhjr
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Do The Evolution

 May 13, 2011, 11:27:06 AM

World monetary mass estimated by the International Monetary Fund in 2009 was 4 trillion dollars or 4,000,000,000,000,000,000 \$

4,000,000,000,000,000,000 / 21,000,000 btc = 190 billions dollars for 1 btc

I actually used the debt of 14 + 3 Trillion and got 17,000,000 / 21 or about \$809,523,809,520 USD per BTC.
Now if you ask me, I really want it to be quickly adopted. That way I can be added to the "Richest man" on earth along with the 10K BTC pizza guy.

ghost
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 May 13, 2011, 03:19:12 PM

World monetary mass estimated by the International Monetary Fund in 2009 was 4 trillion dollars or 4,000,000,000,000,000,000 \$

4,000,000,000,000,000,000 / 21,000,000 btc = 190 billions dollars for 1 btc

You've got a tad too many zeros in there. 4 trillion / 21 million is around \$190,000 per bitcoin.
kristoffernolgren
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 May 13, 2011, 05:45:45 PM

This is a kind of interesting question. At some point in time, we thought there would never be to few ip-adresses either Some factors to take into acount:

Ofcourse, you need to be able to pay really small/specific amounts of money.
The world economy is growing a few percent every year.
A lot of coins will get lost along the way.

The last one I think is the most important, people are fuckups and lose money, specially coins. In fiat currencies, lot's of coins get printed every year.
FreeMoney
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Strength in numbers

 May 13, 2011, 06:39:43 PM

World monetary mass estimated by the International Monetary Fund in 2009 was 4 trillion dollars or 4,000,000,000,000,000,000 \$

4,000,000,000,000,000,000 / 21,000,000 btc = 190 billions dollars for 1 btc

A trillion is the number that has more and more zeros until you get bored. Public school, I assume?

Sorry for being a jerk

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Littleshop
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 May 14, 2011, 02:33:17 AM

I don't know the answer to this but here is one way to look at it.  Imagine if BitCoin only replaced Paypal (Preypal) and nothing else.  Now figure out about how many dollars are in the Preypal system.  Let say that is 600 million (I do not know the real number), and there are 6 million bitcoins out there......
using that logic a BitCoin could be worth \$100 if it replaced Preypal and Preypal only.  One BitCent to a Preypal dollar.  This does not set a maximum of course but it gives you an idea.

marcus_of_augustus
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 May 14, 2011, 02:46:11 AM

These are interesting mind exercises ... I do them all the time to keep the grey matter clicking.

But think of the wider ramifications. Imagine all those people currently sitting on hundreds of millions and billions of dollars of wealth, Buffet, Gates, Ellison, bankster CEO's, the Paris Hiltons, old money families, Tiger Woods, Mark Zuckerberg, etc ... there are quite a few but not innumerable, for guestimates sake lets say around 200,000 people who control 90% of global wealth or something like that.

Now, imagine if bitcoin become the new denomination of wealth. Suddenly we have world turned upside down where the new holders of big wealth are cyperpunks, linux hardware nerds, extreme gamer college students and various other programming geeks, libertarian anarchists and etc who got in early. Even a few tens of bitcoins could represent a massive holding under the new system.

And that other former ruling elites are suddenly grasping at straws trying to get into bitcoin at any cost as they see their power evaporating away in the collapse of the old discredited monetary system.

FreeMoney
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 May 14, 2011, 08:59:39 AM

These are interesting mind exercises ... I do them all the time to keep the grey matter clicking.

But think of the wider ramifications. Imagine all those people currently sitting on hundreds of millions and billions of dollars of wealth, Buffet, Gates, Ellison, bankster CEO's, the Paris Hiltons, old money families, Tiger Woods, Mark Zuckerberg, etc ... there are quite a few but not innumerable, for guestimates sake lets say around 200,000 people who control 90% of global wealth or something like that.

Now, imagine if bitcoin become the new denomination of wealth. Suddenly we have world turned upside down where the new holders of big wealth are cyperpunks, linux hardware nerds, extreme gamer college students and various other programming geeks, libertarian anarchists and etc who got in early. Even a few tens of bitcoins could represent a massive holding under the new system.

And that other former ruling elites are suddenly grasping at straws trying to get into bitcoin at any cost as they see their power evaporating away in the collapse of the old discredited monetary system.

Those people's wealth is measured in dollars so that we can compare sizes. Their wealth is not actually dollars. When we measure their holdings in Bitcoins they will still measure well. Maybe not as well since surely some of their holdings value is deeply tied to the current establishment. Bernank et al actually derive their wealth from the dollar machine, they won't fare so well.

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PseudoCode
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 May 14, 2011, 11:33:09 AM

Ask a woman "How much is a single diamond worth ?"

Then you can add in imponderable variables like
"What size/color/carats is it ?"
"Is it in the pawn shop, or the window at Tiffany's ?"
"Is it attached to a Engagement Ring?"
"Who's offering the ring ?  Bill Gates, Fred Astaire, Tom Jones or Joe Bloggs ?"

As with everything, Bitcoins are worth whatever someone is willing to pay for them.

Water is free from the tap, unless you are in the middle of the Sahara in which case, you might find that bottle of H2o in your pack suddenly acquires a heck of a lot of value to a dying thirsty man on foot.

So was your friend asking about perceived *value* or coding limitations in the current software ?
tomcollins
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 May 14, 2011, 05:47:44 PM

These are interesting mind exercises ... I do them all the time to keep the grey matter clicking.

But think of the wider ramifications. Imagine all those people currently sitting on hundreds of millions and billions of dollars of wealth, Buffet, Gates, Ellison, bankster CEO's, the Paris Hiltons, old money families, Tiger Woods, Mark Zuckerberg, etc ... there are quite a few but not innumerable, for guestimates sake lets say around 200,000 people who control 90% of global wealth or something like that.

Now, imagine if bitcoin become the new denomination of wealth. Suddenly we have world turned upside down where the new holders of big wealth are cyperpunks, linux hardware nerds, extreme gamer college students and various other programming geeks, libertarian anarchists and etc who got in early. Even a few tens of bitcoins could represent a massive holding under the new system.

And that other former ruling elites are suddenly grasping at straws trying to get into bitcoin at any cost as they see their power evaporating away in the collapse of the old discredited monetary system.

None of the people you mention have their wealth evaporate due to BitCoin.  Wealth is not just in currency but in actual material things that are valuable to people.  Having a company that is capable of producing a lot of things people want is valuable.  Having a lot of property is valuable.  It doesn't matter what it's enumerated in.

Some of this wealth is in currency, but the majority of it isn't.  The people that hold a lot of currency tend to be the poorer people and the elderly.  They don't need Bitcoin to sell insurance, sell software, sell databases, manage hotels, play golf, sell ads on a social network, etc...  The bankers do get hurt, of course.

Before anything of that level, you'll see a thousand clones.  Some will survive, some won't.  Geeks typically find something first.  Businessmen find something geeks created and actually find a way to make money on it by getting it to the general public.  The odds that anyone ever gets a mere billion dollars of wealth from Bitcoin has to be several million to 1 against it.  It's nice to dream, but it's also good to be grounded in reality.
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