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MoneyIsDebt
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May 17, 2012, 06:18:25 AM
 #1

I know it's a stupid question, and impossible to answer, but this is speculation after all.
What do you guys think will be the total value of the bitcoin economy in say, a couple of years, when we're close to having most of them mined? (or the price of one BTC at that time)
There are so many threads where zealots insist the price will climb infinitely because of scarcity, but scarcity, supply and demand are not the only factors in the price / value of bitcoin. There is also the risk of catastrophic failure due to (already discussed or as of yet unknown) various factors. And also the intrinsic value of the ability to do transactions across borders, and the value in the number of exchanges and services and infrastructure built up, the value in the p2p network size and hashing power providing security.
A lot of zealots also imagine bitcoin replacing fiat currencies and becoming a major factor in world economy. For that to happen, the size of the economy (price x 21 million) must be significant. (Yes, the technology behind bitcoin might become a world changer.... but will the current bitcoin blockchain get big enough?)
I'd love to hear some more realistic thoughts on this.

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May 17, 2012, 06:26:10 AM
 #2

I'd love to hear some more realistic thoughts on this.

 21 million dollars per coin  Wink

you seem to know whats going on,

this fourm is more concered with day to day trading, i think we all agree in a few years to trend is UP UP UP unless we see a catastrophic failure, but that's unlikely ... if their was to be a catastrophic failure, we would of seen it by now

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May 17, 2012, 07:15:03 AM
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I theorize that Bitcoin will remain fairly fringe and in relatively low demand until the alternatives stop working acceptably well.  And I'm not talking about in some theoretical sense; I mean in practice.  Right now, and as far as my eye can see, it is in fact a giant and expensive hassle to translate value between legal tender and Bitcoin.  To avoid the problem one can simply hoard (my strategy) or try to find something that you want to actually spend it on.  Sadly, I'm not into on-line gambling, drugs, or wanking off to someone's web cam so my options are limited.  Most of the BTC that have left my wallets have gone toward donations to some cause I think is worthwhile.

Now, a failure in one or more legal tender currencies coupled with likely capital controls could really open people's eyes to Bitcoin and could send demand through the roof.  If one is prepared to capitalize on such a thing it could really be a windfall.  I suspect that in such a scenario there would be enough of a panic globally that the few exchanges which vaguely work today would become completely useless.  So the trick would be how to get your Bitcoin into the hands of those who want it, and how to get something you want from them into your hands.  That might be easier said than done in part because they may have nothing you want...or at least nothing they wish to part with...and even if they do it might be a real challenge to take possession.  Having a reliable agent in the likely regions of failure might be worth trying to cultivate.

I expect that there could be a sonic boom of sorts in BTC values (though I still consider it a low order probability event) and some pretty good opportunities for those who control more than a trivial amount of BTC but, if the bitcoin network makes it through that phase, the phase which follows will be one where Bitcoin is recognized as more of a transfer mechanism than a reliable store of value.  Even then with the number of BTC in circulation, the amount needed to provide liquidity would put a pretty dear price tag on a single BTC.


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May 17, 2012, 01:27:25 PM
 #4

I've never been as bullish as I've been in the recent months. I don't mean the price development but Bitcoin in general. The market can do whatever it wants, I worry less and less of what is happening in the speculative circles. Bitcoin growth is much slower than many have hoped but it is growing and eventually that growth will pick up again. The real revolution hasn't even started yet, Bitcoin is still fairly scarcely accepted, but it is coming. I've never been more sure about that, than I am now.

So I look forward to the years to come when Bitcoin starts to get used more in one niche after another and I can personally start using it more and more. I have been using Bitcoin more but my usage is still not even close to what I'd want it to be. At some point there will be an explosion in growth and it's very difficult to know when, it requires known businesses of the medium to large size to start accepting Bitcoin, at least a few of them. My estimate is that we're still years away from this.

All that Bitcoin basically needs is time. I'm seeing more and more people that have heard of Bitcoin once, eventually we'll reach the stage (hopefully) when almost everyone has heard of Bitcoin at least 10 times and Bitcoin is still functioning. That will be the time when it explodes, at the latest. Time in itself is simply so important, for example most gold enthusiasts don't really take Bitcoin seriously because it's just ones and zeros in computer networks. For this to change we might need more than a couple of years, probably a few decades. Doesn't really matter for me because I'm in this for the long haul.

Even though tvbcof is not into the popular Bitcoin niches, many seem to be. I'm not into drugs but that seems to work for more and more people. Gambling is something I like to do, I used to be a professional poker player so that fits. I've actually used many different types of Bitcoin gambling sites recently and I have to say that they have been getting much better and their usage is growing. This is one niche that will keep on growing. Another niche that might not just grow but actually explode is the web stripping market. Bitcoin is simply so convenient in webcam stripping, you can interactively and anonymously ask girls to do stuff and tip them with bitcoins, that is simply BRILLIANT. I'm expecting this particular niche to possibly be the fastest growing Bitcoin usage of them all.

Then there are of course other types of usage. Bitcoin as a store of value will become more serious only with time, there is not much we can do about that. Bitcoin in virtual gaming markets seems to be stalling a little but I expect this market to pick up speed at some point. Bitcoin in remittance might pick up massive speed with the latest issues in remittance between the US and Somalia etc. Same goes for Africa in general because the banking system is so weak there. I expect this particular market to take time though, so don't "bank on it" just yet. Also the deepening euro crisis is good for Bitcoin, I expect more people to learn about it because of that and even though there might be no explosion coming, it's still good old growth.

We also shouldn't forget regular payments. As Bitcoin usage in various niches increase it will increase the amount of people using Bitcoin in general. I see this market growing, starting from small shops of course because of the low starting costs. It's actually almost impossible for a small shop owner, online or brick-and-mortar to not benefit from adding Bitcoin payments at this point. The entry costs for a small merchant are small and the positive marketing value of accepting the future of money and also the actual extra revenue etc.

For example, my company is running a Finnish Bitcoin portal, which opens in a few days. We haven't even opened yet and we got asked to demo Bitpay to a small pizza/kebab joint in Tampere, a large Finnish city. My company is an official integration partner for Bitpay with exclusive rights in Finland. The first of its kind. I don't actually know if we'll be able to sell it to them but it makes sense for them to take it. They would be the first brick-and-mortar restaurant to accept Bitcoin in Finland and the entry costs are very low, there are basically two sales employees in total or something like that. I know a lot of Bitcoin-enthusiasts in Finland that would go to this particular restaurant every time they visit Tampere, so the expected value simply can't be negative.

Obviously that only applies to small shop owners, just like I said before. Bitcoin is something that grows not top-down but bottom-up. It's important to understand this. It will start from the small, grow with the small, until some day the big guys get really interested as well. We're not there yet but who cares? Bitcoin IS growing, not at an explosive rate but at a very good rate in my opinion. Price seems to support this as well, we have a stable price even though monetary inflation is still massive.

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May 17, 2012, 06:47:45 PM
 #5

a couple of years, when we're close to having most of them mined?

"most"?  

The 50% will have been reached in December, 75% mined roughly December 2016.  87.5% roughly December 2020.

when almost everyone has heard of Bitcoin at least 10 times and Bitcoin is still functioning. That will be the time when it explodes, at the latest.

That will make a difference whether or not they use bitcoin as a store of value, but for those using it as a trading currency, it really isn't a factor.

If you want to play online poker and the easiest (or only) method to deposit funds is with bitcoin, it won't matter if that's the first, second or tenth time they've heard of bitcoin.  You'll figure it out either way.  And that's for entertainment / recreational purposes.   For those who need something for a business and the seller only takes bitcoin, there's no question as to what happens next.

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May 17, 2012, 07:02:46 PM
 #6

Any kind of growth will lead to a Bitcoin value increase because there is always a portion of either buyers or sellers that decide to hoard some coins. Obviously we don't know how many do this or how much they hoard in any given situation but there are always some, which means that any type of growth will increase the value of one bitcoin, at least a little bit.

Right now one must obviously take into account that we have massive currency inflation still going on. In fact we're having a quite nice growth rate currently since the inflationary pressure is strong and still the price holds. The first block reward halving will be very interesting.

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May 17, 2012, 09:04:29 PM
 #7

I've never been as bullish as I've been in the recent months. I don't mean the price development but Bitcoin in general. The market can do whatever it wants, I worry less and less of what is happening in the speculative circles. Bitcoin growth is much slower than many have hoped but it is growing and eventually that growth will pick up again. The real revolution hasn't even started yet, Bitcoin is still fairly scarcely accepted, but it is coming. I've never been more sure about that, than I am now.

So I look forward to the years to come when Bitcoin starts to get used more in one niche after another and I can personally start using it more and more. I have been using Bitcoin more but my usage is still not even close to what I'd want it to be. At some point there will be an explosion in growth and it's very difficult to know when, it requires known businesses of the medium to large size to start accepting Bitcoin, at least a few of them. My estimate is that we're still years away from this.

All that Bitcoin basically needs is time. I'm seeing more and more people that have heard of Bitcoin once, eventually we'll reach the stage (hopefully) when almost everyone has heard of Bitcoin at least 10 times and Bitcoin is still functioning. That will be the time when it explodes, at the latest. Time in itself is simply so important, for example most gold enthusiasts don't really take Bitcoin seriously because it's just ones and zeros in computer networks. For this to change we might need more than a couple of years, probably a few decades. Doesn't really matter for me because I'm in this for the long haul.

Even though tvbcof is not into the popular Bitcoin niches, many seem to be. I'm not into drugs but that seems to work for more and more people. Gambling is something I like to do, I used to be a professional poker player so that fits. I've actually used many different types of Bitcoin gambling sites recently and I have to say that they have been getting much better and their usage is growing. This is one niche that will keep on growing. Another niche that might not just grow but actually explode is the web stripping market. Bitcoin is simply so convenient in webcam stripping, you can interactively and anonymously ask girls to do stuff and tip them with bitcoins, that is simply BRILLIANT. I'm expecting this particular niche to possibly be the fastest growing Bitcoin usage of them all.

Then there are of course other types of usage. Bitcoin as a store of value will become more serious only with time, there is not much we can do about that. Bitcoin in virtual gaming markets seems to be stalling a little but I expect this market to pick up speed at some point. Bitcoin in remittance might pick up massive speed with the latest issues in remittance between the US and Somalia etc. Same goes for Africa in general because the banking system is so weak there. I expect this particular market to take time though, so don't "bank on it" just yet. Also the deepening euro crisis is good for Bitcoin, I expect more people to learn about it because of that and even though there might be no explosion coming, it's still good old growth.

We also shouldn't forget regular payments. As Bitcoin usage in various niches increase it will increase the amount of people using Bitcoin in general. I see this market growing, starting from small shops of course because of the low starting costs. It's actually almost impossible for a small shop owner, online or brick-and-mortar to not benefit from adding Bitcoin payments at this point. The entry costs for a small merchant are small and the positive marketing value of accepting the future of money and also the actual extra revenue etc.

For example, my company is running a Finnish Bitcoin portal, which opens in a few days. We haven't even opened yet and we got asked to demo Bitpay to a small pizza/kebab joint in Tampere, a large Finnish city. My company is an official integration partner for Bitpay with exclusive rights in Finland. The first of its kind. I don't actually know if we'll be able to sell it to them but it makes sense for them to take it. They would be the first brick-and-mortar restaurant to accept Bitcoin in Finland and the entry costs are very low, there are basically two sales employees in total or something like that. I know a lot of Bitcoin-enthusiasts in Finland that would go to this particular restaurant every time they visit Tampere, so the expected value simply can't be negative.

Obviously that only applies to small shop owners, just like I said before. Bitcoin is something that grows not top-down but bottom-up. It's important to understand this. It will start from the small, grow with the small, until some day the big guys get really interested as well. We're not there yet but who cares? Bitcoin IS growing, not at an explosive rate but at a very good rate in my opinion. Price seems to support this as well, we have a stable price even though monetary inflation is still massive.

+1. Great summary.

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May 17, 2012, 10:33:39 PM
 #8

What's the economy like now? Just pulling numbers out of my @ss... We've got ~$40 million of mining, plus MtGox, Bitcoinica (assuming they bounce back from hiatus), a bunch of smaller exchanges... so there's maybe 6~12 businesses in the 1 to 10 million dollar range, and the rest of the field seems to consist of 100s, maybe a couple thousand small on-line start-ups in the $500~$50k range. All up, I'm generously guesstimating $70M at the moment.

In as little as 6 months, there could easily be 5~10 more "big" (by Bitcoin standards) $10 million players. Again, just pulling ideas out of the aether, there has been a lot talk about porn/cam/gambling sites lately, but those businesses could be anything. Remember that it's an international monetary system. That bumps the economy up to $120M~$170M. Things could go either way for miners, but even if their revenue halves, that's still a potential $125M on average (assuming a steady $5 exchange rate).

In a couple of years? Guesstimating by pulling similar numbers out of the same place: 10~20 $50M-scale businesses join in, + 1000 ~$1M businesses (some are new, some have grown). We should remember that the nature of money is such that it can't be everywhere at once. Therefore, even with a ~$2 billion economy outside of mining, the total bitcoins in circulation might only be say, $400M.


So there you have it, folks, in a couple of years, Bitcoin could have a 2.5B economy in today's dollars.
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May 17, 2012, 10:45:34 PM
 #9

As was stated before, half of the 21 million BTC will be mined by December, at that point, the total value would be about $55 Million @ current prices. (10.5 Million coins @$5 each)

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May 18, 2012, 12:32:11 AM
 #10

What's the economy like now? Just pulling numbers out of my @ss... We've got ~$40 million of mining, plus MtGox, Bitcoinica (assuming they bounce back from hiatus), a bunch of smaller exchanges... so there's maybe 6~12 businesses in the 1 to 10 million dollar range, and the rest of the field seems to consist of 100s, maybe a couple thousand small on-line start-ups in the $500~$50k range. All up, I'm generously guesstimating $70M at the moment.

In as little as 6 months, there could easily be 5~10 more "big" (by Bitcoin standards) $10 million players. Again, just pulling ideas out of the aether, there has been a lot talk about porn/cam/gambling sites lately, but those businesses could be anything. Remember that it's an international monetary system. That bumps the economy up to $120M~$170M. Things could go either way for miners, but even if their revenue halves, that's still a potential $125M on average (assuming a steady $5 exchange rate).

In a couple of years? Guesstimating by pulling similar numbers out of the same place: 10~20 $50M-scale businesses join in, + 1000 ~$1M businesses (some are new, some have grown). We should remember that the nature of money is such that it can't be everywhere at once. Therefore, even with a ~$2 billion economy outside of mining, the total bitcoins in circulation might only be say, $400M.


So there you have it, folks, in a couple of years, Bitcoin could have a 2.5B economy in today's dollars.
+1

It's obviously very difficult to predict how long exactly it takes for this development to happen but I like the way you think. This is more or less the way it happens if Bitcoin doesn't run into major obstacles on the way.

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