Infographic: why the sky is the limit on bitcoin prices

[mystery2048]

The price of bitcoin has and always will be speculative... The sky is the limit but so is the floor...

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[Roger_Murdock]

A very handy (because the math is simple) way to think about bitcoin's huge potential upside is to focus on the $20 trillion in the cash and checking account bubbles (which, as I understand it, gives you the world's M1 money supply).  There will be roughly 20 million bitcoins in circulation when they're all released. So the trick is to figure out what percentage of the value being held in the current M1 money supply will eventually move into bitcoin.  If you think it's only 0.001% (1/100,000th) that gets you a price per bitcoin of $10.

0.01% - $100 / BTC
0.1% - $1,000 / BTC
1% - $10,000 / BTC
10% - $100,000 / BTC
100% - $1,000,000 / BTC

I'm hoping for a hundred percent, but I'd settle for 10.  

[adamstgBit]

A very handy (because the math is simple) way to think about bitcoin's huge potential upside is to focus on the $20 trillion in the cash and checking account bubbles (which, as I understand it, gives you the world's M1 money supply).  There will be roughly 20 million bitcoins in circulation when they're all released. So the trick is to figure out what percentage of the value being held in the current M1 money supply will eventually move into bitcoin.  If you think it's only 0.001% (1/100,000th) that gets you a price per bitcoin of $10.

0.01% - $100 / BTC
0.1% - $1,000 / BTC
1% - $10,000 / BTC
10% - $100,000 / BTC
100% - $1,000,000 / BTC

I'm hoping for a hundred percent, but I'd settle for 10.  

whats your formula

$20trillion * 0.0001 / 21million?

[smoothie]

The price of bitcoin has and always will be speculative... The sky is the limit but so is the floor...

Yes but most of us can touch the floor not much of us can "touch" the sky

[dacoinminster]

Though, the idea of central enforcing entity as opposed to a distributed one seems to be less than ideal.

This is one misconception I keep running into, and I'm not sure what makes people think that my proposal involves losing decentralization. Decentralization is key to the success of bitcoin, and to the success of anything built on top of bitcoin.

While I would like to see a "trusted entity" with a financial incentive to work on adding features to make the protocol extensions more valuable, perhaps I haven't emphasized enough that the trusted entity would NOT control the new features. They would still be open source and decentralized.

[dacoinminster]

A very handy (because the math is simple) way to think about bitcoin's huge potential upside is to focus on the $20 trillion in the cash and checking account bubbles (which, as I understand it, gives you the world's M1 money supply).  There will be roughly 20 million bitcoins in circulation when they're all released. So the trick is to figure out what percentage of the value being held in the current M1 money supply will eventually move into bitcoin.  If you think it's only 0.001% (1/100,000th) that gets you a price per bitcoin of $10.

The M1 money supply a big deal. However, the world's money supply is dwarfed by all the speculation that goes on with derivatives, stocks, options, commodities, futures, etc. I want to attract THAT money into bitcoin, if only because there are a lot fewer people that need to be convinced (how many people have a checking account versus how many people have a brokerage account for trading futures, options, or forex).

[ArticMine]

A very handy (because the math is simple) way to think about bitcoin's huge potential upside is to focus on the $20 trillion in the cash and checking account bubbles (which, as I understand it, gives you the world's M1 money supply).  There will be roughly 20 million bitcoins in circulation when they're all released. So the trick is to figure out what percentage of the value being held in the current M1 money supply will eventually move into bitcoin.  If you think it's only 0.001% (1/100,000th) that gets you a price per bitcoin of $10.

The M1 money supply a big deal. However, the world's money supply is dwarfed by all the speculation that goes on with derivatives, stocks, options, commodities, futures, etc. I want to attract THAT money into bitcoin, if only because there are a lot fewer people that need to be convinced (how many people have a checking account versus how many people have a brokerage account for trading futures, options, or forex).

The key to understand here is that fractional reserve banking can also be used for Bitcoin. I agree with the M1 analysis because Bitcoins themselves will likely replace cash or a chequing account but derivatives no way. We would have derivatives based on Bitcoin and the resulting Bitcoin money supply (M2, M3 etc) would be be much greater than 21,000,000 BTC.

[dacoinminster]

The key to understand here is that fractional reserve banking can also be used for Bitcoin. I agree with the M1 analysis because Bitcoins themselves will likely replace cash or a chequing account but derivatives no way. We would have derivatives based on Bitcoin and the resulting Bitcoin money supply (M2, M3 etc) would be be much greater than 21,000,000 BTC.

I believe that derivatives based on bitcoin will draw more money into bitcoin than even if all the checking accounts and cash in the world moved into bitcoin. It can't be proven though until someone tries it

[cbeast]

The key to understand here is that fractional reserve banking can also be used for Bitcoin. I agree with the M1 analysis because Bitcoins themselves will likely replace cash or a chequing account but derivatives no way. We would have derivatives based on Bitcoin and the resulting Bitcoin money supply (M2, M3 etc) would be be much greater than 21,000,000 BTC.

I believe that derivatives based on bitcoin will draw more money into bitcoin than even if all the checking accounts and cash in the world moved into bitcoin. It can't be proven though until someone tries it

If you are able to leverage a multi-sig escrow against an Open Transaction, you should have very secure and transparent assets. I'm not sure how to make them fungible unless they use timed transactions that are then re-scripted at maturity and possibly sold.

[TraderTimm]

I've made the decision personally to invest more in bitcoin. I'm wary of upcoming events that could have large impacts on every traded currency in the world. Bitcoin was never just a means for me to turn one currency into another, either.

I've been spending some BTC on things that make sense, and building a good reserve as well. Even if the smallest fraction flows into BTC from the sources you've mentioned, it could be quite interesting. Not just the external dollar valuations, but the network would benefit from more participants using BTC.

I was talking to someone about this the other day, (scarcity of supply built into the system) and said "maybe one day we'll look at someone buying a WHOLE bitcoin as the luckiest bastard on the planet."

Wouldn't that be something - all of us used to 0.0000<something> transactions instead of whole numbers and fractions.

If only...

[julz]

Where does this: http://www.bbc.co.uk/news/business-18944097  21 Trillion fit in the infographic?

[FreeMoney]

I was talking to someone about this the other day, (scarcity of supply built into the system) and said "maybe one day we'll look at someone buying a WHOLE bitcoin as the luckiest bastard on the planet."

Rather, one day it will not be said "buy a bitcoin". What would you buy it with?

[dacoinminster]

Where does this: http://www.bbc.co.uk/news/business-18944097  21 Trillion fit in the infographic?

Good gravy!

His numbers are almost certainly high, but it does seem likely that a lot of offshore banking will eventually go to bitcoin once your average embezzler feels confident that bitcoins will be stable and secure enough to use.

I would imagine that estimates of offshore banking goes into estimates of the money supply, which I used to make my graph. Maybe under "savings accounts" . . .

[Rygon]

Where does this: http://www.bbc.co.uk/news/business-18944097  21 Trillion fit in the infographic?

I often wonder what would happen to those vast stores of fiat wealth if there was serious crisis to the faith behind the currencies. There probably aren't many people hoarding Euros anymore, except those who are trying to keep the Euro intact. But the dollar is another story. The Fed has a unique position in that it can print money without significantly affecting inflation because a lot of it flows out to the big power players and those looking for a "safe" haven. But what if the situation changed and enough individuals holding onto $B stockpiles decided to store their wealth somewhere other than fiat...

Would it go into stocks, PMs, real estate, etc? There are parts of the US where $1B could theoretically buy all the land in a small town or even county. Inflation in prices (deflation in the buying value of a dollar) could lead to more dumping of dollars. Perhaps there are a lot of players just waiting for the bottom of the current depression to buy back in (buy low, sell high).