Old Man Carney Yells At Bitcoin

At this point in Bitcoin’s journey, we’re now getting central bankers attempting to trash bitcoin as a money. See Mark Carney’s comments in this speech at Bloomberg here:

Carney trots out tired arguments that have been addressed time and time again. But let’s just pick them apart anyway:

Bitcoin volatility and “poor store of value”

Bitcoin’s most ardent supporters would not try to make you believe that bitcoin’s volatility is low and it’s a “stable currency for use right now”. This entire case is about the long run. First, hyperbitcoinization. Then, regular use as a real currency.

And while we’re on the topic of volatility, why don’t we instead drag it out over a longer time period?

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BTC/GBP price chart from CoinGecko

So you can see from this chart that at about August 2017, the price went above 2,000 GBP and in early March 2018 as I write this, it’s around 8,000 GBP. So basically, if you have bought before August 2017, the worst you could have done is 4x your money. If you bought in years ago, you’re absolutely laughing.

This guy should not be one to throw stones

So you can see from the price chart above that anyone who has held bitcoin for a long period of time has done very well in GBP terms. How about the flip side? I’ve made up a quick chart to show how terribly the GBP has gone against bitcoin. price of 1 GBP in BTC.png

Oops. Mark Carney’s money hasn’t exactly done that well, has it? Better check the scoreboard next time.

Repeating history

Mark Carney makes a comment referring to the saying “Those who don’t know history are doomed to repeat it”, as though this is an argument against a money modeled against gold in it’s supply characteristics. This is ignoring that the world operated for thousands of years on gold, and the classical gold standard era had very high growth rates.

If anything, having these elitist central bankers who believe they need to manage the money will lead to us repeating history: By having continually declining value. It’s time for a change, a move towards a sound money that is truly scarce.

In the end, this is yet another case of Old Man (Carney) Yells At Bitcoin:YXR3fZ.jpg

Why Bitcoin could be worth millions

I think some of the numbers being thrown around about bitcoin’s potential value are too small. Here’s a quick example:

Here’s a back of the envelope calculation for what bitcoin could be worth:

Global Wealth = $280T (Credit Suisse Global Wealth Report 2017)

Number of bitcoins = 17M (21M-4M, assuming 4M bitcoins are lost from this chain analysis performed)Selection_003.png

This is going to be a “winner takes most” market, so let’s say 80% of global wealth.

Calculation:

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So the initial estimate we come to here is $13 Million per bitcoin.

Ratio of money to global wealth

Now you could argue that it’s not correct to use the $280T figure, as money can ‘move through’ an asset as it prices it. So if we adjust for this, how would we do it? One way to do this is to compare the USD value of ‘broad money’ figure (e.g. $90T from this Visual Capitalist page).

Selection_006.pngTake the ratio of that $90T to the global wealth $280T (3.1111), and then calculate a per BTC price. Here’s that number calculated out:

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So even accounting for the Broad Money / Global Wealth ratio, we still get a value of $4.2 Million USD per bitcoin, in today’s terms. This is before we even take into account the massive productivity that will be unleashed on the world by having a sound money.

It could take decades to get there, but at least now we have a better idea of what we’re playing for.