I think some of the numbers being thrown around about bitcoin’s potential value are too small. Here’s a quick example:
1/ A lot of smart people help us think about the market size of the non-sovereign monetary store of value use of #bitcoin. Often it is related to "digital gold" (@wences, @jlppfeffer) with est of $8T market cap or "the offshore banking system" (@AriDavidPaul) with est of $20-30T
— David King 🔥 (@dksf) March 1, 2018
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)
This is going to be a “winner takes most” market, so let’s say 80% of global wealth.
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).
Take 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:
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.