Friend: What's the intrinsic value of Bitcoin, in your opinion?
StJohn Piano: Difficult to measure. A little like asking what the intrinsic value of "bookkeeping" or "gunpowder" is. If you use it better than the other people, you win, and you get their stuff. So.... that's not exactly a "price".
But... let's try.
Bitcoin is a pretty good gold. Not a perfect one (maybe there's some problem that we can't see yet), but a good one.
So, to calculate a potential final price (assuming it keeps working): Take market value of all gold on the planet. Assume Bitcoin is equally valuable. This suggests that 50% of value of gold will go into Bitcoin eventually.
Approx $10 trillion / 2 = $5 trillion. [0]
Divide $5 trillion by 21 million bitcoins and you get..... $238,095
Note: Bitcoin has a few extra properties (e.g. teleportation to anywhere on the planet within 1 hour), that mean that it's potentially rather more valuable than gold.
Note 2: Any dollar-based estimate of the final price is complicated by the fact that the US Dollar is inflating rather rapidly.
StJohn Piano: Difficult to measure. A little like asking what the intrinsic value of "bookkeeping" or "gunpowder" is. If you use it better than the other people, you win, and you get their stuff. So.... that's not exactly a "price".
But... let's try.
Bitcoin is a pretty good gold. Not a perfect one (maybe there's some problem that we can't see yet), but a good one.
So, to calculate a potential final price (assuming it keeps working): Take market value of all gold on the planet. Assume Bitcoin is equally valuable. This suggests that 50% of value of gold will go into Bitcoin eventually.
Approx $10 trillion / 2 = $5 trillion. [0]
Divide $5 trillion by 21 million bitcoins and you get..... $238,095
Note: Bitcoin has a few extra properties (e.g. teleportation to anywhere on the planet within 1 hour), that mean that it's potentially rather more valuable than gold.
Note 2: Any dollar-based estimate of the final price is complicated by the fact that the US Dollar is inflating rather rapidly.
However, it's important to recognise that, if the Bitcoin cryptosystem breaks in some catastrophic way, it will be worth $0. So: A reasonable estimate of its market price is "between $0 and $238,095". Humans generally don't like dealing with items of such variable value, as the average man desires safety rather than freedom, but... it is what it is. Anyway, if it does break, a new one will emerge as a successor. [1]
Note: This is the optimistic high-end estimate of Bitcoin's market price as a gold i.e. a store of value. Its value as a secure global monetary network could be significantly greater, as final settlement for transactions between different countries / monetary systems is very difficult. If Bitcoin is eventually used for a significant percentage of final settlement operations between major monetary systems, then I estimate that it can go one (perhaps two) orders of magnitude higher in price. So: at least ~$3 million / bitcoin.
A sensible strategy would be:
1) Get a reasonable amount of bitcoin.
2) Store it yourself. Always put a certain percentage of your available time / work into secure storage, for the rest of your life.
3) Evaluate new cryptocurrencies when possible to see if any of them could become a peer competitor to Bitcoin.
4) After doing (1), look around for other things to invest your time and energy into, that might provide a store of value, so that if Bitcoin breaks, you won't lose everything. E.g. skills, good working relationships, a portfolio of work, some gold, etc. Probably not the dollar though.
My version of (4) has been to build Edgecase Datafeed, a private blockchain dedicated to publishing, which you are currently reading. It provides me with a secure repository of tools and experimental results, and a portfolio for when I need to show a prospective employer that I'm the right man for the job. It also provides a fixed reference point, around which (maybe) an organisation can orient itself (e.g. by providing other members with a permanent blockchain-protected portfolio).
If you are interested in working with me (for life, no backsies, I'm not interested in short-term working relationships - in this field, they cost more than they're worth), get in touch. Bear in mind that you must either be someone who's already capable, or someone who's prepared to work very hard to become capable.
Information about Edgecase Guild:
The Establishment of a Cryptocurrency Guild
Important prerequisite: Cultural fit. See here for details: Edgecase Guild: Strategic Policy Document
You should also understand that Edgecase Guild is a political association, not just a technical one. The reasons for this are explained in Police and cryptocurrency. If you're someone who still believes in the Cult of the Individual... well, 1) you're a security risk, and I don't want to work with you, and 2) I find The Worship of Man to be excruciatingly boring. Find better gods to follow.
[start of footnotes]
[0]
Source for the $10 trillion value:
www.goldeneaglecoin.com/Guide/value-of-all-the-gold-in-the-world
(5.6 billion Troy ounces) * (current gold spot price of $1,812.00) ~= $10 trillion.
www.goldeneaglecoin.com/Guide/value-of-all-the-gold-in-the-world
(5.6 billion Troy ounces) * (current gold spot price of $1,812.00) ~= $10 trillion.
[return to main text]
[1]
Take a minute to imagine what happens if it breaks. What, everyone forgets that it ever existed ? And they go back to the old ways, and never experiment with it again ? Nope. Someone starts a new chain, or several people start new chains and they compete against each other until one emerges as the primary chain. This tech won't disappear - it's too useful.
[return to main text]
[end of footnotes]