Bitcoin market cap will easily be worth in the trillions of dollars

September 10, 2017 at 9:40 am | Posted in Uncategorized | Leave a comment

I have been a big bitcoin proponent for quite some time. The current market cap of bitcoin is currently 70 billion dollars  – a lot of money to me and you but a pittance in terms of the world economy. I often wonder when this growth will slow down. I recently read an insightful post on reddit remarking on how far it can go. Was written by ZenoOnTheMoon, but re-posted here for convenience:

It’s quite easy to imagine a 2.6 trillion dollar market cap for bitcoin.

The current market value of Gold is 6.5 trillion dollars. The gold used in industry, jewelry and grills accounts for somewhere between 5 and 10 percent of the total supply, The rest of it’s value is essentially speculation on it’s ability to store value.

The perception of gold’s ability to store value, I would argue, is fundamentally based on 2 things. First, it’s relatively scarce, and second, it’s historical precedence as an accepted form of money.

To contrast this first point, scarcity, with bitcoin, I would argue that bitcoin’s scarcity is much more assured than gold’s. It’s assured digitally, in fact. Gold’s scarcity is assured only based on the fact that people think most of the easy-to-mine gold in the world has been found and mined.

To contrast the second point, historical precedence, with bitcoin, i would argue that historical precedence always gives way to technical advance. Unless there’s a mad-max scenario, the world is not going to go back to using precious metals as money. The conveniences brought about by the technological advance of bitcoin, in particular it’s uncounterfeitability, it’s perfect fungability, and it’s almost non-existent friction, are just too many.

So, the mad-max scenario aside, bitcoin could take a huge portion of that 6.5 trillion dollar gold market.

But bitcoin really goes beyond this. It’s a currency that has purposefully combined the most desirable properties of gold, and the most desirable properties of fiat (which i admit, there are not many!). Why on earth would it NOT dominate the currency market? Everything else being equal, exactly who would choose to save their money in a currency that not only could be slowly inflated into oblivion, but also had an undeniable historical precedence for being inflated into oblivion?

There are four trillion dollars changing hands every day in the forex markets. Hundreds of billions of which is just people speculating on which government is going to debase their currency fastest.

There’s at least 40 trillion dollars (USD equivalent) in government issued fiat currency, in the world, plus 7 trillion dollars worth of precious metals. Is it realistic that the greatest form of money the world has ever seen will have a 2.6 trillion dollar market cap? No, that figure is WAY TOO LOW.

It is going to crush the fiat currency markets and precious metals markets like the internal combustion engine crushed the horse and buggy, and talking about the dollar value of bitcoin will be as cute and antiquated as measuring how powerful a car’s engine is in terms of horses.

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