Block reward rate: 6.25BTC. 144 blocks are mined per day. Coins are sold by miners to pay for their power and operating expenses. This means 6.25x144x500000 = $450,000,000 per day is how much new money would need to be brought in to keep the price stable. Per day. That works out to $164,250,000,000 in new money per year to keep the price stable.<p>The more expensive bitcoin gets, the more new money has to be brought in to prop the price up.<p>At $500K per coin $164B per year in welfare is extracted, burned up and wasted. That's the only math you need to do, tbh, when estimating future coin value.<p>This is just pumping by the world's biggest bag holders.<p>> ...and printing money like a banana republic.<p>And yet, inflation is likely to achieve an effective rate of 0.44% this year.
I always thought my parents should have seen the potential of Microsoft and Apple back in the day. But what potential did I see?<p>1999: I was a teenager, so no stocks for me<p>2009: In my early twenties, no cash, not interested in the stock market<p>2020: Saw the potential of recovery, most money already tied up (house, stocks)<p>The tech companies pulled the stock market back up. The future will be in tech. So I'm not betting against tech. I do not care much about arguments, I just buy some bitcoin because I think technology is the future. Is it blockchain? I don't know, don't care, but sure I'm not gonna miss it.<p>Almost all people are bad at making future forecasts. So I don't.
I'm sure it's a coincidence, but the Winklevoss brothers claim to own ~1% of all Bitcoins mined so far, and a price of $500,000 would value their fortune at almost exactly the same as Mark Zuckerberg's net worth ($96b).<p>I would love for them to have chosen $500,000 for that reason.
The real issue with Bitcoin and the reason why it is different from other assets is that there is no actual source of value. A good way of thinking about this is trying to consider the values of various assets if the government was about the make it illegal to trade them.<p>A house for instance would still be valuable because you can live in it. Facebook stock would still be valuable because it represents ownership in a real company that generates profit.<p>Bitcoin however is useless if you can't trade it. There is literally no reason to own Bitcoin except to eventually sell it to someone else.
The numerical part of this argument is... nonexistent? The only time the 500k figure appears in the article is at the very end: "Said differently, the price of bitcoin could appreciate 45x from where it is today, which means we could see a price of $500,000 U.S. dollars per bitcoin."<p>OK, so where does this factor of 45x come from? It comes from the immediately preceding sentence: "If we are right about using a gold framework to value bitcoin, and bitcoin continues on this path, then the bull case scenario for bitcoin is that it is undervalued by a multiple of 45."<p>Right. What is a "gold framework"? They don't say. There are some ramblings about asteroid mining and Elon Musk bringing gold back from Mars, which will "crater the price of gold". This is unclear, but I <i>think</i> they are trying to suggest the gold price dropping to near 0. Which seems nonsensical, since nobody will mine the asteroids if they can't expect a good return on their effort.<p>Aaanyway, back to the 500k: We do get this right before the "gold framework" sentence: "Today, the market capitalization of above ground gold is conservatively $9 trillion."<p>OK. So I <i>think</i> the reasoning they are hinting at goes something like this:<p><pre><code> - the gold price will fall to near 0
- the $9 trillion dollars currently invested in gold will all be invested in Bitcoin instead
- the supply of Bitcoin is limited at 21 million
- $9 trillion / 21 million Bitcoin = $429k / Bitcoin, which = $500k / Bitcoin if you squint hard enough
- the above checks out if you assume a "real" supply of 18 million Bitcoin because some are lost
</code></pre>
I question most of the points listed above.
<i>If both depositors and borrowers get it — depositors through higher interest rates and borrowers through lower interest rates — then it’s called dual interest rates. If lenders and shareholders get it, then it’s quantitative easing. If the people get it, then it’s helicopter money, and so on.</i><p><i>Winners and Losers</i><p><i>Regardless of what channel the central bank uses to inject money into the economy, the winners and losers are the same: borrowers will be rewarded at the expense of lenders and depositors.</i><p>Who seriously believes that all ways of distributing new money have the same winners and losers? Who seriously believes that quantitative easing and helicopter money / UBI have the same winners?<p>Why is this essay anything else than yet another hodler pumping their bags?
Have Bitcoin supporters shifted their goal from making Bitcoin a viable currency to making Bitcoin a value store? Because I'm not seeing that in this article.<p>The problem with Bitcoin as a value store is the value it has. I'd argue that the current Bitcoin value is based on speculation and not on anything concrete. Oil and gold obviously have very concrete practical uses, since we can use them to make our cars move, our houses warm and our computers do something.<p>US Dollar obviously is less concrete since its value is based on people agreeing that it has a value - but it has a very large backing. Obviously there's a country where 300+ million people have agreed that the US Dollar has value and you can find someone to trade in your dollars all around the world.<p>Also, I'm not completely impressed with the comparison between gold and Bitcoin. First of all, fixed scarcity? Is this actually a good thing? And is Bitcoin actually scarce? How does hard forking affect the scarcity? And is there a reason why any singular fork of Bitcoin is the one and true cryptocurrency? Because if there's something with no scarcity, it's cryptocurrency in general.<p>"Software durability" also is pretty funny. I don't consider software all that durable. How much cryptocurrency has been stolen through software exploits, be it within a cryptocurrency itself or via some adjecent software, thus far?<p>Portability and storage for Bitcoin also sound pretty good at first. However, if you're thinking about a value storage, is portability actually that good? If I want to store $500k as an asset, I don't actually want it to be that portable since I don't want anyone else be taking it. $500k in gold is like 8 kg, so at least it's not something that someone can sneak out or take from across the world. And a safe or vault have costs associated with it, that's what I want for value storage.
Sorry, the article does not make one mention of stability. This is arguably the most important value of any money store, the peace of mind that what you have today will be worth the same tomorrow. The dollar is stable because it's instability means the very collapse of society and government.<p>>Bitcoin is not just a scarce commodity, it’s the only known commodity in the universe that has a deterministic and fixed supply. As a result, bitcoin is not subject to any of the potential positive supply shocks that gold (or any commodity for that matter) may face in the future.<p>This doesn't mean a thing and I would argue isn't true. 4th generation Toyota Supras are also a fixed supply, yet the value of these cars has fluctuated wildly and will continue to. There won't be a single new 4th gen Supra produced. I would argue vintage cars are the most similar asset to bitcoin. Since like cars, some bitcoin is continually lost and destroyed every day. Like bitcoin, cars are simply worth whatever someone is willing to pay. The market for cars is not logical, it is purely emotional. Yes, toyota supra prices will likely not collapse anytime soon, since they look cool and there are less and less examples every day. But anyone making an argument that bitcoin is an effective money store needs to consider all the things that can go wrong, and cannot argue that bitcoin is anything better than gambling. The market is not logical, since the market is simply people, and thats the first assumption that is wrong here.
The entire thing with bitcoin that I don't get is that the owner's need to trade it for fiat currency at the end. So long as fiat currency is part of the play I don't see the value. It needs to exist without fiat currency. Govts and the central banks around the world have no power without being fiat, they need to be able to print as much as they can, and they demand for taxes in fiat. So you will eventually have to sell your bitcoin even if you most of your transactions in it, you will need to sell some and buy money to pay taxes.<p>The Feds "saved the economy" with the massive QE, Trillion dollars stimulus. What could they have done if currency was all bitcoin?
What about security / hacking threats?<p>Say I have precious metal in safes at some banks, good luck to steal it from me overnight. Now imagine people get a digital wallet on their smartphone. It's now easier to rob them of their lifetime savings, in the stealthiest manner ever. Surely easier than to mine the asteroid next door. Software bugs, hardware backdoors, social engineering, or just not understanding how it works... even the most tech savvy is at risk.
The problem with gold is not unlimited supply. Humans have mostly colonized planet Earth. It has become increasingly difficult to mine gold. Average Joe can no longer mine gold with a pickaxe. Gold mining now requires large capital expenditure. Space mining also requires large capital investment.<p>The problem with gold is centralization. Large capital investment prevents smaller players to participate. Nation states also monopolize the existing gold supply. New gold from space is likely going to end up in central banks' reserve.<p>Bitcoin faces the same problem with centralization. The hard cap makes Bitcoin even easier to manipulate. Nation states can pump and dump retail investors out of the game. Don't fight the Fed. If the Fed decides to enter the Bitcoin game, investors are going to lose. Once nation states monopolize the Bitcoin supply, we're back to the same situation like gold. Making decentralized money is not that easy. Bitcoin alone cannot fix everything.
Man is talking about how asteroid mining will destroy the value of gold... Has he heard of quantum computing? Would sure hate to see the bitcoin network fall to it...