I thought I’d just do a fun “back of the envelope” calculation today. Let’s estimate a theoretical maximum price for bitcoin. Fun! But beware! This is all based on a few very dubious assumptions:
- We assume bitcoin becomes the only currency in the world by 2140
- We assume that there are 21 million bitcoins by 2140
- We assume that all that bitcoin is equal in value to the worlds total wealth in 2140
I mean, hey, it could happen!
Anyway, Satoshi Nakamoto’s original protocol only allows for a maximum of 21 million bitcoins, and the year 2140 comes from an estimate of when the last block of bitcoin will be mined.
So now we just need to know how much wealth the world will have in 2140. According to this report by Credit Suisse, there was $241 trillion worth of “stuff” in 2013 (it’s on page 13 if you’re looking for it). This was approximately double the amount of wealth in 2000.
Great! So let’s assume the world’s weath doubles every 13 years from 2013 to 2140. That’s 127 years, or just under 10 periods of 13 years. If you double something 10 times, you get 1024 (2^10) so let’s just call it 1000 (since we’re on the back of an envelope and all…). So in 2140, we should be looking forward to having about $241 quadrillion in wealth along with 21 million bitcoins with which to buy it all.
Yay! So theoretically then, a bitcoin should be worth about $241 quadrillion divided by 21 million bitcoins, or about $12 billion per bitcoin.
Well, that makes me feel a lot better about not investing in bitcoin five years ago when I first heard about it. But if the price doesn’t reach $12 billion dollars by 2140, please don’t send me nasty emails. After all this was just for fun…or was it?
So while we all wait for 2140…keep pipping up!