Allegro.cc - Online Community

Allegro.cc Forums » Off-Topic Ordeals » Bitcoin - P2P currency

This thread is locked; no one can reply to it. rss feed Print
Bitcoin - P2P currency
decepto
Member #7,102
April 2006
avatar

Today I was thinking about how one would go about forecasting the future value of 1 bitcoin.

For a thought experiment lets assume that as of today, bitcoins as a currency are of equal monetary value to that of US dollars, Ceteris paribus. The find the exchange rate between bitcoins and USD, one would just need to find the ratio between the two currency's total money supply:

total number of bitcoins / total number of USD

The money supply of bitcoins is easy to determine. Determining the money supply for USD is a bit more difficult. For argument's sake, lets use a conservative figure: the current reported monetary base.

Using this data, the current approximate money supply of bitcoins is 6,000,000. The current approximate money supply of USD is 2,400,000,000,000 (2.4 Trillion).

The USD to bitcoin ratio would therefor be : 2,400,000,000,000 / 6,000,000 = .0000025

The bitcoin to USD ratio would be : 6,000,000 / 2,400,000,000,000 = 400,000.

Food for thought.

--------------------------------------------------
Boom!

Dustin Dettmer
Member #3,935
October 2003
avatar

Hm, so if bitcoins took over us dollars a single bitcoin would be worth 33k. That's a nice thought -- I think I'll hold onto my 43.25 bitcoins.

Edgar Reynaldo
Major Reynaldo
May 2007
avatar

decepto
Member #7,102
April 2006
avatar

Math check :
2400/6 = 400
6/2400 = .0025

Can you explain where these numbers come from?

Edit: 2.4 trillion is 2.4 million million.

Edit 2: Sorry, I meant to say 6 million, and I accidentally wrote 6 billion. I've updated the post above.

--------------------------------------------------
Boom!

Dustin Dettmer
Member #3,935
October 2003
avatar

Google says:
2.4 trillion / 6 million = four hundred thousand
6 million / 2.4 trillion = 2.5 × 10-6 (ie 0.0000025)

Edgar Reynaldo
Major Reynaldo
May 2007
avatar

decepto said:

The USD to bitcoin ratio would therefor be : 2,400,000,000,000 / 6,000,000,000 = .000003

The bitcoin to USD ratio would be : 6,000,000,000 / 2,400,000,000,000 = 33,333.

Your figures show 2.4 Trillion to 6 Billion, which gives the ratios I just posted. But you actually said there were 2.4 Trillion US Dollars and 6 Million Bitcoins, so that makes the ratios (after dividing top and bottom by 1,000,000) :
2,400,000/6 = 400,000
6/2,400,000 = 0.0000025

decepto
Member #7,102
April 2006
avatar

I knew my math degree would come in handy ::)

Thank you for catching that, I've updated in the post.

--------------------------------------------------
Boom!

Dustin Dettmer
Member #3,935
October 2003
avatar

I think 6 million is the wrong number.
https://en.bitcoin.it/wiki/Myths#Early_adopters_are_unfairly_rewarded

It looks like the actual number is 21 million, so:
2.4 trillion / 21 million = 114 285.714

Which means my 43.25 coins would be worth $4,942,857.13 :D.

decepto
Member #7,102
April 2006
avatar

I think 6 million is the wrong number.

There are currently 6 million in circulation, roughly speaking.

http://en.wikipedia.org/wiki/File:Total_bitcoins_over_time.png

Edit:

Well, I found a kind soul on Reddit to sell me 10 bitcoins. I bought them at $5.50 USD. We'll see where this goes...

--------------------------------------------------
Boom!

weapon_S
Member #7,859
October 2006
avatar

decepto said:

Well, I found a kind soul on Reddit to sell me 10 bitcoins. I bought them at $5.50 USD.

It could be me, but someone here doesn't know the proper exchange rate. :o
How did you make 3.25 Bc, Dustin?

Dustin Dettmer
Member #3,935
October 2003
avatar

I bought them using Paypal before it got blocked.

BAF
Member #2,981
December 2002
avatar

Bump, to keep it alive. I'm interested in seeing where this goes - I'm trying to find someone to sell me some over PP at a good exchange rate, now that it's on the rise after today's drop. I'd bid on mtgox, but I'm waiting for dwolla to verify my account.

decepto
Member #7,102
April 2006
avatar

What's going on? Should I sell or wait?

So far I've turned my $40 into $170.

Please tell me you didn't sell them. Your 43.25 Bitcoins are now worth ~375 USD.

--------------------------------------------------
Boom!

bamccaig
Member #7,536
July 2006
avatar

decepto said:

Please tell me you didn't sell them. Your 43.25 Bitcoins are now worth ~375 USD.

Unless the rise in value of Bitcoins is predictable there's no shame at all in cashing them in ASAP while there's a very reasonable return on your investment because if you wait too long the tables may turn. :-/ It doesn't matter if you would have made more money if you waited because just as easily you might have lost it all if you waited. :-/ You could also cash a fraction of them in so the original investment (and maybe a little extra for spending money) is at least
"protected"[1].

References

  1. Then again, the banks could decide it's inflation time and fuck you on traditional currencies any time they want... :-X


Go to: