Bitcoins Are Worth $10,000 Each And Here’s Why!

What is the true value of a Bitcoin? Now I’m not the first to say this, but if bitcoins are to be treated and used as a “real currency”, adopted and used by millions if not billions of people worldwide, I think each bitcoin will find its way to a value of at least $10,000.

Today, bitcoins are worth about $144 each and with 11.8 million of them in circulation, the value of all bitcoins reaches $1.7 billion and since bitcoins are the first truly global digital currency it’s fair to measure them on a global scale. With a world population approaching 7.2 billion, that’s less than 25 cents worth in bitcoins per person to go around. Compare this to nearly 11 trillion U.S. dollars in circulation, worldwide ($1,500 per person). These numbers illustrate just how small the total value of bitcoins in circulation remains and how much the total value of bitcoins must appreciate before there is enough value to spread around. A substantially larger bitcoin market size will help encourage acceptance within major businesses around the world. Sure, some large business like Baidu recently started accepting bitcoins, but this was likely more of a marketing tactic than a shift in their business model.

Put into perspective, the total market of bitcoins is tiny– so tiny that Mark Zuckerberg (CEO of Facebook) could theoretically purchase all bitcoins in existence with only 7% of his net worth! Obviously this couldn’t actually happen in real life, but the analogy helps visualize the market size for bitcoins. Also, Amazon.com, an online business that could save a tremendous amount of money on credit card transaction fees by accepting bitcoins, doesn’t yet. Why? Because Amazon brings in over $61 billion a year in revenue! The current value of all bitcoins in existence is less than $2 billion. Do the math, it’s small potatoes… but not for long!

Today, there’s simply not enough total value unlocked within bitcoins to go around to enough people to encourage a robust bitcoin supply chain. Plus there is no central bank that’s able to print more bitcoins when it wants and no fractional reserve banking system to inflate the supply of bitcoins artificially (this is a good thing). However, because of this, many early adopters and supporters continue to save bitcoins, waiting for their inevitable appreciation. So where will the bulk of this appreciation come from? The answer is asset diversification.

Over the next 3 to 5 years small amounts of wealth currently invested in stocks, bonds, commodities, gold, silver, real estate and other hard assets will slowly make its way into bitcoins. And only very small fractions are required!

Watch the video below featuring Tuur Demeester speaking about this idea in his presentation at the 2013 Bitcoin Conference in San Jose.

In addition to Tuur’s video above, below is a slide from the Bitcoin Investment Trust recently offered by Secondmarket.

Bitcoin Investment Trust

In my opinion, bitcoins are behaving more like and asset class or store of value than a currency of late, and it may be this way for a little while longer. Yes, bitcoin transaction volumes continue to grow, but most accepting merchants remain small while large business don’t see the urgency given the size of the overall market. As more investors and wealthy individuals seek to diversify their wealth, safe havens and hedges against inflation will be sought after. Bitcoin will remain in the spotlight, and as the confiscation of wealth in Cyprus earlier this year showed us, your money is not always safe in banks.

However, in 5 years there will be 17 million bitcoins in circulation and with a $10,000 price per bitcoin their combined value would equal $170 billion. Still technically quite small, but enough value to go around and encourage a deeper supply chain of accepting merchants and a larger pool of users to that spend bitcoins. $170 billion would still only represent 1.3% of the total U.S. dollars in circulation by 2018. Compared to the current valuations of tech companies like Facebook and Google, Bitcoin would then fall right in the middle, but remain less than half the value of Apple. It’s clear, bitcoin has a long way to go and the bitcorati are all in!

So, that’s how I see bitcoins appreciating to $10,000 per coin in the next 5 years.

Is this a fair and accurate prediction? What do you think a bitcoin is worth and why?

About The Author

Profile photo of Ryan Charleston

Ryan is a tech professional with experience in marketing and advertising, research and analytics, business strategy and web development. He left his full-time job at eBay to focus on Bitcoins and his role as founder and CEO of Bitcorati.com and other Bitcoin related projects. Ryan has a strong background in finance and economics from his days as a commercial real estate analyst. His interest in Bitcoins began in September 2012 and has been closely researching and investing in the digital currency ever since!

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11 Comments

  1. cortar el cesped

    “In my opinion, bitcoins are behaving more like and asset class or store
    of value than a currency of late, and it may be this way for a little
    while longer.”

    or like any hedge against inflation, you may need more time to look at the value of bitcoins over time to make this assumption.

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  4. Randall Smith

    I think your estimate is quite low, and does not consider the international markets enough. The Chinese LOVE their gold as a culture, yet as a country they are gold-poor. Now that China is #1 for bitcoin trading volume, and given their huge population, it’s fair to say that they will simply outpace the western world’s bitcoin consumption without even touching WU, paypal or other citations here. Then there’s the matter of M-PESA, the unbanked world, and the 6 Billion cellphones that can now use bitcoins… It’s only a matter of time before that tinderbox catches on fire, since there literally aren’t many alternatives for these folks. Then finally, and most importantly IMHO, you’ve got the failing US dollar rapidly losing its’ reserve currency status. We’ve likely got 5 or fewer years left before the dollar can’t buy a penny, and I’m pretty sure that this fall of the planet’s #1 currency is going to have an effect on Bitcoin too. So my prediction? I’m placing the price of bitcoin between $250,000 and $1 million each, within a decade. Sadly we’ll face some rough times before we see that though.

  5. Randall Smith

    I think your estimate is quite low, and does not consider the international markets enough. The Chinese LOVE their gold as a culture, yet as a country they are gold-poor. Now that China is #1 for bitcoin trading volume, and given their huge population, it’s fair to say that they will simply outpace the western world’s bitcoin consumption without even touching WU, paypal or other citations here. Then there’s the matter of M-PESA, the unbanked world, and the 6 Billion cellphones that can now use bitcoins… It’s only a matter of time before that tinderbox catches on fire, since there literally aren’t many alternatives for these folks. Then finally, and most importantly IMHO, you’ve got the failing US dollar rapidly losing its’ reserve currency status. We’ve likely got 5 or fewer years left before the dollar can’t buy a penny, and I’m pretty sure that this fall of the planet’s #1 currency is going to have an effect on Bitcoin too. So my prediction? I’m placing the price of bitcoin between $250,000 and $1 million each, within a decade. Sadly we’ll face some rough times before we see that though.

  6. Pingback: Bitcoins Are Worth $10,000 Each And Here’s Why | bitcoinvancouver

  7. pietrod21

    I suppose that is better to consider the alternatives of investment, all stock and bonds etc are denominated (and selled) for certain currencies, soo all the investments base on some currency, around 50% the world trade traffic are exectued in dollars, and all the major currency are strongly interconnected…..so the point for me is, alternatives.

    Let a minor crisis spread in only one, also minor fiat currency, or let just one nation default, or also a little bank, and all the fiat currency will evaporate in moments, especially in this financial turmoil days…..and at that point only natural cryptography (metals) and computer cryptography limited amount commodities will be secure, because the world will loss its grip on fiat currencies…sooner or later

    For me this is what is really bitcoin about.

    When the next financial crisis will spread bitcoin will corner ALL the fiat currencies market!!!

    Tip for goldman and shacs: buy a lot of bitcoin call the guys of morgan and organize a default, then you will be really rich 😀

  8. rodomonte11

    I suppose that is better to consider the alternatives of investment, all stock and bonds etc are denominated (and selled) for certain currencies, soo all the investments base on some currency, around 50% the world trade traffic are exectued in dollars, and all the major currency are strongly interconnected…..so the point for me is, alternatives.

    Let a minor crisis spread in only one, also minor fiat currency, or let just one nation default, or also a little bank, and all the fiat currency will evaporate in moments, especially in this financial turmoil days…..and at that point only natural cryptography (metals) and computer cryptography limited amount commodities will be secure, because the world will loss its grip on fiat currencies…sooner or later

    For me this is what is really bitcoin about.

    When the next financial crisis will spread bitcoin will corner ALL the fiat currencies market!!!

    Tip for Goldman and Sachs: buy a lot of bitcoin call the guys of JP Morgan and organize a global default with derivatives, then you will be really rich, but not in paper, in gold and bitcoin!!! 😀

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