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How Much Can Bitcoin Possibly Be Worth?

The news is all over the Internet in so many places that I’m not going to bother linking to it: Bitcoin has reached a $10,000 valuation. Sure, that’s just an arbitrary power-of-ten number, but it still serves as a nice milestone to look back on how far it has come, and how far it might still have to go.

My interest started around 5 years ago when a friend gifted me with about 6 Bitcoins. The sum total of their worth at that time was about $15. Needless to say, it was just a curious experimental economy for me. I was most interested in using them within that economy rather than just selling them for a piddling amount of cash. Very few merchants took them early on, though, and so over the years I only slowly donated about 1 Bitcoin of what I had to anyone else who was interested in playing in the Bitcoin economy.

The value of Bitcoins had a steady rise of ups and downs over that time to reach $1,000, and then 2017 happened. It’s hard to say what exactly have been the drivers, but things really started to rise in the April/May time span. Since then, with every new $1,000 added, everyone seems to feel justified in calling it a bubble. Not me. Impossibly Stupid isn’t here to answer the question of what Bitcoin can only reasonably be worth, but rather what it could mathematically be worth.

According to Wikipedia, in 2018 the amount of wealth in the world is expected to be around $450 trillion. But the supply of Bitcoins has a hard limit of 21 million. So, by a matter of sheer coincidence, the value of a Bitcoin could be around $21 million. But not all the world’s wealth is going to be in the form of Bitcoins! If they represented even 1% of the global economy, that would be amazing. I would more rationally put the limit at upwards of a tenth of that, and so I’d put a reasonable limit more around $20k.

Even that can’t capture the whole complex picture of Bitcoins. There are millions of Bitcoins that are known to be dormant/dead/lost, never to be part of an active economy. And it’s quite likely that many more will be lost in the future by people who still don’t understand how to deal with digital assets. And keep in mind that Bitcoin functions as more than just a store of value; you can actually transact with merchants using it in a way you can’t with something like gold. So just maybe, over the next 25 years, Bitcoins could actually be worth $40k each. But you should expect new technologies and new stores of wealth to be created over that period of time, too.

For my own part, I’m finally considering selling some of my remaining Bitcoin for cash. My current plan is to sell one or two in the $10k+ range, maybe another two if it ever hits the $20k+ range, and just keep whatever I have remaining after that to keep spending directly in the Bitcoin economy. It’s their use that will ultimately determine how much long-term value they really have.