Forecast: Bitcoin's Potential Value: $4 Million/coin
The value proposition is clear and strong, but what is that value? Can we put a number to it?
Imagine we're sitting in a room together. On my laptop, I pull up the following chart (please go here to view the chart). This is the best illustration of asset values on the web. More specifically, it helps to put bitcoin and the entire crypto-universe into perspective against the world's assets.
Start at the top with Silver and Cryptocurrency, then work your way down to Derivatives. If that doesn't make you put bitcoin's potential value into perspective, I don't know what will.
How can you quantify this potential?
Bitcoin could take value away from silver and gold valued at $17 billion and $7.7 trillion, respectively. It may take value away from the global stock market (banks in particular) which has a market capitalization of $72 trillion. It may suck up all the world's currency (coin and bank notes) valued at $7.6 trillion, but this is only 8% of the world's total money supply. The true money supply, referred to as 'broad money', includes coins, bank notes, money market accounts, savings, checking and time deposits. It's all the money we "think" we have access to. The total amount of broad money in the world is $90 trillion.
It's hard to say which asset class bitcoin will impact the most. I think the drain will be felt by all, but the global money supply is the most vulnerable. In order to use bitcoin's other features, you need to convert your local currency, whatever it is, to bitcoin.
In addition to being a store of value, bitcoin also represents a way for people to hide money and protect it against asset seizure. Today, it is estimated that roughly $21 trillion sits in off-shore accounts.
Translation: Bitcoin has a value potential of at least $90 trillion, which we'll assume includes $21 trillion sitting in off-shore accounts.
We also know that the maximum number of bitcoin available is 21 million, which allows us to calculate the potential value of 1 bitcoin by dividing the total amount of broad money by the total number of bitcoin.
The calculation is $90 trillion divided by 21 million, which is approximately $4.3 million per bitcoin.