The Ultimate Purchasing Power of Bitcoin \ stacker news ~bitcoin

The Ultimate Purchasing Power of Bitcoin

2702 sats \ 18 comments \ @Undisciplined 1 Mar bitcoin

I was watching this video by Mark Moss, where he walks through a hypothetical situation where Bitcoin ends up being worth $43 billion in the not-so-distant future. The crux of the argument is that Bitcoin will absorb the role of store of value from other assets like real estate, gold, bonds, and so forth. We've discussed that before on SN and it's an interesting point.

My first big post on Stacker News was What are Sats Worth to You? and it was about our subjective valuation of sats: i.e. how we actually use them. For many of us the answer was that we basically value sats at one US cent, which just happens to be roughly what would happen if the USD became backed by Bitcoin.

I couldn't find the post quickly, but I think I won a bounty for answering someone's question about what Bitcoin will ultimately be worth. My answer was $11 million and was based on converting the current global money supply into Bitcoin. The video I linked to above is making me wonder how far off that estimate is. I knew at the time that there were many other factors and realized later that I completely neglected the store of value argument.

To be clear, I'm talking about purchasing power and just using today's dollars as units of comparison. I know that measured in any particular fiat, bitcoin (and every other real asset) is going to infinity.

So, what are the most credible purchasing power estimates you've seen?

And, what are the most underappreciated arguments you've come across?

Should we be using our bitcoin differently in light of the answers?

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31 sats \ 1 reply \ @Voldemort 1 Mar

The assumptions in that video are pretty wild. Maybe the biggest being countries will just move to bitcoin. I know people who hate the crypto world and were overjoyed when it crashed in 2022. They will never move to bitcoin. Give it 6 months and some new thing will take people's minds off inflation altogether.

These analyses ignore the fundamental drivers of value. Value is 100% a function of supply and demand, not some arbitrary ratio of how much bitcoin will replace the real estate market as a store of value (is the assumption people will sell their homes for bitcoin????)

For currencies, especially for those that are not tangible, demand is more a function of psychology than anything. Envy will alone will limit demand. Indeed, the people on the left who loathe crypto will not adopt it purely because it will make their opponents better off.

The possibility that BTC can go to zero will also forever be on people's minds. Even if that can happen with the dollar with bad policy, they trust the government to make sure it doesn't happen in their lifetime.

So, what will BTC be worth? I would be thrilled if it was $120-150k at some point in 2025, $300k-500k by 2030.

0 sats \ 0 replies \ @Undisciplined OP 1 Mar

You're estimate is certainly closer to my own, but I think extreme scenarios can serve as a jumping off point for thinking about what's really going on.

The point about real estate isn't so much that people will sell their homes and buy bitcoin, but that real estate has a store of value premium priced into it, as do other assets like gold. As bitcoin is more prominently used as a store of value that premium will decrease.

31 sats \ 2 replies \ @OT 1 Mar

It's anyone's guess. Its fun to pick a number with a date like $1m by 2030, but anything can happen. I personally look down a little upon the big number bitcoin influencers. Its such an easy thing to say and it gets your attention but no one knows.

The vast majority of people still don't know anything about bitcoin so we're probably not going to see it's "ultimate" valuation in our lifetime.

101 sats \ 1 reply \ @Undisciplined OP 1 Mar

I personally look down a little upon the big number bitcoin influencers.

Fair enough. I'm less interested in the number than I am in the thought process. I hadn't seen anyone work through that exercise before, although I'm sure many others have.

we're probably not going to see it's "ultimate" valuation in our lifetime

Yeah, "ultimate" wasn't the right word, since it will always be evolving. I wanted to get at what people are expecting somewhat long-term, but not so long-term that they won't live to see it.

31 sats \ 0 replies \ @OT 1 Mar

I know for me as bitcoins purchasing power goes up I will likely spend it more.

There is a general number that I have in mind as a point I could retire (as in work on passion projects). Often thinking about doing this now with V4V combined with a 4 year holding period. Say in 2024 I just work on music, art and writing and over the year I earn 1m sats, I need to hold it until 2028 for it to be spent. Pretty sure my wife would not like this though. We'll see....

31 sats \ 6 replies \ @grayruby 1 Mar

43B? That's some serious hyperinflation in the USD.

Bitcoin will be the last resort and forced by the people if it becomes the next global reserve currency. I think that is many decades down the road if it ever happens. However I do think over the next couple decades it becomes the premier reserve/collateral asset and starts to somewhat keep fiat in check or at least give people an alternative to fiat.

I typically work on the framework that it is worth 2.5M by 2035 and 5M by 2040-45. In today's dollars.

40 sats \ 1 reply \ @gojira9000 2 Mar

This is pretty spot on to my assumptions as well. I think we'll absolutely hit a minimum million or more per coin and flip gold, and Bitcoin will solidify itself as precisely what you said: the premier store of value. It's got so much more utility vs gold (i.e. you can send it across the world instantly or carry it across an international border in your head) so all it takes is for the world at large to come to understand that and start adopting it for that purpose.

This cycle alone could see as much as a 400K BTC by some estimates, and other estimates think that isn't bullish enough. I wonder if what we think of as a "Bitcoin cycle" won't smooth out a bit so we see less precipitous drops during the dormant cycle, and therefore a smoother and more constant uptick in price. Going into this halving at or close to the former ATH is already showing a deviation from the norm.

20 sats \ 0 replies \ @Undisciplined OP 2 Mar

I strongly suspect each cycle will be less volatile than the previous. It just makes sense that the underlying dynamics would be priced in more accurately as we get more experience with the asset.

50 sats \ 3 replies \ @Undisciplined OP 1 Mar

I'm not sure how to disentangle dollar depreciation from what he was talking about, but the 43B is not in units of the depreciated currency.

It was based on guessing what shares of the current stores of value will be absorbed by bitcoin and the assumptions weren't obviously preposterous.

31 sats \ 2 replies \ @grayruby 1 Mar

I need to watch this video. I am not getting the thesis here. 43B would be a marketcap of over 900 quadrillion. Even if marketcap/capital inflow multiple goes to some insane level that seems very absurd without some massive dollar devaluation.

60 sats \ 1 reply \ @Undisciplined OP 1 Mar

Since a large portion comes from absorbing the value fiat currently has as a store of value, the devaluation is implicit. So, maybe those should be considered to be 43B devalued dollars.

I was mostly following the logic, but some of the specifics probably slipped past.

31 sats \ 0 replies \ @grayruby 1 Mar

I think I am on track to seeing what he is getting at but I need to watch the video to see if I really am or I have just confused myself further.

31 sats \ 4 replies \ @elvismercury 1 Mar

I don't know the answer, but it's a good question, and my favorite thing about it would be if it killed until the end of time the 1 btc = 1 btc thing.

If you don't care what your money will purchase in the world, then you're worshiping money as some kind of religious relic. I don't think the btc-as-fetish-object framing is contributing to its success anymore, and would like to do my part to help it on its way to the shitheap of history.

27 sats \ 3 replies \ @Undisciplined OP 1 Mar

I don't know the answer

I'm curious if you have any mental projections that you use (could be over any time frame). It should make a big difference in our behavior if the ultimate valuation is actually 1000x our current expectation (as implied by the video I reference).

310 sats \ 2 replies \ @elvismercury 1 Mar

I have maybe a meta-answer, which is that when people do the "everything / 21m" calculation, which is technically reasonable, they're ignoring the fact that money is fundamentally a construct in service of social coordination; and that the value of an abstraction is determined, fundamentally, by human psychology.

I asked yesterday if this moment feels like anything. If you woke up tmrw and btc was at $100k, would that feel reasonable, or unreasonable? To me, it's the latter, and I don't think I'm alone. The billionaire looking to allocate capital -- and whose allocation will increasingly drive the price -- would (I propose) look at a $100k price and say: it's a bubble, that's not the right price, I'll wait for it to go down and sit on his hands. So price movement becomes tethered to psychology to a more extreme degree than is the case for other, more concrete, assets.

The result is that I don't think the psychological inputs will admit of some of these lofty valuations people propose on short timescales. Further, I think the various inputs are minimally understood. I think $1m will probably arrive; I don't think it will be before twenty years have passed and a great deal of cognitive underpinnings have become established and distributed. I'd be surprised if we saw $100k before 2026. That's about as calibrated as my feelings get on the matter.

27 sats \ 1 reply \ @Undisciplined OP 1 Mar

Interesting. If we do hit 100k before my arms fall off from doing so many pushups, will you reevaluate?

I feel like an implication of your view is that we're going to get to all these exchange rates through fiat devaluation, rather than bitcoin acceptance (at least as the primary driver).

Also, I meant to forward 10% from this post to you. My bad.

31 sats \ 0 replies \ @elvismercury 1 Mar

Interesting. If we do hit 100k before my arms fall off from doing so many pushups, will you reevaluate?

You will be so swole, bro, that I will be forced to update my priors.

I feel like an implication of your view is that we're going to get to all these exchange rates through fiat devaluation, rather than bitcoin acceptance.

I think that's right, though I might tweak a bit: if we appreciate in price substantially faster than I'm imagining, it will probably not be real purchasing power so much as fiat catastrophe.

Also, I meant to forward 10% from this post to you. My bad.

That's very kind of you to even imagine doing. Muy amable.

31 sats \ 0 replies \ @Nuttall 1 Mar

You have 2.1 quadrillion sats to replace dollars. These tokens are immutable.

In lightning you have 2.1 quintillion to use, that's 1000 mSats per sat.

That's a salary per week in today's dollars.

That's the value.