What is the “cap” for an immutable money that becomes the standard for humanity? Why it’s time to go down from zero.
This is an opinion editorial by Luke Broyles, a Bitcoin content creator.
How much bitcoin does it take to get rich and finance your lifestyle? How little does bitcoin need to protect against inevitable inflation, bank runs, and fiat demise? Are you “too late” to Bitcoin? What would a 1% allowance do?
These are questions that Bitcoin newbies and veterans alike ask themselves, and there is often no clear answer.
Let’s provide a solid framework to answer that question.
There is no ‘Top’ for an immutable money standard
January 2009 was BTCThe first price prediction of. Hal Finney predicted that bitcoin could become the dominant payment system globally, or $10 million per coin (Finney’s estimate would be closer to $40 million today). But bitcoin wouldn’t break above $1.00 until April 2011… More than two full years later.
What Finney understood is that after the invention of perfect money, all global wealth would inevitably be consolidated into it. henry fordNikola Tesla and others also foresaw this.
A closed (monetary) system inevitably absorbs all open (productivity) systems. Money is the technology that values everything else within its own ledger. There is no “top” price prediction for an immutable monetary standard of the human race, he standard.
It’s about purchasing power, not price
So a better way to think about bitcoin’s value is not price, but purchasing power. Superimposing a portion of the money stock with a given amount of productivity (or economic value) is a better way to predict the value of money. It’s worth noting that on a finite ledger, wealth inequality as we know it today does the opposite of what we expect today (a topic for another time).
First, let’s clarify “entities”. We have 10 arbitrary “groups,” loosely based on current broad estimates from entities mega-rich to those in poverty.
Second, we have to account for what is often attributed to the “Pareto principle“: The vast majority of productivity is created by a minority of people, and the vast majority of that productivity is created within the minority of that minority.
Third, we must take into account the monetary stock to complete our matrix. It is often said that “there will only be 21 million bitcoins”, however, this is not true. Accounting for lost bitcoinsthere could easily be less than 16 million.
When we loosely follow a Pareto distribution and today’s current ranked distribution of entities, what is shown below is what we get. Fascinating results. Michael Saylor, the US government, and a few select others have already become Bitcoin’s top 10 “mega-rich” entities.
Furthermore, an average person today is more prosperous than a 20th century billionaire. So if Bitcoin just survive… as little as 800,000 sats could buy a lifestyle in the future much more luxurious than an upper middle class lifestyle today, as bitcoin actually reflects the real prosperity gains of the world.
Let’s go further. there’s just a little more two million bitcoins left on the exchanges and just below two million left to mine. Let’s take a hyper bullish scenario and assume there are only four million BTC to distribute, not 16 million. If we do the math here, things only get more absurd.
In this scenario, as little as $14.81, $100, or 75,000 sats (at the right time horizon) could literally change the life of a person or company of the future.
What would happen if global wealth and prosperity increased tenfold? What if the world population increases by two billion? What if another two million bitcoin He is lost? What if a nation-state secretly starts hoarding and another three million bitcoins are retained? What if a billionaire tomorrow allocates 20% of his wealth to abitcointo absorb 100,000 BTC Off the market? What if companies in the future employ billions of AI bots to create productivity to fight for the rest? BTC? What if only two of these scenarios occur?
What if in a few centuries power companies don’t burn coal or rely on fission, but mine asteroids, use fusion, and start building a Dyson’s swarm? According to our model, what if these future companies have full balances of 10 to 1000 BTC? How do you price that?
An entity selling the rights to solar real estate or trading a contract with an asteroid sounds crazy to us. As much as we mock, we have less in common with the future than with the past.
Are you too late?
So are you too late? Absolutely not.
A closed monetary system is designed so that it is never too late for anyone, no matter how productive they are. When humans sell rights to the sun or other celestial bodies in the solar system, they will almost certainly be sold for bitcoins. Stop thinking it’s “too late.” it’s stupid
The question is: what do you do with this information? if you are a American dollar millionaire in 2023, you have no excuse not to buy 0.06 BTC. At $20,000 per BTC, this 0.12% allocation could save your wallet. Yeah Bitcoin survives, eventually this 0.12% will be more valuable than the other 99.88% of your portfolio. Even better, allocate 1% for 0.5 BTC as stock markets move 1% in a day. You can buy your “BTC insurance” with just one day of volatility.
Not a millionaire in USD? You have no excuse for not buying $100 of bitcoin (0.005 BTC as of this writing) and lock it… just in case. If you spend so much on insurance on an unlikely event, why not spend it on a likely event? Most won’t, because understanding BTC is accepting a lot of uncomfortable truths.
You’ll soon realize that allocating your 1% puts your other 99% at greater risk as you draw liquidity from the fractional reserve Ponzi.
The longer Bitcoin survives, the lower your risk and the higher your upside. It is designed to be a better time saving tool. Personally, I think my 16 million model is too bearish and the 4 million model is too bullish (for now).
Either way, the highest risk allocation to bitcoin is 0%. Either bitcoin goes to zero, or everything else is. There is no third option.
Thank you all for your ideas. keep sharing that Bitcoin signal, and down to zero if it’s still on it.
This is a guest post by Luke Broyles. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
