Quote from: pitham1 on October 30, 2017, 09:37:30 PM

Quote from: ChromaticStar on October 30, 2017, 02:22:19 AM

Assuming the most optimistic scenario, BTC replaces Fedwire 100%.

Over the past 4 months, BTC's blockchain volume has been roughly $1 billion dollars per day. In 2016 Fedwire sent approximately $2 trillion per day. This is an astonishingly large amount of cash and more than notes of USD notes in circulation and really makes me wonder what is going on with the banks. In order for BTC to match this volume of Fedwire transactions, its price would need to be 2000 times higher than it currently is or roughly $12,000,000.

I really don't know if this is even plausible, but an interesting hypothetical. This would make Satoshi, with his 1,000,000 BTC stash, worth $12 trillion. No wonder he's gone silent.

I suppose even just a fraction of this, like 1%, could be considered a major success, or $120,000 BTC. Could this be what people are starting to price in since there is still so much potential?

Any thoughts, critiques or other ways to value BTC are appreciated.

How are you computing volume of transactions ($ per day) to the price of Bitcoin (in $). You are missing an important variable - the velocity of money, or how fast it circulates. You could have 1$ transferred between a million people in a single day, resulting in money circulation of $1 million. This is different from 1 bitcoin, valued at $ 1 million, changing hands.

$ of volume comes from here:

https://www.federalreserve.gov/paymentsystems/fedfunds_ann.htm

https://blockchain.info/charts/estimated-transaction-volume-usd

Fedwire daily transactions in 2016 were roughly 2000 times higher than the last 4 months of daily BTC transactions. Thus it would require a BTC price 2000 times higher to match this same volume.

Mathematically speaking, all I did was a linear extrapolation. Extrapolations like this are not expected to be perfect, but can provide ballpark estimates. It makes some assumptions that are purely hypothetical, not necessarily probable. I do not expect this to occur. But even if BTC takes 1% of this, that is still a price 20 times higher than today. It is hard to value BTC without some numerical measure to compare it. But when people like Buffett say BTC is a bubble worth $0 because it has no yield, he's not comparing it to already existing systems that have been numerically valued and from which BTC intends to take away market share.

If you want to value BTC, you need to compare it to something else you know can be accurately measured and valued. Many people right now are just price speculating, and they are the weak hands who are going to be shaken from the market when it dips. Assigning value based on volume, market cap or something else is the only way we can decide what the price should be.