Quote from: Hook^ on July 16, 2011, 04:34:13 AM

Quote from: error on July 15, 2011, 03:24:10 AM

All of us here are early adopters. If we weren't, there wouldn't be any discussion about how to get merchants on board, why Bitcoin is stuck at $14, etc. We'd all be permanently retired and living on the beach in Fiji on the proceeds from 15 or 20 BTC while the latecomers fight over why the µBTC is stuck at $14. Yes, I'm taking a long view. Cheesy

Very long view indeed. You may be correct that we are still early adopters, but I very much doubt that Bitcoin will ever see the kind of proportional increase that it has already seen. Just for some numbers to put in perspective:

The total US M2 money supply this year is around 2 trillion dollars. There is some controversy over M3, which is much higher but no longer used. So let's just double M2 and say 4 trillion dollars. The US is about 1/4 of the world economy so multiply by 4. That gives a worldwide money base of around 16 trillion dollars.

Now divide that by the total market capitalization of bitcoin at around 90 million dollars, and you get a ratio of around 200,000. In other words, even if bitcoin replaced every currency in every country in the world and was used for every single transaction, a uBTC would still only be worth around $2.80. I realize that you can't just derive value from the money supply. But this is useful for a rough estimate.

For a more realistic number assume bitcoin is used for around 5% of all transactions eventually (which is about the size of the underground drug economy). That means that the ratio is now around 10,000. Which just happens to be the original ratio of increase (from 1/4 cent per bitcoin to $25 around the peak)

The time it took the original ratio of 10,000 to take place was around one year. I find it difficult to believe that bitcoin can take over 5% of the world economy in one year.

So basically, the original early adopters have it better than anyone now can ever hope to get. Not that we can't do well, but the gravy train has already pulled way out of the station.

Oh, sure, I would have loved to get in on this a year before I did.

As for the $2.80 number, you haven't taken into account inflation (both of the money supply and of prices).