What Value Will Bitcoin Reach… Will My US$400K Prediction Be Right?

Summary: The recent news stories of people getting assaulted for their crypto passwords have caused me to sell my last bit o’ coin… and revisit my initial prediction. Ten years later, I still think a value of 400k is consistent with the per-capita US savings relative to the bitcoin cap of 21 million ‘shares.’
Bonus insight: look for a spike when the market starts reporting the Satoshi rate (a hundred-millionth of a bitcoin) instead the full coin value, making the emotional purchase price less intimidating.

I originally predicted, when I bought one bitcoin — just one, don’t get all excited — for a couple-hundred dollars, that bitcoin would reach $400,000. Now that I’ve sold the last of that original coin and am completely out of crypto, what do I think of that original guess? Is it close, or an idiotic lucky guess, or prophetic, or something worse, “irresponsible” or something like that?

I almost think I knew what I was talking about when I said $400K. Whatever the case may be, I’m here to give you the 20/20-hindsight-interpretation of what I possibly got right.

How could I have been right that …

• it would survive in the first place…
• it would not just survive but prosper…
• big money and business would buy in…
• the public would comprehend that even fiat money has no inherent value… so that’s not something that they hold against crypto…
• it would survive as the standard bearer…
• it would survive system failures, such as un-trapped corruption, that occur at subordinate operational levels, such as exchanges…
• it would survive shareholder failures, such as lost passwords and physical media…
• it would cruise past the $US20K price point where I first noticed it had ballooned after not looking at the price since it was maybe at a thousand dollars… and selling off my first cash-out, which I gladly misremember as having funded a little mid-life convertible…

Yes, it was idiotic luck that it survived. One would have had to be confident that…

• open software (to whatever extent) would be up to the job of running a financial commodity (let alone global, or is it? Maybe from the right perspective it’s anti-global)…
• someone was smart enough to make a system that couldn’t be technologically broken into, meaning “hacked.”

Those are two big hurdles. I’m not sure I even noticed them as questions. So it’s as if I stood at the plate and the pitcher threw me 4 balls and I walked to first even though I didn’t even know I was at bat. Sorry, been watching too much baseball lately.

But onward to ‘valuation.’

I came up with 400 thousand dollars as my prediction based on:

• It was the first crypto and was still surviving and hadn’t been hacked yet. I read as much as I could understand of the specs and theory of crypto, and gosh that nonsense about the “Byzantine Generals’ Problem” convinced me it’s complicated enough that no one will crack it.
• Bitcoin is capped at 21 million coins, but it’s more useful to phrase it as “21 million shares,” making clear how it exchanges like stock. I’m still not clear why other coins — I think — have not capped their limit. Maybe it adds complexity. Whatever. The cap makes it extremely seductive as others in the world express faith in it… meaning bid up the share price. And our morning newspaper today was full of people proving that no amount of even criminal deterrent can overcome a particular seduction for a particular person.
• As for people believing in crypto even though so many people will repeat ad nauseum, “it’s not real so how can it have any value?… what do I have to say to that, HUH, stupid?” What I say is that even fiat money is not real. Money only acquires its value by the holder’s belief that it can be traded for something like bread or milk. Perhaps it’s no accident that bread is a synonym? I’ve always said there’s a lot of wisdom in individual words alone. But if you prefer lengthy diatribes over pithy syllables, I wrote this wonderful allegory explaining how money gets its value in a community. (“Com-munity”… together money, see?) I think it’s one of the most important things I’ve written.
• I suppose I thought about Berkshire Hathaway being at $50,000 or something, around that time.

But that was the extent of my conscious factoring. In retrospect here’s why it could make sense:

There are $52.0 trillion invested in the US market and 160 million investors, that’s a $362K per investor. So comparing 362k per US stock market investor and $400k as an individual share of something semi-mythical, there’s a conceivable believability to it… that people would chase that limited, 21-million-slice pie, into the half-million range.

I just don’t want to get beat up for my password, so I’m out.