How Bitcoin Can Be Worth So Much

pyramid of wealthWith Bitcoin rising $4,830 TODAY, it’s difficult to explain to someone new to Bitcoin how it can be worth so much.  Here’s another attempt.

Scale down the 7.5 billion people in the world in proportion to the number of Bitcoin (16,600,000).  That gives us 451 people for each bitcoin.

If we take those 451 people and apportion the world’s wealth to that representative group, it gives us the following:

68% (296 people) worth $10,000 or less; 3% of the world’s wealth

22% (120 people) worth $10k-$100k; 13% of the world’s wealth

8% (40 people) worth $10k-$1000k; 41% of the world’s wealth

1% (5 people) worth $1,000,000 or more; 42% of the world’s wealth

Those 451 people buy some Bitcoin at a price of $1,000,000 per coin.

The first group, the 68%, the 296 people with less than $10,000, purchase just $100 worth of Bitcoin at $1,000,000 per.

The next group, the 22%, the 120 people with $10k-$100k, purchase just $900 worth of Bitcoin at $1,000,000 per.

The next group, the 40 people with $100k-$1000k, purchase $409,000 worth of Bitcoin at $1,000,000 per.

The next group, the 5 people with $1,000,000+, purchase $410,000 worth of Bitcoin at $1,000,000 per.

The amount of Bitcoin they purchase very closely mirrors the amount of currency they hold to cover the money they hold for a week up to a month of expenses.  If Bitcoin is a new asset class of digital currency, to be used for spending much the same as any other currency, then we can expect the kind of spending shown in this example.

That’s is happening now.

How fast will this happen? When there are no restraints such as budget limits, legal hurdles, government restrictions, or fear of failing: very quickly.