Bitcoin Valuation: As Cash; As Gold

Gold bars

There are 5.5B ounces of gold in the world and 7.5B people, an average of 3/4 ounce per person @$1232 is worth $961.50.  If gold’s market cap is 6,776B is divided by the total number of bitcoin ($6,776,000,000,000  / 16,600,000 Bitcoin = $408,192).  One bitcoin would be worth $408,192.

Here’s another way to evaluate bitcoin: How much cash is there in the world? That is a complicated question which depends on your definition of cash.  Low estimates start at five trillion.  High estimates go from thirty-five to ninety trillion.

pile of cash

Cash, for our purposes, is the liquid money that you keep on hand to use for pleasure, maintenance, and emergencies.  That would be all the money you have in the bank and under your mattress that is NOT stocks or bonds, gold, real estate or fine art.  If bitcoin were to be the currency of choice, then one bitcoin will equal USD $5T / 16,600,000 Bitcoin (the total number in circulation) = $301,204.  Remember, this is a low estimate of the amount of cash available.

The two numbers, $408,192  in gold and $301,204 in cash equivalencies respectively, are not all that far apart. There might be some truth to this valuation.


171003 JPM’s John Normand: Bitcoin is like Airmiles

JP Morgan Chase’s John Normand has been writing about Bitcoin for many years.  He called Bitcoin “a retail novelty,” back in 2014 and essentially has the same opinion today. He acknowledges, though, the huge change in scale Bitcoin has achieved.   Trying to avoid calling Bitcoin a Ponzi, he likened it to “Airmiles,” as though Bitcoin’s added value is something like a bonus in the same way as Airmiles is an added value bestowed upon credit cards.  Wow.  That’s as basic a misunderstanding of the value of Bitcoin as you can get.

The underlying blockchain technology gives Bitcoin the trust and reliability that makes it part of an ever growing network of value.  In the future Blockchain technology will be used wherever a secure database is required.  Contracts, property deeds, vehicle registration information, stocks, and bonds are going to be using blockchain technology.