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Hypothetically, if everyone decided to trade in all their money and get Bitcoins for them tomorrow then how much would a single Bitcoin be worth?

My dodgy calculation makes it out to be $3,750,000 per BTC since there is apparently $60 trillion worth of fiat money and there are almost 16 million Bitcoins in circulation however I'm sure the calculation isn't that easy :p

EDD
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  • I think besides the value of Bitcoin exploding, it would make fiat money worthless at the same time. Thus it would become kinda meaningless to still express the value of one bitcoin in terms of fiat. Compare this: if suddenly all countries abandon the U.S. Dollar (including the U.S.) and switch to Polish Złotys, how much would one Złoty be worth in USD? – RocketNuts May 16 '16 at 14:00
  • @RocketNuts I knew someone would say this -.- I am only using USD to represent the buying power of a Bitcoin. "If everyone swapped to Bitcoin tomorrow then how much would a BTC be worth tomorrow in USD today" – EDD May 16 '16 at 16:28
  • This question is hard to answer because you are measuring the value of a bitcoin with a unit that is also not fixed (dollars). Think of this as if you are trying to measure a length of string with a ruler. Your question would then be phrased "if my string suddenly grew in length and my ruler shrank, how many inches on my ruler would my string measure?" Perhaps a different unit can be used, like a week's worth of groceries for a family of 4. It's not precise, but will give you a better result than using dollars. – Jestin May 16 '16 at 16:36
  • @Jestin I phrased my question in a way that implied that I was taking the buying power of a USD today and comparing it to the buying power of a BTC tomorrow. If I can buy 10 apples for $1 today but can buy 1,000,000 apples for 1 BTC tomorrow then the 2 can be compared, 1 BTC tomorrow would be worth $100,000 today because I can buy the same amount with them in theory. The price of the USD is fixed right NOW but not over time. – EDD May 16 '16 at 16:55
  • If everybody switches to Bitcoin, one single bitcoin would be worth: a whole truckload of money. – RocketNuts May 18 '16 at 09:52
  • I think the problem comes from thinking that there is an actual value across currency systems. Because the systems are inherently different, and because people value things differently, it's not really a fair or possible calculation. If everyone switched to BTC, 1 BTC would be worth 1 BTC. – Throsby May 19 '16 at 05:08
  • @Someone Look at the Brazilian conversion to the real, their currency today. That might help you think about you question differently. – Throsby May 19 '16 at 05:10

1 Answers1

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What complicates your calculation is the liquidity aspect. Although there is about 16 million mined bitcoins, the number of bitcoins available for trade is far less than that.

What is interesting to observe is that the fact there is a ~7bn market on bitcoin right now doesn't necessarily mean the sum of the money spent by the bitcoin holders is even near 7bn. Some people bought if for pennies, some for a couple dollars, some mined it. It just means that the holders of bitcoins are not willing to give them away for the price being offered by buyers right now.

The price is determined by supply and demand market forces, and the supply would respond to the increase in price. I maybe would sell one of mine if the price reached $100k per unit.

Other factor is that fiat money may be created out of thin air, so it has sort of an infinite supply. If an unrestricted government decides to purchase bitcoin, this would strongly push the price up.

In the end of the day, what you can try to grasp is what would be the minimum price it would reach, but estimating the actual price would depend on far too many variables.

Note that non-Bitcoin currencies have the same or extremely similar price mechanism. Dollars, specifically, can lose all their value if people stopped liking them. In a way, cryptocurrency is a huge threat to "free floating" currencies like the US Dollar.

Lodewijk
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Jonathas Carrijo
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