Estimate the value of 1 BTC
In this short post, I try to estimate the value/price of BTC. I was not a believer even before yesterday, until I found the real problem it solves.
Assumptions
To avoid overestimation, following assumptions are chosen:
1, BTC is backed by online black market solely. (I don’t think it’s true but this assumption keeps the estimation reasonable.)
2, Online black market occupies same proportion to the total size of black market as online economy. (Again, I think it’s a serious underestimation b/c with the help of the Tor + BTC, moving from offline to online is a non-brainer for any participant of the black market even if just for sake of safety and anonymity.)
3, BTC will take over 10% of the online black market. (This one is the weakest point of the calculation. I don’t have any theory to back this estimation. Besides, there are serious contenders for the market. It’s a pure guess.)
4, BTC is solely backed by USA economy. (It’s just wrong but help for the calculation. p.s. I’m Chinese and I don’t think USA is the centre of the universe)
5, BTCs are all in circulation. (Not true. FBI has hold of 1.5% and probably never let it go :))
Numbers
Time for google!
A, Total size of USA economy: 16.6 trillion.
B, Total size of the black market in USA: 1,829 billion.
C, Total size of the online economy: around 9% of total economy.(This one is difficult but for sake of simplify let’s live with it)
D, Total amount of BTC: 21 million.
Math
Calculation 1: the total size of online black economy: x/1,829 billion = 9%; x = 164.61 billion
Calculation 2: the total size BTC would take: 164.61 * 10% = 16.461 billion
Calculation 3: with 21 million BTC involved in the 16.461 billion market, how does one BTC worth? I’m not an economist but here is my formula: 16.461 billion / (21 million * 2) = 392.928
Conclusion
Here you go, 1 BTC = $392.928
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In the next post, I will entertain the possibility of Tor as a controlling mechanism of FBI/CIA/GCHQ…
