Hi,
I am a miner in the cryptocurrency universe since late 2012.
I have discovered steemit lately so i would like to share a thought regarding the BTC price, so i can get your feedback on the matter.
Bitcoin Market Capacity
Today, the Market capacity for Bitcoin is 47,769,994,026 USD.
A gentle reminder on how market capacity is calculated :
Market capactity = Price x Circulating Supply
So let's do our maths :
2915.48 x 16384950 = 47769994026
So far ... so good, everything looks normal.
Bitcoin Circulating Supply
The main problem i see with the bitcoin price, is that it uses the Circulating Supply which is based on the Bitcoin algorithm that will generate bitcoins until it gets to 21000000 BTC units.
If, as of today, 16384950 BTC have been generated so far (no doubts about that), how much have been lost/destroyed by humans mistakes ?
Few examples :
- Wallet creation + passphrase lost : [Bitcointalk] or [Reddit]
- Formatted computers + no backups : [Bitcointalk] or [Reddit]
- All the 0.0xxxxx that were left abandonned or can't be withdraw from pools or exchanges as the amounts are too low.
One of the most famous story is the one from that guy throwing his former laptop with 4 millions pounds worth of BTC on it : [The Guardian]
According to the various searchs i have made, i would say that between 30% - 40% of the 16384950 BTC generated so far have been lost forever.
It sounds like a worst case scenario, but i don't think it is.
New cryptocurrencies are not that much impacted with 'destroyed coins' but stories of lost coins are still a thing, like Quadriga that sent 60000 ETH into a black hole lately [Reddit]
Bitcoin Possible Prices Correction
Without touching the actual price
30% lost coins
Let's say 30% of the BTC have been lost.
The new circulating supply would be : 11469465 BTC
11469465 x 2915.48 = 33,438,995,818
The market capacity with this fix would be : 33,438,995,818 USD
40% lost coins
Let's say 40% of the BTC have been lost.
The new circulating supply would be : 9830907 BTC
9830907 x 2915.48 = 28,661,812,740
The market capacity with this fix would be : 28,661,812,740 USD.
Without touching the actual Market Capacity
30% lost coins
47769994026 / 11469465 = 4164,97 USD
The BTC price with this fix would be : 4164,97 USD
40% lost coins
47769994026 / 9830907 = 4859,16 USD
The BTC price with this fix would be : 4859,16 USD
Possible Conclusions ?!?
BTC is underpriced
The price of a single bitcoin is underpriced, because there are less BTC in circulation than thought :
The price of a single BTC should be between : 4164,97 USD -- 4859,16 USD
Market Capacity is overestimated
The market capacity of BTC is overestimated because it is based on wrong BTC circulating supply and should be lowered by 30 to 40 %
The market capacity should be : 28,661,812,740 USD -- 33,438,995,818 USD
Let me know what you think in the comments !
Cheers,
PS : All those calculations were based on cryptomarketcap.com prices, 11 June 2017.
I think you are not very far off. I remember I mined some back in 2011/12 and it never left the miner site because I didn't know how and the wallet software was crap.
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Interesting perspective. I would assume it would only get worse as time went on too. Today is not the last day someone, somehow, will lose BTC. Upvoted and welcome to the platform!
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Does that mean that one day in the future if we use the same rate of loss as we currently estimate, most bitcoin will be lost forever? Then what?
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Hi Charlz,
Not really, i guess it is related to the Bitcoin price, when you had, let's say, 10BTC in your wallet end of 2011, it was worth 15$ each, for a total of let's say, 150$.
You could forget to backup them or lost them without a second thought, not a big deal ...
Now, it would be worth almost 30000$, so you would be extra cautious not to lose them.
The bitcoin "issue" is that most of the actual circulating BTC were generated in the early years, and during those years, people were not cautious about something that was worthless.
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This is so true, and one of the reasons I have such faith in bitcoin and have no problems with 4k or even 5k bitcoin in shorter perspective. Great article! Upvoted and followed.
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Very good post. Thanks for bringing this to our attention. The biggest group of uneducated investors in mankind get's a shot to determine the price of a crypto. It's an interesting world we live in. Does anyone know about: https://www.coincheckup.com They seem to give this complete indepth analysis of all cryptocoins. Sorted by team, product, company, advisors, previous investors, etc. For example: https://www.coincheckup.com/coins/Bitcoin#analysis For a complete Bitcoin Investment and research analysis.
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