Paul Bininda – Blog
28Jun/11

My Part of the Bitcoin World Economy

A few months ago, I first heard about Bitcoin on the Security Now podcast by Steve Gibson and Leo Laporte. I was intrigued and downloaded the Bitcoin client. I noticed, how the exchange rate of Bitcoin vs. US Dollars kept climbing and got even more intrigued. So I opened an account at the Bitcoin exchange Mt. Gox and transferred €500 to it on May 31. It turned out to be $713.60, for which I started buying Bitcoins. I tried to catch the lows in the exchange rate development but didn’t really succeed. So in effect I bought around 68.28BTC. Luckily I finished buying before the exchange rate skyrocketed to $31 on June 7.

So what will I do with my Bitcoins now? Well I think I’ll keep them and dream a bit. Lets assume, the world at large embraces the advantages of Bitcoins over the current currencies we have and in a few years all currencies are traded into Bitcoins. Today the amount of $ (M2) floating around is around 10 000 Billion $, The amount of € (M2) is around 85 000 Billion €. Let’s assume the total amount of money in the world is somewhere around 40 000 Billion $.

The total amount of Bitcoins is limited by the system to asymptotically approach 21 Million BTC (it is currently around 6.4 Million BTC).

So, if the world economy completely converts to Bitcoin (21 Million available) and I still have my 68.28 BTC, I will have about 0.000325% of the global money supply. Translated to the current money supply that would come out to be around 130 Million $. Not too shabby.

Of course you could argue that this outcome isn’t very likely. I completely agree. However, I have invested only 500€ in this little dream and so far it is living up to its promise. Today my Bitcoins are worth around 800€ and I can’t wait to check again tomorrow.

 

 

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