Re: Come and get them
I was watching an article about Bitcoin on BBC News this morning, and it got me thinking. Critics are expecting the Bitcoin price bubble to burst anytime now, and I admit that I was one of them. But if Bitcoin is starting to appear more and more on mainstream News programmes, then it's got a good chance of gaining acceptance as a legitimate mainstream method of payment.
But if Bitcoin is ever going to be of any use in the world at large, it needs to be accepted and used in millions of financial transactions. The natural limit of 21 Million coins sounds like a lot, but it wouldn't be enough for a worldwide currency. Now Bitcoin already has this covered by making the currency units divisible by up to 8 decimal places. However for the smallest unit (0.00000001 BTC) to be usable, it has to be worth something. So 1 BTC therefore has to have a high enough value for 0.00000001 BTC to be worth anything. At the other end of the scale, there needs to be enough Bitcoins to enable transactions involving very large sums of money to take place. When Bitcoins were worth a dollar it would be impossible to pay someone the equivalent of $21 Million, because there weren't enough coins in existance.
So to be able to use Bitcoins for transactions at both ends of the scale (selling a loaf of bread or buying a Company), the cost of a single Bitcoin needs to be far higher than the current $900.
If my calculations are correct, for 0.00000001 BTC to be worth 1 cent (in US currency) a single Bitcoin has to be worth $10M. That would enable the currency to be used across the board.
In which case, the value of Bitcoin has to continue to increase, with smaller divisions of coin coming into play, until the value stablises somewhere around my hypothetical 1 cent. Any lower or any higher and Bitcoin can't be used for transactions at the very top and bottom of the scale.
Am I right here? If so, it's still worth buying and mining coin. Even if your mining rig currently makes a loss or breaks even against electrical costs, your coins will continue to increase in value, and you'll get your money back in spades.