A Simple Case for $250,000 Bitcoin-- Maybe not as Impossible as it Sounds!

These days, there is much discussion about the cryptocurrency market, and particularly the impressive returns on Bitcoin, the original crypto coin.

If you bought 1 BTC on January 1st, 2017 you would have spent $997.69 which already seemed like a lot, yet today it would be worth over $2800.00.

Impressive Returns, but...

Relative to many of the newer "Alt Coins" on the crypto market, Bitcoin's impressive gains pale by comparison.

Of course, such a price run-up gives rise to the speculation that the entire cryptocurrency market is in a "speculative bubble" that will burst and send everything crashing to the ground. Along with that, observers sit and ponder the question "Well, if it's not a bubble, how high can it go?"

Of course, I hurry to add that I am not an expert on any of these things, but I have been observing economic patterns and human behavior since college... so let me offer an alternative perspective.

Cryptocurrency Mass Adoption

Cryptocurrency experts and proponents are working hard to persuade the world that blockchain technology will change the world, and that it's just a matter of time before "mass adoption" becomes a reality.

So let us assume for a minute that cryptocurrency is not only here to stay, but it is going to become widely embraced as an alternative store of value and method of payment, and as much of a part of daily economic activity as-- for example-- PayPal. PayPal was pretty revolutionary in its own right... marking the beginning of peer-to-peer money transfers without a bank. 

We have a LONG way to go before cryptocurrency use becomes that widespread. At this point, the number os businesses and individuals who regularly use Bitcoin (or other currencies) number in the tens of thousands... a far cry from "mass" market.

Now, Let's Look at the Scale of Things

Even at a combined market cap of US $100 billion-- that's the aggregate market cap value of all cryptocurrencies added together--  virtual currencies currently account for little more than a flyspeck in the context of the greater economy.

Let's, for example, compare the record-setting $100+ billion market cap of cryptos to the market cap of a company like Apple, currently valued at roughly US $800 billion. That makes the aggregate value of all cryptos worth the same as 12.5% of the value of one company.

How's that for perspective?

Let's look at the possibility of $250,000 Bitcoin

To get back to the potential reality of $250,000 bitcoin vis-a-vis the idea that cryptocurrencies are in a "speculative bubble," let's examine a current standard investment example: billionaire Warren Buffet's holding company, Berkshire Hathaway.

What makes Berkshire Hathaway a unique point of reference and comparison is that-- UNlike most companies-- the main Class A common stock (NYSE ticker BRK.A) has never had a stock split, so the current price ultimately reflects raw growth over time.

Also, even though the company has had its winning and losing investments, it has hardly been built around "ultra risky junk investments," but around a solid investment strategy.

Let's keep in mind that now we're looking at some very long-term possibilities... but here's a hard fact for you: on March 1, 1980, you could have bought a single share of Berkshire Hathaway Class A stock for US $260.00. If you had held onto it till June 5th, 2017 (yes, that's 37 years) its value would have grown to approximately $250,000! 

That is almost a THOUSAND FOLD increase!

And that's not on something wildly speculative and high risk.

Of course, 1980 doesn't represent the starting point of the company-- it had much lower (and more volatile) stock prices before that.

$250,000 Bitcoin-- some more perspective and assumptions

So what exactly would $250,000 Bitcoin imply, in the greater world?

If we make a very broad based assumption that the remaining crypto market keeps up with the growth rate of Bitcoin it would suggest a total market cap of ALL cryptocurrencies in the region of $10 trillion, some 10, 15, 20, 25 years down the road.

Is that even realistic or feasible?

Currently, the Gross Domestic Product (GDP) of planet Earth is in the region of US $75 trillion. Using that figure means that cryptocurrencies could grow to become 13.3% of current-year GDP. Of course, if we assume a 25-year time horizon, one would assume continued GDP growth, so let's be super conservative and assume cryptos could become valued at 8-10% of GDP. Is that realistic?

Well, I'm not an economist, so that becomes super speculative... but it would seem to me that if we believe that cryptocurrency is "the future" of economic activity, then having it account for 10% of economic activity 25 years from now is not a ridiculous projection.

So there you have it... $250,000 Bitcoin may not be as unthinkable as it sounds!

How about YOU? Do you think $250,000 Bitcoin-- a 100-fold increase from today-- is a possibility? Does it seem less like "science fiction," when compared to the Berkshire Hathaway example? How about $100 Steem? Do YOU think we're in a speculative bubble with cryptocurrencies... or is this just the beginning of a very long uptrend and mass market adoption takes place? Leave a comment-- share your experiences-- start the conversation!

(As usual, all text and images by the author, unless otherwise credited. This is original content, created expressly for Steemit)