<How much will Bitcoin cost in the future>

<How much will Bitcoin cost in the future>

As the price of Bitcoin recently exceeded 100 million won, the FOMO phenomenon seems to be spreading similar to the thunderstorm Pim that occurred a few years ago when housing prices soared.

Since 2008, when Bitcoin came into the world, there have been many analyses of its nature and arguments about its usefulness, but when the U.S. SEC approved the Bitcoin ETF in January, it became a financial asset officially incorporated into the institutional sphere.

Recently, 500 million, 1 billion, etc. have been suggested as a future price forecast for Bitcoin, so many people are still unsure, but as I recently established some "View" of Bitcoin, I assumed future values (around 2040: for comparison with the situation roughly 20 years after the gold ETF was launched in 2004).

First, Bitcoin could be defined as "Pure & Unique Global Money: PUGM" in a nutshell.

The pure reason is that it is very independent under any circumstances because it does not have a specific entity, 2. has extreme scarcity, and 3. is insulated from common monetary phenomena such as inflation.

The unique reason is 1. Digital currency is a payment method suitable for the future digital world, 2. It has excellent security because it is distributed, and 3. It is clearly distinguished from ordinary money due to difficulties in policy intervention due to the lack of issuer.

Also, because global is literally used anywhere in the world, there are no issues such as currency exchange.

The reason why it is money is that it performs functions such as value scale, value storage, and transaction based on abstract popular value, which is the essential function of money.

In order to predict the future price of Bitcoin with these characteristics, it seems to be primarily meaningful to compare it with gold, which has the most similar characteristics of PUGM.

Gold's current market capitalization is approximately $15 trillion, accounting for approximately 3% of global financial assets worth $500 trillion. The fact that gold accounts for 3% of global financial assets is technically thought to have about 3% invested in insurance premiums for the risk of the current global monetary economy collapse.

This is due to the fact that the rise in the global monetary and economic crises is exactly proportional to the gold market. For reference, the US GDP last year was $28 trillion and debt was $33 trillion, and interest expenses on government bonds exceeded defense expenditures. Therefore, it is impossible to repay the debt and must issue government bonds to pay interest. This appears to spread doubts about the hegemony of the dollar, the global reserve currency, and at the same time raise questions about the sustainability of the current global monetary and economic system.

Therefore, if we look at Bitcoin as defined above, the future price of Bitcoin is likely to be largely determined by two key variables.

First, bitcoin's gold role replacement rate (in other words, the proportion of bitcoin and gold's global portfolio), and second, the increase in premiums for global monetary economy risks. We can assume that bitcoin's gold replacement rate will be low or high in the future, that is, a low replacement rate of approximately 30% and a high replacement rate of more than 70%. And we need to look at whether the premium will remain at the current 3% level or will it triple to 10% as the risk to the current global monetary economy increases.

Then comes four scenarios for the future value of Bitcoin.

A. Big Bang Scenario (70% gold replacement rate, 10% premium): The market capitalization of Bitcoin is approximately $35 trillion, and the price per Bitcoin is $1.67 million (KRW 2.2 billion)

B. Small Resort Scenario (30% gold replacement rate, 10% premium): The market capitalization of Bitcoin is approximately $15 trillion, and the price per Bitcoin is $720,000 (KRW 940 million)

C. Digital Gold Scenario (70% gold replacement rate, 3% premium): The market capitalization of Bitcoin is approximately $10 trillion, and the price per Bitcoin is $480,000 (KRW 630 million)

D. Small Gold Scenario (30% gold replacement rate, 3% premium): The market capitalization of Bitcoin is approximately $5 trillion, and the price per Bitcoin is $240,000 (KRW 310 million)

Since the current price is 100 million won, it is possible to expect at least three to 20 times more profit in any scenario. However, since the time when that scenario occurred is around 2040, an IRR calculation must be performed in consideration of the time value of money, and at the same time, the above prices increase global financial assets by an average of 5% every year at the current price, so it would be reasonable to calculate the IRR by doubling the above price by 2040 to 1000 trillion dollars. For example, when the Big Bang scenario occurs, the price per bitcoin in 2040 is expected to exceed $3 million, which makes it worth buying an apartment in Gangnam.

In my personal opinion, I think Bitcoin can be viewed from this perspective rather than from the price outlook, and if you look at it like this, you can understand the recent price surge and look at the future.