Winklevoss: Bitcoin Payment System Worth $400B

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Hey, did you guys know that the bitcoin payment system is worth $400 billion? Who told me that? Why, the Winklevoss twins did! That would make bitcoins worth about $32,000 each. :D

The most widely known estimate of its intrinsic value is $400 billion, made November 2013, by the Winklevoss twins Cameron and Tyler at the "New York Times" Dealbook Conference. At that valuation, Bitcoin would be worth 70 times its current value of $5.7 billion. That’s based on an April 8, 2014 price of $453 per coin for the 12,620,475 bitcoins in circulation. Clearly, there’s a long way to go to reach $400 billion.
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Steve said:
Hey, did you guys know that the bitcoin payment system is worth $400 billion? Who told me that? Why, the Winklevoss twins did! That would make bitcoins worth about $32,000 each. :D
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I would like to see their calculations and read their justifications. The Winklevoss' have a better education than I do and have a lot more money than I likely ever will. However, being born to a rich family got them where they are and I just don't trust my money with people who didn't earn it for themselves.
 
Mandatory

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weuntouchable said:
I would like to see their calculations and read their justifications. The Winklevoss' have a better education than I do and have a lot more money than I likely ever will. However, being born to a rich family got them where they are and I just don't trust my money with people who didn't earn it for themselves.
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From the article:

"The $400 billion estimate, he explains in an interview, is not its value as an alternative currency. Instead, it is based entirely on the ability of the digital currency to provide near zero cost transactions across the world, from the least developed to the most developed nation, from the tiniest micropayment to the largest, while its encryption and tracking of all existing coins eliminates the cost of fraud from the transaction."

Worthy of a snicker if not a full on guffaw. Read on!

"To arrive at the $400 billion estimate, Tyler says he and his brother did a back-of-the envelope calculation of the market capitalization of some of the biggest high transaction cost players in the global payments system – the credit card companies, such as Visa, MasterCard, American Express, Discover and others. The four credit card companies named, for example, had a market cap of $333 billion on April 8. That shakes out as follows: Visa, $128 billion; MasterCard, $85 billion; American Express, $92 billion; and Discover, $27 billion."

Regardless of what you think of bitcoin valuations like this are utter fucking nonsense. The market is worth the value per coin times the number of coins. I wonder if their valuation has anything to do with the fact they are one of the major players?
 
Weren't these two of the same guys who claimed we might see Bitcoins go for $42,000 by the end of 2014?

Yeah. They just want their name in the papers. They're probably still butthurt about that whole Facebook thing.
 
weuntouchable said:
I would like to see their calculations and read their justifications. The Winklevoss' have a better education than I do and have a lot more money than I likely ever will. However, being born to a rich family got them where they are and I just don't trust my money with people who didn't earn it for themselves.
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Ever hear the phrase "that person is educated beyond their intelligence"?

Yea.... that is what you are seeing here. They could have Ph.d.'s in economics, business, or whatever other program you can think of and the above phrase would still apply to just about everything they say and do.
 
weuntouchable said:
I would like to see their calculations and read their justifications. The Winklevoss' have a better education than I do and have a lot more money than I likely ever will. However, being born to a rich family got them where they are and I just don't trust my money with people who didn't earn it for themselves.
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Then read the fucking article.
 
I read the fucking article.

Shameless self promotion of a boondoggle. "we did some quick calculations on the back of an envelope" in other words, they pulled the numbers out of their ass.

the entire valuation is based on the assumption that bitcoins will be widely adopted by lots of people, soon. yeah, I see THAT happening. said no one on wall street, ever.

what I do see is the credibility of crypto-currencies going strait into the cyber toilet. as long as the bitcoin exchanges continues to be at the mercy of people that run them, (oops we lost all your imaginary money, again) without any sort of oversight by regulatory agencies ordinary people are going to shun them. and that flies in the face of what the current proponents of crypto-currencies see as it's Raison d'être, unregulated, untraceable and non-taxable currency.
 
I would personally think that the max intrinsic value of bitcoins would only be the internet transfer of money (shopping) that occurs in 12 hours (the time of btc confirmation x2) / the number of bitcoins.
 
The intrinsic value is nearly nothing. As someone pointed out here, with no transaction protection, the commercial value is limited. Once someone sets up a middleman to clear transactions, it's the same as a dollar for transfers, no benefit remains. Add to that a limited supply of coins, which in a growing economy simply doesn't work, because it's deflationary. No one exchanges a currency they are hoping to profit from holding.
 
When coinbase has 1 million bitcoin accounts, where each effectively behave as bank accounts, yeah, I'd say the valuation of bitcoin as an entire industry certainly transcends the value of its market cap.

They have access to 1 million unique, mostly Americans, who are affluent and fall into the most valuable demographic range.

Now think about what happens when 500m people have bitcoin addresses and a social media platform (Facebook, twitter, gmail, yahoo, etc) Integrates itself with those addresses.

When that happens, people will laugh at 400b
 
Aluisious said:
The intrinsic value is nearly nothing. As someone pointed out here, with no transaction protection, the commercial value is limited. Once someone sets up a middleman to clear transactions, it's the same as a dollar for transfers, no benefit remains. Add to that a limited supply of coins, which in a growing economy simply doesn't work, because it's deflationary. No one exchanges a currency they are hoping to profit from holding.
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Overstock and a whole swath of bitcoin only websites say otherwise.
 
Optik said:
Overstock and a whole swath of bitcoin only websites say otherwise.
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Lots of businesses would be fine with taking a deflationary currency, but it doesn't make sense for consumers. Why spend bitcoins when they might be worth more tomorrow?

This applies regardless of the recent hyperdeflation bubble. Bitcoin is inherently deflationary. There's a limited supply and the majority of mined bitcoins are sitting around unused. Without inflation there's nothing to drive spending/investment, and without being tied to a government or commodity there's no reason to stop people from just making up new crypto-currencies when the price gets too high, as we saw recently.
 
Bitcoin isn't worth near the value of the coin x the number of coins.

In my oppinion it's much much less. If someone cashed out 250k coins it'd tank the market. The other day -50k dropped the market by $100 or about 25%.

I still think bitcoin has the fundamental flaws of being very slow and not user friendly.
 
Optik said:
When coinbase has 1 million bitcoin accounts, where each effectively behave as bank accounts, yeah, I'd say the valuation of bitcoin as an entire industry certainly transcends the value of its market cap.

They have access to 1 million unique, mostly Americans, who are affluent and fall into the most valuable demographic range.

Now think about what happens when 500m people have bitcoin addresses and a social media platform (Facebook, twitter, gmail, yahoo, etc) Integrates itself with those addresses.

When that happens, people will laugh at 400b
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and 99.99 % of those 500m people would wonder what the hell your talking about when you ask them how many bitcoins they have.

When Discover Card starts giving out bitcoins as reward points, maybe the currency will become more than a novelty :p
 
Dayaks said:
Bitcoin isn't worth near the value of the coin x the number of coins.

In my oppinion it's much much less. If someone cashed out 250k coins it'd tank the market. The other day -50k dropped the market by $100 or about 25%.

I still think bitcoin has the fundamental flaws of being very slow and not user friendly.
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I get you point, but you may not be keeping things in perspective.

250k coins is a lot... ~2.5% of the current outstanding BTC available. What other market could you sell 2.5% and not see a dramatic downward price change?

GE - has 10,000,000,000 outstanding shares, trades about 30m per day...

and a 2.5% dump would be 250,000,000 shares or 8.33 TIMES the daily average.

50k BTC is 0.5%, which dropped the price 25% and is also a pretty high trading day on Bitstamp.

In GE world a 0.5% dump would be 50,000,000 shares or 1.6 TIMES the avg daily volume.


The problem you describe is there are too few shares and many which were gotten at much lesser prices... thus making these dumps more common.

Yet the reason why BTC is hot is because it is a risky volatile investment, that is paying off for many even now in a down trend.

I also pretty much agree with you, the end consumer I don't think would see tons of value of BTC over say CC. Though I believe larger organizations that move a bit of money may...
 
Optik said:
Overstock and a whole swath of bitcoin only websites say otherwise.
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Derpness! Overstock makes you convert out of btc to some other currency before the transaction is finished. They're accepting bitcoins directly. They take the USD that you get from the conversion and then secure that against the purchase.
 
Wealth that cannot be confiscated (see Cyprus) rehypothicated (see M F Global, Corzine) is worth more than gold IMHO
 
Wealth that cannot be confiscated (see Cyprus) rehypothicated (see M F Global, Corzine) is worth more than gold IMHO
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There will always be a place to cash in my gold, bitcoins not so much I cant walk into a pawn shop and say hey would you like some virtual currency?
 
The whole system is based on delusions of grandeur of such an epic scale that it is far beyond the understanding of the common (or should I say common sense) folk. This is why nobody takes it seriously.
 
The fiat system is based upon trust... ultimately you will find there is no trust to be had in the Central banking system of this world. Economic dinosaurs will be left behind.
 
ServerKing said:
There will always be a place to cash in my gold, bitcoins not so much I cant walk into a pawn shop and say hey would you like some virtual currency?
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When civilizations collapse or meet for the first time what do the survivors or new found people normally barter with. Precious metals, gems, food, etc. Somehow these idiots think bitcoins are going to be the currency even though there will certainly be no stable power grid to process them. Delusions of grandeur. I'm honestly at a loss for words...
 
celeron300 said:
The fiat system is based upon trust... ultimately you will find there is no trust to be had in the Central banking system of this world. Economic dinosaurs will be left behind.
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I wanna jump face first into the propaganda swimming pool too! :D
 
celeron300 said:
The fiat system is based upon trust... ultimately you will find there is no trust to be had in the Central banking system of this world. Economic dinosaurs will be left behind.
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I lol'd. So your alternative is to trust currencies traded on exchanges created for magic cards set up by sweaty nerds that have no government backing or intrinsic value. Lol!
 
maverikv said:
I lol'd. So your alternative is to trust currencies traded on exchanges created for magic cards set up by sweaty nerds that have no government backing or intrinsic value. Lol!
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Their fundamental flaw of logic:

There is a big problem.
We have something small that is different.
We have the solution to the big problem.

Simple thinking.
 
Cash has force of law. Anyone who quibbles about the value of that should try not paying their taxes to see what exactly the force of law is able to do.
 
Don't have a problem with folks disagreeing but im not sure what price will change minds for some (if any)

When 1 BTC was 10 bucks... everyone ignored it.

Now it has a market cap of about 6 billion ... it would not be hard for it to grow 10 to 20 times in the next few years regardless of what the dollar does.

Maybe then some of the naysayers will reconsider their position.
 
celeron300 said:
Don't have a problem with folks disagreeing but im not sure what price will change minds for some (if any)

When 1 BTC was 10 bucks... everyone ignored it.

Now it has a market cap of about 6 billion ... it would not be hard for it to grow 10 to 20 times in the next few years regardless of what the dollar does.

Maybe then some of the naysayers will reconsider their position.
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Extreme volatility isn't a sign of a good investment, and it looks even worse on a currency. Something that doubles it's value in a day can half it's value in a day in theirs of an investor.
 
As long as people think of btc in terms of the number of dollars they're worth, they'll never go anyplace. They need to have their own value system that's not relative to an actual currency in order to be a currency and they need complete, personally identifiable transactions with human controlled individual exchange approval to eliminate the rampant criminal activity.
 
celeron300 said:
Don't have a problem with folks disagreeing but im not sure what price will change minds for some (if any)

When 1 BTC was 10 bucks... everyone ignored it.

Now it has a market cap of about 6 billion ... it would not be hard for it to grow 10 to 20 times in the next few years regardless of what the dollar does.

Maybe then some of the naysayers will reconsider their position.
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The thing is BTC can't win. The business plan is that it will replace CC and Paypal as a system with zero fees. Sorry to tell you that no one is going to process the volume of transactions that would need to be processed if it succeeded as an alternative without collecting a fee.

Also businesses do not want to hold Bitcoin, they want to convert it back to their currency (the same applies when a business is paid with foreign currency). Someone will need to charge a fee in order to make that happen.

BTC is trying to replace a system that is near perfect. Meaning I can use my CC or send money via Paypal because they are nearly universally accepted. Yes, there are fees involved for this convenience. Those fees need to exist because my credit card issuing bank is not going to setup a direct payment system with everyone who I purchase things from. Visa, Mastercard, Discover handle that end. I buy something with Visa, Visa pays the store, my issuing bank pays Visa, I pay my issuing bank. Its a great little network. And for all of that to work as nice as it does, a small transaction fee is charged along the way.

Transaction fees are unavoidable unless you are strictly dealing in cash which is universally accepted and does not have to be converted into anything else. Don't even try to make the argument that BTC will somehow replace the dollar because that is silly.
 
CreepyUncleGoogle said:
As long as people think of btc in terms of the number of dollars they're worth, they'll never go anyplace. They need to have their own value system that's not relative to an actual currency in order to be a currency and they need complete, personally identifiable transactions with human controlled individual exchange approval to eliminate the rampant criminal activity.
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You know every currency is valued in other currencies right? wtf are you talking about? We have to ignore other things with value when we compare bitcoin to other things to determine its value?:confused:
 
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