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What's the story with Bitcoin?


  • Bitcoin recently passed the $20,000 price mark for a brief moment.

  • The value of all circulating bitcoin is about $371B (at a price of $20,000 per bitcoin).

  • The value of all gold above ground is about $11.5T (at a price of $1,800 per oz.), a factor of ~30X more than bitcoin.

  • If bitcoin even got to $200,000 (ten times the recent price) – approximately half of all billionaires in the world would owe their wealth to bitcoin.


Bitcoin provokes strong reactions – positive and negative. Warren Buffett thinks Bitcoin is a bubble (“rat poison squared”). Meanwhile, large public companies are starting to get on board with Bitcoin – Square recently bought $50M worth and Paypal are planning to add Bitcoin to Venmo in 2021.

Personally, I think Bitcoin could go to zero, but it could also go much higher. As I’ve written before, I hold ~5% of my liquid net worth in Bitcoin.

Passing $20,000

Bitcoin jumps around in price a lot and – like any speculative asset – people just love when it crosses a good round number, like $20,000! $20,000 is roughly the mark that Bitcoin hit in 2017. This past week, bitcoin went slightly beyond its 2017 record and reached an all time high.

How much Bitcoin is in the world?

There is a maximum supply of 21 million bitcoin. These have now almost all been released into circulation. At the time of writing, there are about 18.5 million bitcoin in circulation. At a price of $20,000, that implies that the value of all bitcoin (known as the market capitalisation or market cap) is about $370 billion.

How much gold is in the world?

Given gold is a financial store of value that is not profit generating in itself (in the same way that a business or real estate is), it provides one comparison for bitcoin, which is – like gold – limited in supply and not profit generating in itself.

As of the end of 2019, about 200,000 tonnes of gold are above ground. At a price of $1,800 per Troy ounce, that implies a market cap for gold of about $11.6 trillion.

So, the price of bitcoin would have to rise by a factor of about 30 in order for the value of all bitcoin to be about equal to the value of all gold. That’s a tall ask, but I think it is at least conceivable that bitcoin could increase more in value. [It’s also conceivable that it could go to zero.]

What if Bitcoin went up by 10X in price (say, to $200,000)?

Interestingly, as Balaji Srinivasan (@balajis on Twitter) points out, half of the billionaires in the world would be “Bitcoin Billionaires”. That’s kind of crazy to think that Bitcoin could re-write the wealth hierarchy of the world.


People love a good round number, hence the recent hype. Expect the same hype to play out again multiple times in the future.

My recommendation is to learn about Bitcoin and how it works for yourself. Then you can make your own decision. Nataniel Popper’s Digital Gold is an ok place to start, as is Wences Casares’ episode on Econtalk.

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