The Verdict

Yep, you heard it... 1 in 5,000 worldwide!

As of right now there is currently 7.5 billion people worldwide, and in contrast only just over 17 million Bitcoins in current circulation.

If these 17 million available Bitcoins were evenly distributed among the world's 7.5 billion residents, only 1 out of 441 people could have one Bitcoin; or every person would have 0.0022 BTC.

Bitcoin is many things, but a socialist currency is not one of them. Like all other aspects of finance, a high percentage of the wealth is in the hands of a small percentage of people. That's fine - I just want to highlight what the real scarcity of Bitcoin looks like in real numbers. We start with 1 in 500 as the best scenario in terms of the average person's access to Bitcoin ever.

Now let's factor in some realpolitik. BTC is not, and will never be, evenly distributed, so when we think about how few people, worldwide, will be able to acquire just one Bitcoin, we have to factor in the innovators and early adopters who own hundreds and hundreds of thousands Bitcoins, and the unknown quantity of lost Bitcoins. We also have to factor in realities about wealth disparity: Bitcoin can improve the world, but it won't change human nature or class stratification. So let's assume that 90% of all BTC is owned by just 10% of the world's population - that's being generous (or naive) still, because there aren't 750 million Bitcoin owners yet, and we already know that the top one percent (not 10%) own 90+% of other types of wealth. But even if we use the 10-own-90 ratio, that means that 1 out of 5,000 people, worldwide, will ever be able to acquire an entire single Bitcoin. 

And think about how skewed (worldwide) current BTC ownership is, towards China and then the U.S. While the ratios of "spread across the population" may be 'better' in these countries, there are 1.6 billion people in the China and the U.S., meaning perfect socialism would allow for 1 out of every 100 residents to own but one Bitcoin - assuming there were none in any other country. Factoring in the wealth disparity, and realizing that plenty of other countries have Bitcoin investors, maybe it's 1 in 2,000 in China and the U.S. - still plenty scarce.

But that means BTC would be even more scarce in every other county, since we have to still average 1 in 5,000 worldwide. India, Pakistan, Russia, and other countries with hundreds of millions of residents are all increasing in awareness and activity. That's got to affect the market. Maybe not $90 a day...but maybe in a few years, by $900/day.

This 1-in-5,000 data holds up no matter what price BTC trades at (it's purely a calculation of supply vs residents - and the Earth's population will increase at a faster rate than Bitcoin production - by a big factor - there are 1,800 new BTC mined each day....and 353,000 babies born each day according to UNICEF). When we drop to 900/day mining in 42 short months, that ratio will tilt further towards scarcity.

All this hints at why every price prediction is likely way conservative. If Bitcoin continues to expand in exposure, to attract new buyers, to trigger more FOMO, to become more desirable to more people... and then you factor in that scarcity... then $900 will be a 'remember when?' number, just as $1 or $13 is for the earliest adopters. Eventually, there will just be bidding wars establish market price. Some one will have to be induced into selling part of a Bitcoin to free any up, and there are many more buyers to come than there are holders or hodlers now.

If there were a growing awareness that only 1 out of every 5,000 people worldwide could get their hands on a ladybug, there'd be no reaction financially (environmentally, maybe). But if you replace the ladybug with something being discussed on Bloomberg and CNBC, and written about in WSJ and Barron's, there will be a scramble. We are seeing that scramble from Cyprus to Venezuela to Greece to China (repeatedly there as the yuan staggers) to India. Capital controls - bank runs - hoarding - abandoning fiat - and governments taking currency out of circulation to stop inflation (really?) - these are becoming more prevalent, not less - and that forecasts greater adoption of Bitcoin by more and more people anywhere there are banks and WiFi routers.

If you're (correctly) thinking, well, Bitcoin is scalable down to one satoshi, so why is scarcity of one Bitcoin important, consider this: The relative scarcity is the same no matter how many different decimal places you use - let's say 1 in 500 people will ever have 0.1 Bitcoins, or 1 in 50 will ever have 0.01 coins....when we get to the point where a fraction of a BTC becomes an aspirational ceiling of ownership, the price will go off the rails, just like the people who bought 10,000 at a time in 2011 became 'Bitcoin billionaires' - when price rose (and fell and rose again, which adds to the health of BTC to survive that crash, much like a relationship is stronger if it survives a tough fight) -so in late 2014 and most of 2015, the rest of us were thrilled to buy 0.5 or 2 or 5 or 10 BTC a month. $225 feels like 'the good of' days...' and that was merely last August, 15 months ago. Now the same money buys 0.2 or 0.5 or 2 or 4 BTC.

A single Bitcoin already costs more than the average American's weekly salary - assuming full time employment - which is hardly a given.

$800 and $900 were so exciting. I know some veterans saw higher prices (briefly) in '13, and I know we will have a dip and level and chop and future spikes. But we're not talking about $900 to $1,000 over the next 4 years. New adoption, reduced supply, increased government pressure - laid on top of the simple math of BTC supply vs population - suggests the moon landing, someday, is several factors of 10 higher than the 'dream' of $20,000 in 2017.

Feel free to ask any questions or queries.

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