Gotta love those stock photos!

Yesterday, I sent my friend 1 Millibit (.001 BTC, or roughly $4.10 as of today) for helping me with something. It was his first time receiving Bitcoin, to which he said, “now this might motivate me to finally get some.” My response was that he is already the proud owner of one 21 billionth of the Bitcoin network. When you purchase Bitcoin, you can immediately calculate your percent ownership of the entire network, since the algorithm states that there will only ever be a maximum of 21 million Bitcoin.

This got me thinking — how much would a one 21 billionth level of ownership of gold be worth? How about the US dollar? How about the global money supply? Bitcoin is a global digital currency/commodity, so its end-game, unlikely as it may be, is replacing or complementing these other assets at the same scale. Bitcoin has a non-zero chance of becoming as big as other global currencies. For measurement’s sake, I will denominate all of my calculations in USD.

So — how much would 1 Millibit be worth if the Bitcoin network became as big as gold? Currently, the market cap of all gold in the world is estimated to be about $7.8 trillion dollars. One 21 billionth of that is currently $371.43, or roughly 91 times the price of 1 Millibit. The Bitcoin network is currently worth less than 1% of the overall market cap of gold.

If it becomes as big as the US dollar? It’s difficult to calculate the exact number of the US dollars in circulation since there are no hard rules to define the rate at which new dollars are created, but at this moment, it is estimated that there are about $14 trillion worth of the currency floating around (not counting stocks, derivatives, etc.). One 21 billionth of $14 trillion is worth $667, or roughly 163 times as much as one Millibit.

How much is one 21 billionth of the global money supply? Another very difficult metric to measure, but by one estimate, the broad money supply in the world is about $80.9 trillion. This includes money locked up in investments and accounts, as well as all of the money in circulation. One 21 billionth of 80.9 trillion is $3,852, or roughly 940 times the current value of 1 Millibit.

My point is this: Whether or not you believe Bitcoin is in a bubble, it will be replaced by another cryptocurrency, or that the price is too expensive, it’s important to take a step back and think about the potential upsides of this technology if you happen to be making the wrong bet. Hell, even if I was convinced that this technology is doomed to fail, I would hedge my bet by purchasing 10 millibits (one 210 millionth of the network). If it fails, I’m out $40. If the Bitcoin network becomes even 10% as valuable as Gold, I’ve turned $40 into $3,714.

Additional Resources:

Find a Bitcoin ATM near you to try it out: CoinATMradar

USD Exchanges/Bitcoin banks: Coinbase, Uphold, Gemini

Euro Exchanges/Bitcoin bank: Xapo, Bitonic

Be your own bank on your phone or computer with a BTC wallet: Android — Mycelium, iOS- Breadwallet, from a computer — Electrum