Starry-eyed crypto bulls are quick to espouse the infinite potential of Bitcoin. But although “to the moon” is a very poignant motto, it is not precisely quantifiable.
In that, we have part of our answer. One of the biggest reasons “to the moon” has taken off as the premiere answer to ‘how high could Bitcoin grow?’ is because the honest answer is tough to quantify.
The potential maximum value of Bitcoin has little to do with Bitcoin itself and everything to do with how the world adopts it.
There is essentially consensus among bullish trades and investors that, on its current trajectory, Bitcoin could eventually go as high as $100,000. But, as we will come to discuss, the honest answer is a lot more complicated, going up to as much as $10 million per coin.
What is a Bitcoin?
Bitcoin was created by Satoshi Nakamoto, the name (or presumed pseudonym) of the person or persons who developed the world’s first cryptocurrency and authored its famous white paper.
At launch, it was designed to be the first decentralized, peer-to-peer electronic payment system. But since it has gained popularity, it has also grown to be considered a store of wealth or ‘digital gold.’ This is thanks mainly because there is a concrete limit on how many Bitcoins there could ever be in circulation.
How many Bitcoins are there?
To understand the potential value of Bitcoin, one must first understand how many there will be when all are in circulation.
The currency is hard-capped at 21 million BTC. As a result, every 210,000 blocks, the Bitcoin reward for miners who add verified blocks to the blockchain is sliced in half, in a process known as halving.
When Bitcoin hits its 21 million coin limit (which is expected to occur around the year 2140), miners will no longer be rewarded for adding new blocks.
Although this isn’t expected to happen for more than a hundred years, it gives us a handy number to quantify possible Bitcoin future values. One can safely assume that Bitcoin’s value will peak when all coins are already in circulation.
What is the Upper Limit of Bitcoin, according to experts?
The price of Bitcoin is theoretically infinite. Like all financial instruments and securities, the cost of Bitcoin is a function of supply and demand.
Because Bitcoin isn’t an asset with inherent value (in fact, it is arguably an asset with intrinsic negative value), its price is determined by every participant based on their appraisal at the time of transaction.
This makes the context in which we imagine Bitcoin essential in determining how much it could be worth in the future. Unfortunately, it also makes answering the question of Bitcoin’s upper price limit extremely difficult.
Instead, it is probably more helpful to imagine several eventualities to get an idea of how much it could be worth in each:
Bitcoin has been adopted by about 1.3% of the world population, meaning it is considered a ‘Niche Global Money.’ If Bitcoin were to be adopted by just under 5% of the world’s population, its market cap could approach $10 trillion.
In this case, Bitcoin’s upper limit could be as much as $500,000 per Bitcoin.
Let’s get a little crazier and imagine. Bitcoin takes up its mantle and literally becomes a ‘digital gold.’ This is a prediction floated by crypto entrepreneur Bobby Lee. If Bitcoin were to replace gold and other precious metals as the world’s premier store of value, we could reasonably assume that it could raise its market cap anywhere up to 21 trillion dollars.
In this case, Bitcoin could reach as much as a million dollars per coin.
Finally, imagine Bitcoin becoming the world’s dominant payment system, handling the world’s total wealth. It’s a thought experiment floated by Hal Finney, the computer scientist who received the first bitcoin transaction from Satoshi Nakamoto.
When Finney completed his calculations, he estimated that current worldwide household wealth measures range from $100 trillion to $300 trillion. With 21 million coins in circulation, that means that Bitcoin could one day be worth as much as $10,000,000 per coin.