Shamoon's Razor

That’s right! You heard it here first! Today bitcoins are hovering at around $11/BTC, so why do I think that they’ll hit $5,000 within 20 years? Allow me to explain.

If you aren’t familiar with bitcoins, get familar. We Use Coins is an excellent first step to learning about this fantastic new cryptocurrency. I won’t get into the specific details in this post, but basically Bitcoins is an open-source, peer-to-peer digital currency. What this means is that there is no central authority, government or company behind it. It’s created by the people, for the people. They cannot be counterfeited and they are (effectively) anonymous. They are also naturally deflationary since the number of bitcoins is capped (to 21,000,000) and a bitcoin can be divided down to 0.00000001 which means they are highly divisible. That about covers it from a technical perspective on what bitcoins actually are - or at least as technical as this post is about to get.

Now, onto the market dynamics. There are currently just under 10 million bitcoins in existence, with a price of $11/BTC which puts the total market capitalization of the Bitcoin world at roughly $110,000,000.  Not too shabby for something that’s controlled by no one in particular :-). But if bitcoins are to be an accepted currency, the market cap has to be large… MUCH larger.

By comparison, the money supply in the US (M1, anyway) is $2.1 trillion! The EU has a money supply of 4.7 trillion. That’s a lot of supply! Let’s assume bitcoins (as a currency) are going to be at least as large as the money supply for an entire nation. Now, which nation should we choose?

We don’t know how many people are using bitcoins, but for it to be an effective currency, a decent portion of the Earth’s population has to use them. What else does a decent percentage of the worlds population use? Facebook!

Looking at the Facebook Growth chart above, we see that Facebook hit it’s stride somewhere between 100 and 200 million users. That was the real inflection point on that hockey stick graph. Let’s call it 200 million users. What country has a population of approximately 200 million? Brazil has a population of 192 million, so close enough.

What’s the money supply (in USD) for Brazil? Approximately $100 billion. This means that the total value for the bitcoin economy, if it’s to take hold, should be $100 billion. We know that there are only 21,000,000 bitcoins that will ever be created and that’ll happen around 2032.

If we need to have a $100 billion market cap with 21 million BTC, that means the value of each BTC will have to be $4,700. So there you have it. $5,000/BTC in less than 20 years.

Thoughts?

I used to be smart. I swear it. Ask my friends and they’ll tell you that I used to be a fountain of knowledge and would often make interesting non-linear connections that would provide new insights to things that we all take for granted. Conversations with me used to be intellectually challenging and emotionally stimulating. But all of that changed somehow over the years and I’ve finally figured out why.

Google. Yelp. Rotten Tomatoes. Amazon. Audible. Zabihah. StackOverflow. Choice.

Easy access to information has made it less important for me to apply my critical thinking abilities. I won’t speak about your experiences, but I have a hunch that they aren’t too far from my own. I’ve been in countless conversations over the years in which I, and my conversation partners, will find ourselves at a question to which there is a definite answer that eludes us. Maybe it’s some factual question that we just don’t know the answer to. Inevitably, someone shouts “Let’s Google it,” and an Android or iPhone appears as trained and focused thumbs get to work asking the oracle of the world.

There’s no more thinking or debating about what the answer could be. In life, if I’ve learned anything at all, it’s that the journey is far more important than the destination. When I’m with friends and we’re trying to figure out a good place to eat, we used to talk and argue and debate until a consensus (or concession) was reached. Now, someone just asks Yelp and whatever place has the highest stars is where we go. Isn’t the very exercise of discussing places how memories are made? Isn’t that the venue that we use to exercise our brains? Thinking about what food I want and what other people would like, factoring in things like location and price, considering possible reputation and then coming up with my own conclusion is what made me smart. Now, I’ve unloaded a considerable amount of that thought process onto Yelp.

For all of you developers out there, how awesome is StackOverflow? For those of you that aren’t, it’s a Q&A site for developers to ask questions to their programming challenges and get insightful answers quickly. As of this post, I’ve asked over 200 questions and my questions have generated well over 20,000 page views! You can see my questions on my profile. Even in my own craft, I’ve outsourced the thinking aspect to other people. Reading through my questions, the answers are so obvious, if only I took the time to figure them out myself instead of taking the easy way out. I used to be a great software developer, now I’m a great question asker.

There are hundreds of examples from my own life in which I’ve decided to turn my brain off because the information was easily accessible elsewhere. As a result, I’ve certainly learned a lot about how to format my queries and questions, but I’m not sure how much I’ve actually learned. There are those that will react to my thoughts with the polar opposite of “but our lives are so much easier now!!!!1111!” or “would you rather live in the stone age?? LOL/JK!”. To them, I say, there is no need to revert to the stone age to combat the problem of turning off our brains.

My Solution. The next time we speak, I won’t “Google an answer” nor will I request that you do it. The next time we go out to eat, I won’t choose based on some arbitrary star rating. The next time I want to find a book to read, I’ll evaluate it based on the merits of the summary. The next time I have a programming challenge, I won’t just ask the world until I at least give an honest attempt to solve it myself.

Maybe I’ll move slower as a result, but I’m confident that my brain will enhance and my connections with my fellow homo sapiens will be deepened. What about you… has Google made you dumb too?

(Source: google.com)