2021-8-28 07:00 |
The explosion in wealth that will occur as bitcoin gains in value will create a new class of billionaires.
When technological change happens in society, it happens quickly and in a pronounced manner. Precisely one decade ago, Apple’s market cap had just matched Exxon Mobile’s market cap of $310 billion. In the decade since, Apple’s market cap has gone up to over $2.4 trillion, and Exxon’s has gone down by 100 billion dollars to $216 billion. This gap is likely to only increase as time goes on.
Today, bring on bitcoin. Even though its volatility has been testing all of our patience, bitcoin is killing it. As of this article, bitcoin has once again crossed the $50,000 mark and its price is up over 280% from last year. Bitcoin, blockchain, and crypto is considered by technocrats to be one of the fastest growing sectors in technology, as evidenced by venture capital firm Andreeson Horowitz’s creation of their new $2.2. billion “Crypto Fund.”
One well-known Andreeson Horowitz partner, Balaji Srinivasan, who doubled as Coinbase’s first CTO, wrote an article titled “The Billionaire Flippening” articulating what he believes will be the structural societal impact of bitcoin’s ever-increasing price. When cryptocurrency enthusiasts hear the term “flippening,” most think it to describe a time period in which Ethereum’s market cap eclipses the market cap of Bitcoin. However for Balaji it appears that there is another, perhaps more fascinating flippening that will come soon - the flippening of billionaires. He says that when bitcoin hits milestones like $100,000, there will be as many bitcoin billionaires as there are traditional billionaires. When bitcoin hits one million dollars, the world’s bitcoin and crypto billionaires will surpass the number of traditional billionaires.
In the “The Billionaire Flippening”, Balaji explains the math-
“There are ~2393 addresses with >1000 BTC. At $1M/BTC, there would be 2393 billionaire addresses.
“Bitcoin is currently about 60% of the total crypto market cap, so assuming a similar distribution of wealth for other coins, and assuming the entire crypto market cap also appreciates with bitcoin, multiply 2393 by 1/0.6 to get about 4000 crypto billionaire addresses. Today there are about 2000 billionaires. 4000/(4000+2000)=0.66 would mean ~66% of billionaires were from crypto, which is an overshoot. As I recall, back when my colleague estimated this the actual threshold was ballparked as $200k/BTC, as a point between $100k-$1M/BTC to guess when 2000 rather than 4000 new billionaires came from crypto. A proper curve fit may give a higher number, given the exponential dropoff in BTC-per-address.”
To add my own calculus to his math, bitcoin’s CAGR (Compounded Annual Growth) of 200% means that it is reasonable to think that within the next two years half the world's billionaires will have made their fortunes from cryptocurrency (when one bitcoin equals), and within five years (when one bitcoin equals $1 million) there will be more bitcoin/crypto billionaires than from every other industry combined!
This represents the greatest structural change in wealth since the emergence of personal computers in the 1980’s. Since Apple tied Exxon Mobile’s market cap in August 2011, the story of the two companies has diverged. Apple has become the first trillion-dollar company. It now sits at an unbelievable market cap of $2.478 trillion, or $2.2 trillion more than Exxon’s. In the information age, change is constant, and whoever predicts change correctly wins the spoils. While Bitcoin’s future is uncertain, it represents our generation’s change. A change to how we bank, socialize, and are structured. So for all of you out there, HODL — most of the world’s future billionaires did!
This is a guest post by Jacob Kozhipatt. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
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