The bull case for Bitcoin is often expressed as an estimate of the future value of all Bitcoin in circulation once it reaches its potential. The most widely known estimate of its intrinsic value is $400 billion, made November 2013, by the Winklevoss twins Cameron and Tyler at the "New York Times" Dealbook Conference. At that valuation, Bitcoin would be worth 70 times its current value of $5.7 billion. That’s based on an April 8, 2014 price of $453 per coin for the 12,620,475 bitcoins in circulation. Clearly, there’s a long way to go to reach $400 billion.
So, how did the Winklevoss twins come up with their $400 billion estimate, which Tyler Winklevoss says is just “a starting point” for what it may ultimately be worth? The $400 billion estimate, he explains in an interview, is not its value as an alternative currency. Instead, it is based entirely on the ability of the digital currency to provide near zero cost transactions across the world, from the least developed to the most developed nation, from the tiniest micropayment to the largest, while its encryption and tracking of all existing coins eliminates the cost of fraud from the transaction.
“If you think of what Bitcoin’s benefit is in terms of payments, it’s a transaction free, borderless global payments system,” Tyler says. “It’s just like someone sending an email to Hong Kong. It happens instantly and free.” In this way, the digital currency is superior over all current payments systems, he contends. “ It replaces the intermediaries and the third party referees, it replaces all the costs associated with them with elegant math, and as a result, it reduces those costs,” Tyler explains. “As a result, its intrinsic value is that it takes all those costs out of the legacy system we’ve known for so long.”
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