7.9 billion person-years / 21 million BTC = 376 person-years/BTC.

Then, 1 year’s worth of bitcoin should cost:

1 year / 376 person-years/BTC = 0.00266 BTC (266,000 satoshis).

Now that we’ve worked out a rough estimate of each bitcoin’s value in terms of human time, let’s fold the fiat currency price back in. Then, we can compare the results to our expected returns in the stock market.

Computing Fiat Equivalents
What is the fiat cost of 1 year of bitcoin savings? At today’s fiat spot price (~$60,000/bitcoin), 1 human-year of bitcoin saved costs:

$60,000/BTC ✕ 0.00266 BTC = ~$160.

So for $160, at today’s price, one can buy 1 person-year worth of stored time in the native instrument of that value.

But what would be the fiat equivalent in today’s value if Bitcoin had already reached saturation? For that, we need an estimate of annual income in fiat terms.

Estimates of global median income vary, but $10,000/year seems to be a conservative number. If 0.00266 BTC is to encode 1 person-year of time at the global median income of $10,000, that implies a fiat price of:

$10,000/year / 0.00266 BTC/year = $3.76 million per BTC.

Dividing that price by today’s price gives the expected return between here and saturation:

$3.76 million / $60,000 = 62.7✕.

As a percentage gain, that’s:

(62.7✕ – 1✕) ✕ 100 = 6170%.

Based on this model, and given conservative estimates, I expect holding bitcoin to yield roughly 6100% gains (in today’s dollars) before we reach an equilibrium price (in terms of person-time saved). Once that happens, it might make sense to diversify into other yield-bearing assets, provided that they aim to produce yield in Bitcoin terms.

Now that we’ve established a hypothetical target Bitcoin price based on stored time, we can compare the expected gains between here and there with the expected return on a market cap weighted stock market index.

Comparison With Stocks
How does our projected bitcoin valuation model compare with investing in stocks? According to Goldman Sachs, the stock market’s average rate of return has been ~9.2% for the last 140 years, but that rate may soon drop . Projecting forward, to achieve our expected 6100% gains in the stock market in dollar terms, one should expect to wait:

62✕ = 1.092t ⇒

Log(62) = t ✕ log (1.092) ⇒

t = log(62) / log (1.092) = 47 years.

Will it take Bitcoin less than 47 years to absorb the monetary premiums of all other assets (including stocks)? I think so. Until then, speculating on anything else seems like a gamble.

But that’s just my opinion.

This is a guest post by Jimbo the Consensualist . Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.