What will be the annualized nominal return of Bitcoin from 2023 to 2100? (5x amplified)

X = btc/usd on Jan 1 2023 (16605)
Y = btc/usd on Jan 1 2100
Resolves PROB to 5*((Y/X)^(1/77)-1)

If the prob would be less than zero, it resolves NO.

If USD ceases to exist we use the successor currency at the last available exchange rate from USD to the successor currency.
If BTC ceases to exist we use the successor currency at the last available exchange rate from btc to the successor currency.

If USD ceases to exist without an obvious successor this resolves YES
If BTC ceases to exist without an obvious successor this resolves NO

If AI kills everyone and both cease to exist simultaneously, this uses the last available exchange rate.

How I think about this problem:
my expectation for the long term change in BTC/USD is: (fed inflation target) + (average fed overshoot) + (average world real gdp growth) + (increased adoption factor)
fed inflation target = 2%
average fed overshoot = 1% (Range: 0-3%)
average world real gdp growth = 3% (maybe higher with AI or lower with demographic collapse and dysgenics. Range: 0%-6%)
increased adoption factor = 4% (this one is the most uncertain. I'm basing it on 25x adoption over 77 years because bitcoin is currently 1/25 the market cap of gold and my median case is parity with gold as a % of global financial assets. Bull case is parity with fiat and bear case is parity with dogecoin, Range: -5% to 7%. )
Could add another 1.65^(1/77)=0.66% for the 65% increase in btc/usd that already occurred between Jan 1 and market creation time but it's too small to matter.
Combined range: 0% to 18%
Combined median case: 10%

my model for the long term change in GLD/USD starts with the same first three numbers but instead of a positive adoption factor there's a negative factor for inflation in the gold supply of 2-10% per year with a 3% median. The high end is if asteroid mining pans out. This gives a combined median of 3% and a combined range of -8% to 9%.

Regardless of your thoughts on bitcoin in particular, it should be clear that any fixed-supply global currency people agreed to use would outperform fiat by 6% in expectation over the long run. Constant supply + constant velocity implies deflation equal to real gdp growth (3%), instead of 3% inflation via QE. Also making a big assumption here that downward nominal wage rigidity is no big deal and the choice of currency won't affect long-run gdp growth.

arbitrage-free interest rate parity requires the depreciating currencies have higher risk-free-rates than appreciating ones, so this analysis doesn't necessarily reflect the total returns realized by the investor.

related arb-able markets:

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predicts YES

Nominal gdp growth of 5.6% from the second linked market + market share growth annualized of 1.45% implies the return on bitcoin is at least 7.05% if M1 growth at least keeps up with nominal GDP growth. The trend lately has been for the fed to expand M1 faster than GDP, decreasing the velocity of money.

bought Ṁ1,313 NO at 34%

@JonathanRay and no market could be wrong, I guess is yet another unfounded assumption.

Far from arb-ing the alleged “related arb-able markets”, you’re piling big on YES on all three, tipping the scales and thus turning all of these into nothing more than self-resolving, non-predictive market failures. Then of course loans make it worse, leveraging into the fundamental flaw of very long-term bets (they’re meaningless).

I’ll sink a couple thousand mana here, just to signal against all your pseudo-mathematical/macro-economic pretense of an air-tight model and theory in an effort to dress up your subjective opinion, a mere hunch, and pass it as some sort of scientific, data-driven inevitable fact. I will happily write-off 1-2k mana as the sensible cost of such signaling, but will not fall prey to your baiting tactics by matching your desired level of escalation, just to correct your failed markets.

So, I’ve left a YES limit, contrary to my beliefs, to liquidate most of my position with a small symbolic gain, in case you or anyone wants to take my place in trying to get these markets to express any sort of meaningful prediction.

@JonathanRay either the marketshare market is overpriced, or M1 will grow more slowly than GDP, or this market is underpriced. Regardless of your view on bitcoin, you can profitably trade on that if you don't think M1 will grow more slowly than GDP, by going long this and short marketshare.

@JonathanRay how can I profit if you can lock the prices (and my capital) until manifold ceases to exist well before these resolve, regardless of the actual state of the world?

can you provide a conversion table please.

if you think X you should bet Y

etc for 1% 2%

guaranteed that people will make mistakes otherwise, plus it's needless work

predicts NO

@StrayClimb Guaranteed that people will make mistakes, period. Perhaps even moreso if you give them a conversion table dumbing down stuff 77y in the future.

Edit: alright here’s an easy table, is BTC a productive investment vehicle/asset class worthy of an annualized rate of return (bet YES at fairly low prices) or is it a digital commodity with not much use other than as speculation/gambling (bet NO at any price).

In the prior market, the creator had a bug in their formula which was discovered when I asked for their interpretation of the formula. Generally it can be good to make sure we're all on the same page here. Are you the market creator?

predicts NO

@StrayClimb not the creator just sharing my interpretation: the formula correctly gives 5 times the annualized rate of return of BTCUSD price over the next 77 years. So current market price of 33% implies annual return of 6.6%, and a Jan 1, 2100 BTCUSD price of 16605*(1.066)^77 = $2,277,947.14

predicts NO

@StrayClimb can you point me to the prior formula bug market by the creator? thanks

predicts NO

@StrayClimb thanks! the formula here is the right one (with the -1) from the start

@deagol yeah I just was thinking it might be more useful if it were more understandable. Even geniuses focus on using notation that explains what they mean.

@deagol what does "PROB to X" mean?

predicts NO

@StrayClimb well in the description X is BTC price of this year but I get what you’re asking. When a creator says “resolves PROB to xx” they mean they will resolve by clicking the PROB option in the interface and pick a number xx (for binary markets like this it’s an integer percent between 1 and 99 inclusive).

predicts YES

Here's an even simpler model with only 2 variables, and separate prediction markets to decompose each of the 2 variables.

1. world nominal GDP growth (this is the expected change in value if market share stays the same)

2. market share change

How will you resolve if the BTC protocol is forked to unlimited supply, or redenominated in a 100:1 or 1000:1 "split"? Yes, it's true that the original chain would still exist and there would likely be some people out there maintaining that chain and claiming it's the "real" BTC, but consider the case of Ethereum and Ethereum Classic. If you had made this market about Ethereum before the ETH/ETC fork, would you resolved based on the price of ETC? Or ETH?

How about Segwit? If this market was created before Segwit was implemented in BTC, would you resolve based on the current BTC chain? Keep in mind that the current BTC chain is not valid by the rules of the BTC software pre-segwit (because segwit was added!)

predicts YES

1. in the event of a chain split, whichever chain ends up with more float (market cap that is actually in circulation, i.e. 'circulating supply' on coinmarketcap, i.e. market cap minus closely held premines) is the real bitcoin, and the other chain is a new shitcoin.

2. A split is totally unnecessary because you can just talk in terms of SI prefix units of bitcoin (millibitcoin, microbitcoin). But if they did a split, the market resolution would be adjusted for that split, so that the split had no effect.

None of the specific forks you mentioned will ever win (<1% chance), because the community already evaporatively cooled as forkers and shitcoiners left. But just in case.

So, as long as the annualized returns are below 38% (impossible), NO wins. Easy. The main threat is that the market author dies before this finishes, but that goes for all traders.

predicts NO

@BowTrix Note it’s 5x amplified, so the bet you took is that the annualized returns are below .38/5=7.6% (still unsustainable over 77y imo).

I put up a bunch of limit M100 limit orders at every price from 1% to 40% and now i'll stay away from this market for the rest of the year

predicts NO

If the prob would be less than zero, it resolves NO.

Obvious but worth confirming, if >100% resolves YES

predicts YES

@deagol correct