EXPONENTIAL ISN'T QUITE RIGHT

# The nutty math that really shows how quickly bitcoin has grown

By Dan Kopf

Bitcoin is eating the world. The value of the cryptocurrency, which was introduced in 2009, has grown at an unprecedented pace.

As recently as May 2017, one bitcoin was worth less than \$2,000, and the value of all bitcoin in circulation was about \$40 billion. As of the morning of Dec. 16 2017, one unit of the currency was worth nearly \$19,400, which gives it a combined value of \$300 billion. The number of bitcoin is also increasing. Every 10 minutes, bitcoin mining machines solve math problems that create 12.5 new bitcoin. There are about 16.7 million bitcoin in circulation today, about 700,000 more than in December 2016.

People often describe the growth of the value of bitcoin as “exponential,” but that isn’t quite right. When we tried to come up with a formula that fit the growth of the value of all bitcoin in circulation (or its “market capitalization”) since May, we found that it was more like a fourth degree polynomial. (The exact formula: \$ billion = 7E-07x^4 – 0.0003x^3 + 0.0328x^2 – 1.07x + 39)

At this ridiculous speed of growth, the value of bitcoin would surpass the value of the stocks listed on the London Stock Exchange in June 2018, the value of stocks on the New York Stock Exchange in October 2018, and the combined value of all the world’s stocks in April 2019.

Of course, none of these hypotheticals are likely to happen. A slowdown is almost inevitable. Nobel prize winning economist Robert Shiller suggests the rise of bitcoin shows all the signs of a bubble. But for the time being, we are riding quite the wave.

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