The value of Bitcoin to me is the motivation which it created to the people to be confident and it stands for nothing to worry about future it is secure and grow with bitcoin.
And also it created the Job opportunity to lot of people make more value about bitcoin.
Topic: How do you value Bitcoin ? - page 6. (Read 5351 times)
This question has befuddled investors and analysts for years when it comes to Bitcoin. While the methods for valuing digital currencies are rather straightforward, the assumptions that underlie competing valuations vary widely. Don't rely on Wall Street analysts to think for you. Instead, consider this framework and come up with your own fair market value estimates for bitcoin.
Bitcoin has value because people think it has value.
Your first question might be to ask whether Bitcoin has any value whatsoever. After all, many bitcoin skeptics have knocked the virtual currency for its lack of "intrinsic value", including world-class investors like Berkshire Hathaway Inc.'s (NYSE:BRK.B
BRK.B
Berkshire Hathaway Inc
189.94
+0.29%
) Warren Buffett (who called Bitcoin a "mirage") and J.P. Morgan Chase & Co.'s (NYSE:JPM
JPM
JPMorgan Chase & Co
100.49
+1.16%
) Jamie Dimon, and venerated economists like former Federal Reserve Chairman Alan Greenspan and Nobel laureate Paul Krugman ("Bitcoin is evil"). Despite this army of skeptics and a myriad of bad news for the industry so far in 2014, Bitcoin still continues to trade for multiples more than it did one year ago. The Winklevoss twins clearly disagree. See Investopedia's interview with Tyler Winklevoss.)
How can this be?
Quite simply, Bitcoins have value because a small, but growing group of people believe that the underlying Bitcoin technology has value. In the future, the Bitcoin technology may be used for a wide array of financial services applications from payments, to contracts, to distributed exchanges. Since Bitcoins are the scarce currency units which are required to power these applications, they are valuable. Unlike fiat currencies whose money supplies may be inflated by central banks, there are a finite number of Bitcoins that will ever be released into circulation, making the currency a superior store of value versus other international reserves. Although Bitcoin is not legal tender backed by a particular government, the currency's value is supported by the individuals and merchants who voluntarily accept Bitcoin for their goods and services.
If we can agree that Bitcoins have a positive expected value (because at least some people believe the underlying technology has the potential to be revolutionary), we can start to make our own estimates about its current fair value.
Bitcoin's value depends on "transactional" and "reservation" demand.
It is important to note that the total market value of a currency, its "monetary base", is driven by two things, transactional demand and reservation demand. We can think of Bitcoin's average daily "float" as the analog of our economy's M1 money supply - the currency needed to satisfy transactional demand for goods and services. Similarly, we can think of the Bitcoins which are "hoarded" by speculative investors as the currency needed to satisfy reservation demand for secure long-term savings. Combined, Bitcoin's float and reserves comprise its total monetary base, which is similar to our economy's M2 money supply (M1+money in savings deposits, money markets, etc).
So the monetary base relies on both consumers and investors who believe that the Bitcoin technology will power a certain volume of economic exchange today and in the future. Speculative investors in particular have shown an extraordinary willingness to buy BTC, leading to a much larger monetary base than would otherwise be expected for a currency with bitcoin's transactional volume.
And that's ok! As long as the transactional demand for Bitcoin continues to grow exponentially in the coming years, the balance between Bitcoin's float and its total monetary base will likely reflect that of other global currencies. (To learn how Bitcoin enters into circulation, read, "What is Bitcoin Mining?")
Bitcoin's potential monetary base is one key input we need for our valuation.
Since there is no real difference between a BTC held for commerce and a BTC held for investment, it should be clear that we really only care about Bitcoin's total monetary base when it comes to valuation.
Theoretically, the fair-market value of one BTC should simply be the dividend of its predicted future monetary base and BTC in circulation, discounted by a "hurdle rate" an investor would require in order to invest in the speculative currency.
So what are some reasonable estimates for bitcoin's future potential monetary base? Bitcoins are worth about $5.5 billion today, but according to investor and entrepreneur Barry Silbert, they will only begin to thrive as transactional currency once the monetary base grows to $50-100 billion.
More dramatically, analysts at Wedbush Securities recently approximated that the potential aggregate demand for bitcoin could be over $13 trillion, including global foreign currency reserves, money supplies of high-inflation countries, and the market value of all gold held as financial assets.
Let's assume that in our optimistic case for Bitcoin, the monetary base grows to $1 trillion dollars within ten years, which would represent a fraction of the U.S. dollar's total money supply and about half the value of the global market for gold. We could then divide this monetary base by the total number of bitcoins expected in circulation by 2024 (thanks to the known mining schedule). With 21 million BTC in circulation, we could see a $50,000 bitcoin with a $1 trillion monetary base!
If we're comfortable with that assumption, all we need to do is boil down our $50,000 future bitcoin into present dollars.
Bitcoin's "hurdle rate" is the other key input we need for our valuation.
Here's where things get tricky: what is an appropriate discount rate to use for bitcoin, a speculative currency that will never generate cash flows?
We need to make certain assumptions about the rate of return required to compensate for the risks associated with holding Bitcoin. Let's assume that we normally require a 12% return on equity for investments in certain growth stocks, but we believe Bitcoin carries five times the usual risk. We would need to apply a 60% discount rate to our future value estimate for Bitcoin. Due to compounding, that would make our $50,000 BTC in 2024 worth approximately $455 today -- not too far off from current price levels.
For further illustration, it might also help to consider how a venture capitalist could determine the net present value of an investment that he never expects to generate positive cash flows during his firm's investment period (e.g. a high-growth tech company that reinvests 100% of its earnings before it ultimate sells to Google). In the absence of earnings, that VC might look at revenue multiples to determine the company's terminal value, and then discount that figure by a rate of 40 to 60%.
With Bitcoin, the thinking is the same. Except Bitcoin's terminal value is actually its future monetary base.
Caveat emptor: Your assumptions make all the difference.
Under the assumptions we used above, Bitcoin may seem as if it is close to fairly priced today.
But what if we think the monetary base will reach $2 trillion in ten years and investors prove willing to settle for annual returns of 30%? Suddenly BTC's current fair market value skyrockets to $7,250! Conversely, if we think the monetary base will reach just $500 billion in ten years and investors only touch Bitcoin when they expect an 80% annual return, the current fair value would plummet to $70.
The Bottom Line
If you're a risk-tolerant Bitcoin believer, today's prices are probably enticing. If you're a more conservative skeptic, you will likely steer clear of an asset class that looks as if it is in a speculative bubble. But either way, you only need to make two basic assumptions to come up with your own fair market value for Bitcoin: its future monetary base, and your risk-adjusted rate of return.
Bitcoin has value because people think it has value.
Your first question might be to ask whether Bitcoin has any value whatsoever. After all, many bitcoin skeptics have knocked the virtual currency for its lack of "intrinsic value", including world-class investors like Berkshire Hathaway Inc.'s (NYSE:BRK.B
BRK.B
Berkshire Hathaway Inc
189.94
+0.29%
) Warren Buffett (who called Bitcoin a "mirage") and J.P. Morgan Chase & Co.'s (NYSE:JPM
JPM
JPMorgan Chase & Co
100.49
+1.16%
) Jamie Dimon, and venerated economists like former Federal Reserve Chairman Alan Greenspan and Nobel laureate Paul Krugman ("Bitcoin is evil"). Despite this army of skeptics and a myriad of bad news for the industry so far in 2014, Bitcoin still continues to trade for multiples more than it did one year ago. The Winklevoss twins clearly disagree. See Investopedia's interview with Tyler Winklevoss.)
How can this be?
Quite simply, Bitcoins have value because a small, but growing group of people believe that the underlying Bitcoin technology has value. In the future, the Bitcoin technology may be used for a wide array of financial services applications from payments, to contracts, to distributed exchanges. Since Bitcoins are the scarce currency units which are required to power these applications, they are valuable. Unlike fiat currencies whose money supplies may be inflated by central banks, there are a finite number of Bitcoins that will ever be released into circulation, making the currency a superior store of value versus other international reserves. Although Bitcoin is not legal tender backed by a particular government, the currency's value is supported by the individuals and merchants who voluntarily accept Bitcoin for their goods and services.
If we can agree that Bitcoins have a positive expected value (because at least some people believe the underlying technology has the potential to be revolutionary), we can start to make our own estimates about its current fair value.
Bitcoin's value depends on "transactional" and "reservation" demand.
It is important to note that the total market value of a currency, its "monetary base", is driven by two things, transactional demand and reservation demand. We can think of Bitcoin's average daily "float" as the analog of our economy's M1 money supply - the currency needed to satisfy transactional demand for goods and services. Similarly, we can think of the Bitcoins which are "hoarded" by speculative investors as the currency needed to satisfy reservation demand for secure long-term savings. Combined, Bitcoin's float and reserves comprise its total monetary base, which is similar to our economy's M2 money supply (M1+money in savings deposits, money markets, etc).
So the monetary base relies on both consumers and investors who believe that the Bitcoin technology will power a certain volume of economic exchange today and in the future. Speculative investors in particular have shown an extraordinary willingness to buy BTC, leading to a much larger monetary base than would otherwise be expected for a currency with bitcoin's transactional volume.
And that's ok! As long as the transactional demand for Bitcoin continues to grow exponentially in the coming years, the balance between Bitcoin's float and its total monetary base will likely reflect that of other global currencies. (To learn how Bitcoin enters into circulation, read, "What is Bitcoin Mining?")
Bitcoin's potential monetary base is one key input we need for our valuation.
Since there is no real difference between a BTC held for commerce and a BTC held for investment, it should be clear that we really only care about Bitcoin's total monetary base when it comes to valuation.
Theoretically, the fair-market value of one BTC should simply be the dividend of its predicted future monetary base and BTC in circulation, discounted by a "hurdle rate" an investor would require in order to invest in the speculative currency.
So what are some reasonable estimates for bitcoin's future potential monetary base? Bitcoins are worth about $5.5 billion today, but according to investor and entrepreneur Barry Silbert, they will only begin to thrive as transactional currency once the monetary base grows to $50-100 billion.
More dramatically, analysts at Wedbush Securities recently approximated that the potential aggregate demand for bitcoin could be over $13 trillion, including global foreign currency reserves, money supplies of high-inflation countries, and the market value of all gold held as financial assets.
Let's assume that in our optimistic case for Bitcoin, the monetary base grows to $1 trillion dollars within ten years, which would represent a fraction of the U.S. dollar's total money supply and about half the value of the global market for gold. We could then divide this monetary base by the total number of bitcoins expected in circulation by 2024 (thanks to the known mining schedule). With 21 million BTC in circulation, we could see a $50,000 bitcoin with a $1 trillion monetary base!
If we're comfortable with that assumption, all we need to do is boil down our $50,000 future bitcoin into present dollars.
Bitcoin's "hurdle rate" is the other key input we need for our valuation.
Here's where things get tricky: what is an appropriate discount rate to use for bitcoin, a speculative currency that will never generate cash flows?
We need to make certain assumptions about the rate of return required to compensate for the risks associated with holding Bitcoin. Let's assume that we normally require a 12% return on equity for investments in certain growth stocks, but we believe Bitcoin carries five times the usual risk. We would need to apply a 60% discount rate to our future value estimate for Bitcoin. Due to compounding, that would make our $50,000 BTC in 2024 worth approximately $455 today -- not too far off from current price levels.
For further illustration, it might also help to consider how a venture capitalist could determine the net present value of an investment that he never expects to generate positive cash flows during his firm's investment period (e.g. a high-growth tech company that reinvests 100% of its earnings before it ultimate sells to Google). In the absence of earnings, that VC might look at revenue multiples to determine the company's terminal value, and then discount that figure by a rate of 40 to 60%.
With Bitcoin, the thinking is the same. Except Bitcoin's terminal value is actually its future monetary base.
Caveat emptor: Your assumptions make all the difference.
Under the assumptions we used above, Bitcoin may seem as if it is close to fairly priced today.
But what if we think the monetary base will reach $2 trillion in ten years and investors prove willing to settle for annual returns of 30%? Suddenly BTC's current fair market value skyrockets to $7,250! Conversely, if we think the monetary base will reach just $500 billion in ten years and investors only touch Bitcoin when they expect an 80% annual return, the current fair value would plummet to $70.
The Bottom Line
If you're a risk-tolerant Bitcoin believer, today's prices are probably enticing. If you're a more conservative skeptic, you will likely steer clear of an asset class that looks as if it is in a speculative bubble. But either way, you only need to make two basic assumptions to come up with your own fair market value for Bitcoin: its future monetary base, and your risk-adjusted rate of return.
Bitcoin is very valuable for me. It helps me to earn some money so that I can buy my basic needs and things that I like. As a student, it gives me more budget to buy sone of my projects that I need to do in my school/class to get higher grades. At the same time, I can buy things that I really want.
The way I appreciate Bitcoin is by obeying the rules and limitations set by bitcoin.
and we can also appreciate bitcoin by donating some of our btc, telling people what bitcoin it is and inviting them to join bitcoin.
I value bitcoin by holding it and waiting for the price to go higher than it usually does, then trading it or converting it to my country's currency. I often use it as payment online.
I value bitcoin like the only money i have on my wallet, I have to hold this so tight so i can secure my future. Bitcoin offers a great new opportunity to make more money. Value your bitcoin for your better future spend it wise, and hold it as long as you could because our future is bright here.
Bitcoin deserves to be appreciated, with the bitcoin that can help us all have extra income and certainly can help the family economy, I think all we have to do is introduce bitcoin with our close friends and even our own family. So that people can join the investment with bitcoin hopefully bitcoin will be known by many people, and more and more people who like.
On my opinion I value bitcoin as an investment for the future needs that changes our lifestyles and helps our needs in life. As a regular employee I value bitcoin as my part time job that fits my daily schedule in my work.
well for me i value bitcoin as what i have value my work today i really need to value bitcoin because it really has a great big incredible help in my status right now maybe everyone didnt really love bitcoin but for me i love bitcoin because bitcoin really a big help in my part so then supporting bitcoin is all i have to do and maybe incouraging everyone to use btc .because it really give you the huge extra income that is verry useful now a days specialy to those person whose salary is not enoughf to provide the things popularly needed in our daily life of living.
On my opinion I value bitcoin as an investment for the future needs that changes our lifestyles and helps our needs in life. As a regular employee I value bitcoin as my part time job that fits my daily schedule in my work.
I think that the most common way to value Bitcoin is like valuing other currency by another currency.
Seeing to it that we all know all the factors that causes or affects supply and demand equilibrium.
Also the time we hold bitcoins. Time is very important factor.
Seeing to it that we all know all the factors that causes or affects supply and demand equilibrium.
Also the time we hold bitcoins. Time is very important factor.
I value bitcoins of course because it is the pme who keeps my wallet wealthy. As a student, I dont have a source of income because I cannot find a job that will pay me a big money. Thanks to bitcoins it provides me a huge money without even sacrificing mu studies I am able to do it simultaneously. And it really helps me a lot especially on my daily expenses, I do not have to rely on my parents all the time because I can know have my own money
I value bitcoin most. Bitcoin become a daily purpose of my life from last two year. It helps me financial independent in many conditions. I am using bitcoin for my daily requirements. Bitcoin help me to doing something instead of doing nothing. So i value bitcoin as my part time job. Nowdays the value of bitcoin is more than gold or diamond,So it gives me a hope to invest some money in bitcoin. You can earn bitcoin very easily by doing post on different topics. Bitcoin become my financial backbone and i trust it.
I appreciate bitcoin by purchasing bitcoin results for an indispensable need. and I also opened a business.
I really appreciate bitcoin because bitcoin is work and can meet my needs
I really appreciate bitcoin because bitcoin is work and can meet my needs
because bitcoin help make money for many circles, bitcoin can also be done anywhere without having to leave the work of the principal, and bitcoin has also help to reduce the unemployment in each state.
My appreciation for Bitcoins is like a gold. So every piece of it is like gold for me. Do you also appreciate the Gold? Earrings, rings, and Jewelry jewelery made of gold. So if you say that bitcoins are higher the value should be the same as your treatment as bitcoins. Because if you can not do it. You just fool yourself. that's just an opinion
the value of bitcoin are more than to gold or diamond, gold and the diamonds are the most highest price value in the market then now have new valuable than gold or diamonds, the bitcoin first digital cryptocurrency have a high price value and easy to use for any transaction and easy to earn bitcoin if you have a capital to setting the mining or invest in trading and most important bitcoin help to the community to give opportunity to the unemployed peopele.
For me I value my bitcoin, as my part time job. Bitcoin are supporting me, in my financial problem, my daily bills and help me to earn money that I can use to pay my bills in school. Being a student that need an extra income to help their parents and her self, bitcoin is a great tool to use. Because it’s hard to find a part time job that really fit in your schedule that’s why I really value bitcoin. 
bitcoin is so hard to find and rare because of that you need to think wisely if you get bitcoin.bitcoin is useful to us it can change everything in your life and also your future.you need to handle it with care.
Also, when you're planning to spend your bitcoin, you should spend it wisely. Spending it in a way that you can really say that it is worthy to spend your bitcoin for that stuff. It's really hard to have at least 1btc, so we should only spend our bitcoin in a useful things.
I value bitcoin like a fiat money for it serves as my future investment which could help me to build what I want to have in the future and it is also give me hope as an asset to spend for my family needs. By now I spend my time on it, thinking ways to make it grows. I treasure it like a gold for I know how to spend it wisely. This is once happened so I never waste the chance of getting a better future.
Well besides the demand and supply rule of economy, I value bitcoins based on the acceptance from the government and the acceptance from the local population
If bitcoins are legal it directly is linked to increase in price and with the advent of new technology more and more people are now getting interested in it.So I think attractive technology and new features like one we are going to get with segwit2x i.e. faster and more efficient transaction are linked with increase in value of bitcoins.
If people generate more interest then it will elevate the demand and supply rule, and if government back up Bitcoins then the crowd will be assured and won't hesitate to invest in bitcoins.
If bitcoins are legal it directly is linked to increase in price and with the advent of new technology more and more people are now getting interested in it.So I think attractive technology and new features like one we are going to get with segwit2x i.e. faster and more efficient transaction are linked with increase in value of bitcoins.
If people generate more interest then it will elevate the demand and supply rule, and if government back up Bitcoins then the crowd will be assured and won't hesitate to invest in bitcoins.
I think that the most common way to value Bitcoin is like valuing other currency by another currency.
Seeing to it that we all know all the factors that causes or affects supply and demand equilibrium.
Also the time we hold bitcoins. Time is very important factor.
Seeing to it that we all know all the factors that causes or affects supply and demand equilibrium.
Also the time we hold bitcoins. Time is very important factor.
bitcoin is one kind of currency.I think that bitcoin value is currency value same high demand. the man do work for money so money value very important. now man do work and want bitcoin, and day by day increase bitcoin demand.
bitcoin is so hard to find and rare because of that you need to think wisely if you get bitcoin.bitcoin is useful to us it can change everything in your life and also your future.you need to handle it with care.
Also, when you're planning to spend your bitcoin, you should spend it wisely. Spending it in a way that you can really say that it is worthy to spend your bitcoin for that stuff. It's really hard to have at least 1btc, so we should only spend our bitcoin in a useful things.
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