You leave out many other sources of value in bitcoin, such as trillions in dark savings previously hidden in swiss accounts, which no longer offer secrecy, or funds which are totally averse to counterparty risk (much of global long-term wealth), as well as the likelihood, nay mathematical certainly of sovereign defaults in the near future causing safety flight into bitcoin.
More to the point, I think any valuation which does not use the quantity theory of money is missing 90% of the story.
Thanks for trying though.
Topic: Revenge of the nerds - Why one Bitcoin will be valued 40.000+ USD (Read 2775 times)
January 08, 2014, 12:47:36 PM
haha 
January 08, 2014, 12:32:14 PM
Interesting, hope you're right 
January 08, 2014, 11:28:56 AM
haha, nice summary
January 08, 2014, 04:09:51 AM
Hi all,
It is hard to grasp the exact basis of the real economical value of bitcoin and the bitcoin currency.
This author has an interesting statement with some good arguments.
Bitcoin is the Linux of payments. And its killer apps will be for US dollars
http://www.valuewalk.com/2014/01/bitcoin-is-the-linux-of-payments/
Basically, he expects that the bitcoin methodology/protocol/technology will be a succesfull transparant layer without the necessity for the bitcoin currency to be fully explicit available to consumers. If this is true, then some BIG questions (for investors) are:
A. Scarcity: Does scarcity of bitcoin matter? (this layer can be used with transactions of 10 BTC each, but also of 0.00001 BTC each?)
B. Fiat rate: can the layer be succesfull with ANY fiat rate of the BTC currency? Does it matter if BTC has value of 1 USD or 1.000 USD ?
C. Invest: If A and B do not matter, then 1 BTC could also be valued at 1 USD?
The above may be true, however, what is not includes in this analysis, are the following 3 arguments/factors:
*** Revenge of the nerds - Why one Bitcoin will be valued 40.000+ USD ***
1. Revenge of the nerds.
A. Imagine all the hours spent on open source projects / peer to peer (distributed stuff).
B. Image all the effort to commercialize part of these efforts.
C. Now imagine how economical succesfull companies these efforts have been (napster, kazaa, bittorrent, wikipedia, linux, mysql, android, apache, etc)
D. Now image all the money consumers have paid for this.
Now image if all effort at A could be directly funded by D.
This is what I call: "Revenge of the nerds", cut out the middlemen, etc.
Of course, Bill Gates and Steve Jobs immediately got paid for their efforts and were able to go from D to A instantly.
But for the other 99,9999% of all nerds, they are not rewarded for the creativity and value they bring to society.
With Bitcoin we close the loop from D to A :-) !
=> this will create an explosion of commercially viable innovations with a large demand for the bitcoin currency!
2. Significant investment has been done and will be done by entities with deep pockets:
- Bitcoin Price Could Reach $98,500, Say Wall Street Analysts / http://www.coindesk.com/bitcoin-price-reach-98500-say-wall-street-analysts/
- Wall Street Will Put 'Hundreds of Millions' Into Bitcoin / http://www.entrepreneur.com/article/230346
3. This is the best quantified argument:
Bitcoin can compete with 3 current products / services with a certain value: 1. foreign exchange, 2. protect inflation, 3. asset/gold
- See: http://www.streetinsider.com/Analyst+Comments/Bitcoin+Could+Be+Worth+10-100x+Current+Price+-+Analyst/8936836.html
- See: http://www.scribd.com/doc/188644617/Bitcoin-Intrinsic-Value-Wedbush-Report-December-2013
If Bitcoin in 10 years will capture 1% of this value, the value of 1 BTC is projected at $1,041.
If Bitcoin in 5 years will capture 5% of this value, the value of 1 BTC is projected at $10,407.
( My expectation: for this factor, we will end up somewhere in the middle of the chart, that is: between $5k and $40k per BTC )
CONCLUSION:
If you combine factors 1, 2 and 3, my expectation is that we will reach a real economic value of at least $40k per BTC in 5-10 years.
We will predict this value within 2-3 years from now and hype it, companies will react to it and include it in yearly plans, build services, products with it, etc.
=> So in 2015 Q2/Q3 we will reach $40k per BTC
It is hard to grasp the exact basis of the real economical value of bitcoin and the bitcoin currency.
This author has an interesting statement with some good arguments.
Bitcoin is the Linux of payments. And its killer apps will be for US dollars
http://www.valuewalk.com/2014/01/bitcoin-is-the-linux-of-payments/
Basically, he expects that the bitcoin methodology/protocol/technology will be a succesfull transparant layer without the necessity for the bitcoin currency to be fully explicit available to consumers. If this is true, then some BIG questions (for investors) are:
A. Scarcity: Does scarcity of bitcoin matter? (this layer can be used with transactions of 10 BTC each, but also of 0.00001 BTC each?)
B. Fiat rate: can the layer be succesfull with ANY fiat rate of the BTC currency? Does it matter if BTC has value of 1 USD or 1.000 USD ?
C. Invest: If A and B do not matter, then 1 BTC could also be valued at 1 USD?
The above may be true, however, what is not includes in this analysis, are the following 3 arguments/factors:
*** Revenge of the nerds - Why one Bitcoin will be valued 40.000+ USD ***
1. Revenge of the nerds.
A. Imagine all the hours spent on open source projects / peer to peer (distributed stuff).
B. Image all the effort to commercialize part of these efforts.
C. Now imagine how economical succesfull companies these efforts have been (napster, kazaa, bittorrent, wikipedia, linux, mysql, android, apache, etc)
D. Now image all the money consumers have paid for this.
Now image if all effort at A could be directly funded by D.
This is what I call: "Revenge of the nerds", cut out the middlemen, etc.
Of course, Bill Gates and Steve Jobs immediately got paid for their efforts and were able to go from D to A instantly.
But for the other 99,9999% of all nerds, they are not rewarded for the creativity and value they bring to society.
With Bitcoin we close the loop from D to A :-) !
=> this will create an explosion of commercially viable innovations with a large demand for the bitcoin currency!
2. Significant investment has been done and will be done by entities with deep pockets:
- Bitcoin Price Could Reach $98,500, Say Wall Street Analysts / http://www.coindesk.com/bitcoin-price-reach-98500-say-wall-street-analysts/
- Wall Street Will Put 'Hundreds of Millions' Into Bitcoin / http://www.entrepreneur.com/article/230346
3. This is the best quantified argument:
Bitcoin can compete with 3 current products / services with a certain value: 1. foreign exchange, 2. protect inflation, 3. asset/gold
- See: http://www.streetinsider.com/Analyst+Comments/Bitcoin+Could+Be+Worth+10-100x+Current+Price+-+Analyst/8936836.html
- See: http://www.scribd.com/doc/188644617/Bitcoin-Intrinsic-Value-Wedbush-Report-December-2013
If Bitcoin in 10 years will capture 1% of this value, the value of 1 BTC is projected at $1,041.
If Bitcoin in 5 years will capture 5% of this value, the value of 1 BTC is projected at $10,407.
( My expectation: for this factor, we will end up somewhere in the middle of the chart, that is: between $5k and $40k per BTC )
CONCLUSION:
If you combine factors 1, 2 and 3, my expectation is that we will reach a real economic value of at least $40k per BTC in 5-10 years.
We will predict this value within 2-3 years from now and hype it, companies will react to it and include it in yearly plans, build services, products with it, etc.
=> So in 2015 Q2/Q3 we will reach $40k per BTC
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