Topic: What is Bitcoin's fair value? - page 5. (Read 1723 times)

The fair value of bitcoin depends upon the circulated options through the value of price. Whether it can reach the higher or it might be pump or a dump that can people accept. It is the options, people that can get through a lot.

Bitcoin's value is said to be "overvalued", with it's price so high and we still don't know what it might reach in the future, it might pump or dump. With a lot of people using and the increasing demand, Bitcoin will be still in the value where people might say "unfair", but for the people that predicted this will happen, it is pretty fair and predicted.

There's no a fairness  limitation for a cryptocurrency. even in my opinion, current prices have already shown unfairness. but if we seen from the demand and limited stock, didn't rule out bitcoin prices will continue to rise as more users and investors. therefore, with its limited number and increasing demand, so we can't determine the fairness of bitcoin prices.

Also since it is so new and so many mainstream avenues not involved yet we need to factor these in.
Every major addition creates a push on demand whether it is a large retailer of like CME from this week.
Those are incredibly difficult to quantify

NOT REALLY, if the DEMAND is Higher then the PRICE will be Higher, Even if the supply will become lower, without the Demand, the price will never go higher.

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I do not like FAIR VALUE but rather a stable one, we still can't see what will be the peak of Bitcoin, Fair Value will still be an issue and a 'flaw'-as how central bank see Bitcoin's volatile price-, we will have a lot of time waiting for the perfect price of Bitcoin, a lot of new highs and correction will happen before we can achieve a stable movement of price.

It's all based on how much people are willing to pay for the coin and how much people are willing to sell it.

About the Transaction Volume, it's just help to determine whether the price is "legit" or not, if the price has gone up and the transaction's volume remained low, it means that the price has been gone up because of a market manipulation and not because an increase in demand( or decrease in supply).

About the bitcoin hoarding, the more people that hoards bitcoin, the more it increases it's price, because supply will become lower, so price goes higher.

All three of those make sense--I can see how each would contribute to bitcoin's value/price.  But I don't see how one could possibly come up with any kind of formula/analysis method to say how they actually do contribute.  For #1, you at least have some data that you can try to use, but I think #2 and #3 are impossible to calculate.  Even worse, I think they all interact and feed off of each other.  For example, if people see higher transactional demand (#1), they may decide to hold their bitcoin longer (#2).  Or if a country tries to ban bitcoin (#3), that could lead to more transactions (#1) and less investment (#2) as people sell, but then there would be fewer users so the transactions would go down (#1), which would discourage people from buying (#2), except that price has now fallen a lot, so more people see it as a good buy, so investment starts to climb again (#2), and on and on we go....

Even if we do force fit a model to value Bitcoin, it becomes kind of impossible to valuate the parameters associated with it. We have reduced the problem from evaluating the price of Bitcoin to evaluating the associated parameters, but we are no closer to the answer. Maybe we should sit back and just let the market decide.

Yesterday, BlackRock Strategist Richard Turnill said there’s no inherent right or wrong Bitcoin price, no fair value. On multiple occasions Bitcoin has been criticized for lacking fair value. I haven't come across any stats or traditional methods that can be used to calculate Bitcoin's fair value, but does that mean Bitcoin doesn't have a fair value?

I found an article on Investopedia about how to measure Bitcoin's fair market value. I don't think this framework is statistically accurate, but theoretically plausible. Almost all predictions regarding Bitcoin price are speculative in nature, but backed by a solid belief that Bitcoin's scarcity and its underlying technology is potentially revolutionary which would have an impact on different sectors. Bitcoin has value because people think it has value, right. It means Bitcoins have positive expected value.

The total market value of a currency, its "monetary base", is driven by two things, transactional demand and reservation demand.

1. Transactional demand - Daily transaction volume.

2. Reservation demand - Hoarding/long-term investment.

It is expected that with more merchant adoption the transactional demand would increase.

3. Hurdle rate - Rate of return required to compensate for the risks associated with holding Bitcoin. Yeah, technopolitical hurdles or backlash from a country can have an impact on Bitcoin's expected value.

Theoretically, the fair-market value of one BTC should simply be the dividend of its predicted future monetary base (total market cap) and BTC in circulation, discounted by a "hurdle rate."


http://www.investopedia.com/articles/investing/050914/easy-way-measure-bitcoins-fair-market-value-doityourself-guide.asp?