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Bitcoin Vlauation
 

Bitcoin Vlauation

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An Attempt to Get a Grip on the Fundamentals of Bitcoin Valuation

An Attempt to Get a Grip on the Fundamentals of Bitcoin Valuation

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    Bitcoin Vlauation Bitcoin Vlauation Presentation Transcript

    • Bitcoin Valuation An Attempt to Get a Grip on the Fundamentals Frankfurt, Jan 9, 2014
    • What is Value? Some Terms: Value, Price, Cost, Fair Value, Inherent Value
    • Why Buy? Speculation Attempt to profit from fluctuation, not underlying financial attributes. Trading wikipedia: day trading is speculation. Investing Long-term, based on financial attributes. Value Investing Very long-term, based on value.
    • Value vs. Price Price: Current market price, driven by supply and demand Value: Expected proceeds from sale (whole / sum of parts), cost of making or buying, expected returns (e. g. dividends) Expected returns: DCF is the generally accepted method
    • Discounted Cash Flow
    • The value of Bitcoin is only based on the expectation that it might become a generally accepted means of payment some day. might —> Discount rate generally —> Money supply being replaced some day —> time factor in DCF
    • When will Bitcoin be ubiquitous? 1. Other innovations: books, electricity, telephone, Internet, mobile phones, … 2. Often longer than expected (UMTS, ASP, …) 3. With DCF, time is a huge factor. 4. When will it happen for Bitcoin?
    • Worldwide Money Supply $ 50 trillion (World bank, IMF, etc.) Ubiquity (20 years) means: 100 % replacement. DCF: One “return” of $ 50 trillion in 2023 to be discounted for present value
    • Discount Rate 1. Covers risk 2. Safe (long-term): 6 % 3. VC, high risk bonds: approx. 25 % 4. Market acceptance is the main risk for new ventures (Oliver Samwer)
    • The Big Picture Bitcoin bears no dividends Market price and “production” cost alone no measure for value Money supply might be replaced Reasonable assumptions for parameters: time, future value, risk.
    • Present Value: $ 28,823.00 What a contrast to the current market price!
    • Influencing Factors:
    • www.bitcoin-valuation.org Check that site for more details and discussions.