Financial Modelling Of Bitcoin

A
DISSERTATION REPORT
ON
“FINANCIAL MODELLING OF BITCOIN”
Submitted By
DEB PRAKASH GANGULY
SRU19M0146
20190815
Under The Guidence of
DR. RAM PRAVESH
In partial fulfilment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
of
Shri Rawatpura Sarkar University, Raipur (C.G.)
Session: 2019-2021
MBA - IV Semester
HOD: DR. RAM PRAVESH
Submission Date:25.September.2021
DEPARTMENT OF MANAGEMENT
Shri Rawatpura Sarkar University
Near Shadani Road, Dhaneli, Raipur(C.G.)

DECLARATION
I, The undersigned, hereby declare that Project dissertation entitled “FINANCIAL
MODELLING OF BITCOIN on written and submitted by DEB PRAKASH GANGULY student
of M.B.A. IV semester in Department of Management, Shri Rawatpura Sarkar University,
Raipur(C.G.),in partial fulfillment of the requirement for the award of degree of Master of
Business Administration under the guidance of prof. DR. RAM PRAVESH is my original work
and the conclusions drawn there in are based on the material collected by myself.
DATE:
Signature:
Name of Student: DEB PRAKASH GANGULY

DEPARTMENT OF COMMERCE AND MANAGEMENT
CERTIFICATE
This is to certify that the report titled “FINANCIAL MODELLING OF BITCOIN” is being
submitted By Roll No: 20190815 in the partial fulfilment of the requirements for the award of
Degree of Master of Business Administration of “SHRI RAWATPURA SARKAR
UNIVERSITY is a bonafied record of work done by me Name: DEB PRAKASH GANGULY of
Department of Commerce and Management of Shri Rawatpura Sarkar University.
Name of Guide: DR RAM PRAVESH Name: DEB PRAKASH GANGULY
Designation: HOD Dean: DR.RAM PRAVESH

ACKNOWLEDGEMENT
First and foremost, I would like to thank my guide DR.RAM PRAVESH, for providing me with
an opportunity to work under him through the medium of this research project. He has been
instrumental in my being able to complete this project to the best of my capabilities.
I would also take this opportunity to express my gratitude and thank all other individuals who
have been kind enough to spare their precious time in sharing insights with me, which has
facilitated in making this dissertation a more fruitful outcome.
A special mention to acknowledge the assistance provided by some of our esteemed faculty
members, my friends, family and industry professionals, for always being available to attend to
all my doubts, inhibitions and queries.
A word of thanks also to the Professors, for their perennial support in making available all
possible facilities, in turn aiding my research for this dissertation.
Finally, I wish to thank all my friends at RPS for their constant support and motivation, which
has contributed in making this dissertation a better effort.
Name:DEB PRAKASH GANGULY
MBA(FINANCE AND IT),
Roll No:20190815
2019-21

Sl No. Topics Page No
1 INTRODUCTION 1
1.1 BACKGROUND OF STUDY. 2
1.2 NEED AND SIGNIFICANCE OF THE STUDY. 3
1.3 STATEMENT OF PROBLEM. 3
1.4 OBJECTIVE OF THE STUDY 4
1.5 SCOPE OF STUDY 4
1.6 .LIMITATION OF STUDY 5
2 .LITERATURE REVIEW. 6
3.1 THEORITICAL FRAMEWORK 10
3.2 SECURITY OF BITCOIN 18
3.3 COMPARISION WITH OTHER CURRENCIES 19
4.1 RESEARCH METHODOLOGY. 22
4.2 RESEARCH OBJECTIVE 28
4.3 SOURCES OF DATA. 29
4.4 POPULATION. 29
4.5 SAMPLE DESIGN 30
4.6 METHOD OF DATA COLLECTION 30
5 DATA ANALYSIS 32
5.1 TABLE NO.01 32
5.2 GRAPH NO.02 34
5.3 GRAPH NO.03 34
6 REFERENCE. 37
7 CONCLUSION 39

EXECUTIVE SUMMARY
A study was conducted based on financial modeling of Bitcoin. It takes into 3 financial variables
of from live market.
The study has been prepared using 8 years‟ of data to calculating the intrinsic value of Bit-
coin.We use a prediction model on Metcalfe’s Law and Gompertz Sigmoid Law but it seems to
be based on the iteration of probability.
Bitcoin is a digital currency which is created to offers the promise of lower transaction fees than
traditional online payment mechanisms and, unlike government-issued currencies, it is operated
by a decentralized authority.
This helps to find out exact price of bit coin and seems to find out the variable or any instances
which probably have a higher correlation with the expected price. Since it’s intangible we don’t
have any financial report or any asset through which we can calculate intrinsic value. Therefore,
it’s quite difficult to compare intrinsic value and real market price.
It is my pleasure and privilege to thank to DR. RAM PRAVESH for him valuable contributions
without which it would not have been possible to prepare this report.

1
CHAPTER -1
1.0 INTRODUCTION.
1.1 BACKGROUND OF STUDY.
1.2.NEED AND SIGNIFICANCE OF THE STUDY.
1.3.STATEMENT OF PROBLEM.
1.4.OBJECTIVE OF THE STUDY.
1.5. SCOPE OF STUDY.
1.6.LIMITATION OF STUDY.

2
INTRODUCTION.
1.1.BACKGROUND OF STUDY.
Bitcoin is earliest and decentralized cryptocurrency everyone know it very well.Bitcoin gained
very fast and large following in world wide since its established in the year 2008.till now it’s a
big secerate that who is the founder of the Bitcoin. This idea is introduced by Satoshi
Nakamoto ,follows the ideas set out .The mysterious thing is that till now the identity is hidden
of the person who has created the technology. In Bitcoin the transaction fees is lower which
offered, then the mechanisms of transnational online payment and, unlike government-issued
currencies, and the operation is done by a decentralized authority.Bitcoin is the Technology
which is firstly introduced towards in the decentralized way of digital currency that allows end to
end transfers and transactions without any intermediaries such as banks, governments, agents or
brokers, using the underlying technology of block-chain. Any person all around the world or
globally on the network can easily do the transaction by transfer of bitcoins to someone else on
the network regardless of geographic location; you just only need to just open an account on the
Bitcoin network and have some bitcoins in it as your wallet, and then you can transfer those
bitcoins.
Ways to get bitcoins in your account:
There are two ways,you can purchase them online or mine them.You can be use bitcoin for
online purchases and also can be used as an investment instrument. Primarily it is used to buy
both the goods and services for exchange.
Cryptocurrency include Bitcoin in it , because Bitcoin is a type of cryptocurrency. Bitcoin
doesn't work physically(virtual currency or a digital currency is a type of money that is
completely virtual), only balances which are kept on a public ledger that everyone has
transparent access to. With the help of massive amount of computing power all the bitcoin
transactions are verified. Bitcoin is independent from all government banks and institution not
issued or backed , nor is an individual bitcoin valuable as a commodity.For not being as a legal
tender in mostly in all whole world or in globally terms , bitcoin is very popular and has tickled
the launch of number of other cryptocurrencies, collectively referred to as bitcoins.The
abbreviation of bitcoin is spell as "BTC."It’s like an online or digital version of cash. It can used
by buying it or exchange of products and services, but not in many shapes accept Bitcoin yet and
some countries have banned it altogether.
Some companies are beginning to purchase into its growing influence.
In the year 2020 in the month of October with the help of example you will understand it
properly that, the online payment service PayPal announced that it would be allowing its
customers to buy and sell the Bitcoin.The physical Bitcoins which is shown in photos are a
novelty. Without the private codes printed inside them , they were worthless.

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1.2.NEED AND SIGNIFICANCE OF THE STUDY.
 NEED:This is very controversial topic at present and need to be conducted for better
understanding.Bitcoin is completely digital network in which monetary transactions are
easily done.Transactions are done very fast and fully secured ,complete digital across
world wide.As in incerease in the number of retailers buyer and seller are bigeneers to
accept bitcoin as a method of payment.Easy to make payment from anywhere at anytime
only if your are a mamber of bitcion and have a account in it.
 SIGNIFICANCE:As you know bitcoin is digital currency which is kept on the bitcoin
user or member who has his own secured bitcion account or bitcoin wallet ,all the
bitcoins are stored in the wallet.And the most essential quality in bitcoin is it is
Independent and free from the hands of government authority and Banks.
1.3.STATEMENT OF PROBLEM.
There are some of the key elements that helps to sell the bitoins over traditional currency,for
instan tprocessing of the transations the customers get attracted ,it doesn’t need any
intermediaries who gain profit.Being a great advantage for the customer it doesn’t means it is
good for whole system.It is fully digitalised so it may be a big deal to do huge transation
throught it.In the day to day basis an economic system is also get benefit to the activities.In
bitcoin the Blockchain plays vital role it is a technology that eleminate the interaction of thierd
party risking wealth of user.
The main problem is that the Bitcoin is a digital currency which is done virtual,the currency are
in intangible form which can not be seen or touched,So it creates great issues regrading to the
fraud activities,it is secured but sometimes hacker could hack your wallet and all the transaction
operations .
Therefore it is created difficult blockchain technology for the institutions who deals with
finance ,it is difficult for them to comply with the rules the monitering of individual financial
deals.

4
Despite from being safe for all the users,the blockchain technology has been used by bitcoin has
made everything possible for those individual for money laundering.
1.4.OBJECTIVE OF THE STUDY.
The main objective of this research is to do the valuation of the financial statement and financial
modeling of bitcoin ,to find out the financial statement there are some steps or processes which
should be followed to verify the whole process and also the most important thing without the
proper collection of the details and information regarding to the proper modulation of the
financial statement could not be foundout.By collecting the data of past 8 years i.e. from 2014 to
2021 of the month Feburary,June,October.here we have to calculate by using the formula of
Gompert’s Sigmoid and Metcalfe’s law with the help of collecting data like Bitcoin
wallet,Bitcoin Price Value,Number of Bitcoin and transaction Pair value with the help of all this
only we can put the value of them in the formula of Gompert’s Sigmoid and Metcalfe’s Law to
get the correct answer as a result of calculation of financial statement modulation in a correct
manner.After all this the correlation and the standered value is to be find out ,you will understand
it properly by reading this research report ahead.
KEY OBJECTIVES:
 To valuate the financial statement of the Bitcoin.
 To evaluate the crorelation .
1.5. SCOPE OF STUDY.
The scope of the study is identified after and at the time of study of this research is
conducted.The main scope of the study was to put into the practical and theoretical aspect of the
study into real and practical life work experience.further study is overall done on the basis of last
8 years record of financial status of bitcoins.

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1.6. LIMITATION OF THE STUDY
Time Consuming- It is time consuming process. This is because creating a financial model is a
project which require several task to be done.
Not accurate - It is not totally accurate because of several factors like whether change,miners
location, hot and cold ,economic crises etc.
Not applicable in future - Due to rise in miner it may happen that miners wouldn’t be satisfy by
their reward.
Complexity -It is not so easy to calculate intrinsic value.
Bitcoin maturity -Scenarios may be different when all bitcoins will be discovered,because it may
worth of expensive or priceless.
The analysis is basically done on the basis of the data collected of last few years,it is a secondary
data,the analysis is done of the year 2014 to 2021 of the month February,June,October.
The study is basically done on the historical data of past years.The data which is related to the
financial data is very sensitive in nature and could not acquire easily.

6
CHAPTER – 2
LITERATURE REVIEW.

7
Bitcoin has attractive combination of improving fundamentals and decreasing supply growth
which we believe support bit coin price key application of our findings is the ability to evaluate
data and marketplace news with the intent to separate meaningful information from misleading
noise. Noise is a dominant driver of price and a statistical measure of the dispersion of returns for
a given security or market index in the short-term. It is not noteworthy that markets disseminate
and consume noise about bitcoin or any other cryptocurrency.
In other cases, cryptocurrency information positive and negative is crafted in a convincing way
by experienced and knowledgeable sources and presented by reputable media. In isolation, these
predictions are indistinguishable from information, even though they are probably noise.
Though value is not observable, even an imperfect assessment of value serves to keep markets
efficient. Over time price tends toward value. The model we have presented serves as a backdrop
against which potential information can be evaluated. It does not predict that bitcoin’s price will
soar or crash.
Rather, it suggests that the probability of those extreme events is very small because ultimately
number of users drives price.
To date, the typical approach to cryptocurrency valuation has been via Metcalfe’s law.
Commonly expressed in shorthand as n2, it is the approximate value of P when n is large. We
show that price is a function of n users, as Metcalfe’s law states. Our research differs from past
models in that we derive that may grow at a non-constant rate over time, as a Gompertz function
would indicate. This function, usually used to describe the growth of biological organisms like
bacteria, tumors, and viruses, likely has some application to network economics, including
cryptocurrency valuation. Lastly, we confirm past research that the long-term growth rate in
users has considerable effect on the long-term price of bitcoin.
Our research offers two conclusions. First, bitcoin’s price, in the medium- to long-term, appears
to follow Metcalfe’s law, with R2 above 80% depending on periods used. We attribute the high
degree of fit in both cases to the fact that a principle assumption of network laws–homogeneity
of the transactions−is met. It helps that Bitcoin is perhaps the first widespread, transparent
application of a network that is directly monetized with the inception of each wallet. Also, we
find evidence to support Gandal’s [2018] hypothesis of market price manipulation in 2013. This
was an unintended finding of our study. If Metcalfe’s law helps explains bitcoin’s price, then in
layman’s terms, the high price on November 29, 2013
We think there is a basis for further research into the application of Metcalfe’s law to forensic
detection of price manipulation for cryptocurrencies.
Metcalfe’s law is largely unknown to economists, and cryptocurrency is new. Few can probably
appreciate the effects of Metcalfe’s law on a limited supply of a currency. It is a circumstance
that has not developed until now, and it has done so in full view of a global public. Bitcoin’s
price provides a transparent look at Metcalfe’s law at work.
Endnotes
1. Bitcoin is a global decentralized digital currency implemented in January 2009.The system is
peer-to-peer, and transactions take place between users without an intermediary. The Bitcoin
network consolidates transaction records into a block, timestamps them, and encrypts (“hashes”)
them into a continuing chain of hash-based proof-of-work. Additionally, a portion of the
encrypted record is used to hash the next record, linking the records. This is called the
blockchain. The blockchain is a public record, stored and globally distributed on (presently) over
9,000 computers. This distributed public record cannot be changed without re-doing the proof of-
work for the prior transaction, and recursively, all other transactions in the chain, as well as all

8
copies of the block-chain in the globally distributed network. This protective mechanism, as well
as block-chain hash itself, serves to practically eliminate counterfeiting a bitcoin or its associated
transaction log. “Bitcoin” with a capital “B” refers to the network protocol while lowercase
“bitcoin” refers to a unit of currency. Burniske et. al [2017] provide a well-rounded description
of bitcoin and its uses; Hileman et al [2017] provide further insight into the cryptocurrency
industry at large; and the original Nakamoto [2008] text serves as a good technical reference.
2. Keynes [1965]. "Fiat Money is Representative (or token) Money (i.e. something the intrinsic
value of the material substance of which is divorced from its monetary face value)–now
generally made of paper except in the case of small denominations–which is created and issued
by the State, but is not convertible by law into anything other than itself, and has no fixed value
in terms of an objective standard."
3. Thornton [1965] “(Money) presents to the holder no hope of future profit from the detention
of it. Not only does it bear no interest, but it offers no substitute for interest; the quantity held by
each person is only that which the number of payments to be affected by it renders, in his
opinion, necessary.”
4. Economides [1996] “The act of exchanging goods or assets brings together a trader who is
willing to sell with a trader who is willing to buy. The exchange brings together the two
complementary goods, 'willingness to sell at price p' (the 'offer') and 'willingness to buy at price
p' (the 'counteroffer') and creates a composite good, the 'exchange transaction.' The two original
goods were complementary and each had no value without the other one. Clearly, the availability
of the counteroffer is critical for the exchange to occur.”
5. In the cryptocurrency lexicon, a node is a computer system that verifies and relays valid
transactions to other nodes, propagates block solutions, and stores a copy of the Block-chain;
nodes are operated by entities such as miners and certain users. Throughout this paper, we use
the general term user to denote a point of connectivity in the network.
6. Reed [2001]."(E)even Metcalfe's law understates the value created by a group-forming
network (GFN) as it grows. Let's say you have a GFN with n members. If you add up all the
potential two-person groups, three-person groups, and so on that those members could form, the
number of possible groups equals 2n . So the value of a GFN increases exponentially, in
proportion to 2n. I call that Reed's Law. And its implications are profound."
7. Bitcoins are created each time a user discovers a new block. The rate of block creation is
adjusted every 2016 blocks to aim for a constant two-week adjustment period (equivalent to six
per hour.) The number of bitcoins generated per block is set to decrease geometrically, with a
50% reduction every 210,000 blocks, or approximately four years.
8. A Gompertz function is a sigmoid function used to model a time series, where growth is
slowest at the start and end of a time period.
9. Per blockchain.info: “Blockchain is the world's leading software platform for digital assets.
Offering the largest production blockchain platform in the world, we are using new technology
to build a radically better financial system. Our software has powered over 100 million
transactions and empowered users in 140 countries across the globe to transact quickly and
without costly intermediaries. We also offer tools for developers and real-time transaction data
for users to analyse the burgeoning digital economy.”
10. Per coindesk.com: “CoinDesk is the leading digital media, events and information services
company for the digital asset and block-chain technology community. Its mandate is to inform,
educate and connect the global community as the authoritative daily news provider dedicated to
chronicling the space.”

9
11. Hayes [2016] provides a cost production model, based on the cost of electricity per kWh, the
efficiency of mining as measured by watts per unit of mining effort, the market price of bitcoin,
and the difficulty of mining. Except for the price of bitcoin, each of these factors would require
an assumption on our part, one that we are reluctant to make for reasons of practicality, as well
as the likely introduction of errors into our own model.

10
CHAPTER – 3.
THEORITICAL FRAMEWORK.
3.0. THEORITICAL FRAMEWORK.
3.1 SECURITY OF BITCOIN.
3.2 COMPARISION WITH OTHER CURRENCIES

11
3.0. THEORITICAL FRAMEWORK.
Working of bitcoin
Ever Bitcoin member or bit coiner have their wallet in which the bitcoin is stored each and ever
bitcoin is basically have a computer file with digital wallet app in mobile phones or
computers .People can send or transferred Bitcoins (or part of one) to your digital wallet, and you
can send Bitcoins to other people.This will help you in tracing the history of the transaction of
Bitcoins to stop the people from them who is spending coins they do not own, making copies or
undo-ing transactions,and escape from the frauds.
Block-chain
“Each transaction is recorded in a public list which is called as the block-chain”.As mentioned
that the block-chain is the underlying technology of bitcoin. Transaction are recorded in a
chronological order,it is based on public distributed ledge. Any record or transaction added to the
block-chain cannot be modified or altered, meaning transactions are safe from hacking. A block
is the smallest unit of a block-chain, and it is a container that holds all the transaction details. A
block has four primary attributes:
1. Previous hash: The function of this attribute is to stores the value of the hash of the previous
block, and that's show how the blocks are linked with each and other.
2. Data: This is the set of transactions which is agreegated and included in this block—the set of
all the transactions which is done that were mined and validated and included in the block.
3. Nonce: In a “proof of work” consensus algorithm, which bitcoin uses, the nonce is that value
which is used to vary the output of the hash value and done randomly. Each and every particular
block is supposed to generate a hash value, and that is used to generate that hash value as a
parameter of nonce. Then the proof of work is the process of transaction verification done for the
proper evaluation in block-chain.
4. Hash: This is the value which is basically obtained by passing the previous hash value, the data
and the nonce through the help of SHA-256 algorithm;and also it is the digital signature of the
block.
SHA-256 is a term of cryptographic hash algorithm that produces a unique 256-bit alphanumeric
hash value for any given input, and that will help us to findout the unique feature of this
cryptographic algorithm: Whatever the input you feed, it will always produce a 256-bit hash.

12
Concepts of Block-chain:
You have to first of all understand the three major concepts of block-chain.To understand the
process of bitcoin mining.
Public distributed ledger:
A distributed ledger is a record of all transactions maintained in the block-chain network across
the globe. The validation of transactions is generally done by bitcoin users by the network.
SHA-256: The unauthorized thing which is going to be access by using a hash function which is
called as SHA-256 to ensure or make sure that the blocks are kept secure and this is prevented by
blockchain. They were signed in digitalised manner. Once if their value of hash is successfully
generated, then it cannot be possible to altered it anymore. SHA-256 put as an input as its feed
and string of any kind in any size and in return ,it returns back a fixed 256-bit as an output, and it
is a single way function—you cannot derive the reverse of the input fully from the output (what
you have generated).
Proof of work: In the process of mining block-chain ,the miners who does the evaluation to
validate transactions by calculating tremendous amount to quizzes and solving a difficult
mathematical puzzle called proof of work. To do the primary and main objective of the miner is
to determine or findout the value of nonce, and that nonce value is the puzzeled mathematical
equations that miners have to solve to generate a hash ,which is required that is less than the
target which is defined by the network for a particular block.The process which is solved
generally is based on a difficult and very complicated mathematical puzzle which is called as a
proof of work. The proof of work is required to evaluate and validate the transaction for the
miner with a motive to earn a reward. Every miners those are completing amongst themselves to

13
mine in a particular transaction; the miner who first cracked the puzzle by solving it by doing
multiple calculation are rewarded. Who have the necessary hardware and computing power to
evaluate or validate the transactions those are called miners who are network participants.
Bitcoin Mining:
In the process of bitcoin in Which the duty of a miner
is to mine and then evaluate for proper verification of
the bitcoin transactions and after that the next thing is
to recording them in theblockchain ledger of public
list. In blockchain, the transactions which are done are
then verified by bitcoin users, so generally the
transactions have to be verified and checked by the
participants of the network. The members who have
required hardware and good computing power are
called miners.
Later on we will talk much more about them , to understand the essential concept to here is that
there is nothing like a centralized body—a regulatory body, a governing body, a bank—to make
any kind of bitcoin transactions go through. Any user with all the required things which includes-
mining hardware and Internet access can be a participant and give their contribution towards the
mining community.

14
Creating a new Bitcoins
From the perception of REUTERS “People who introduce special kind of computer system to
generate or creat a Bitcoins.”In order for the Bitcoin system to work, for eveyone people can
make their computer process transactions .The main work of a computer is to calculate
tremendous amount of difficult calculation. Rarely only in occasion they are rewarded with a
Bitcoin to keep People set up powerful computers only to try and earn a Bitcoins. But the
calculations are getting very difficult to stop too many Bitcoins .If you start to do mining now it
could take too much time or years before you earn a single Bitcoin. You could end up spending
excess amount of money for your computer or other electricity expenses than the Bitcoin would
be worth.
People getting Bitcoins using these ways:
To get a Bitcoin with the help of these three main ways you could achieve it.
 By using real money you can buy .
 Let people pay you with Bitcoins by selling your things.
 By using a computer it can be created or to be formed easily.
Solving the Puzzle
As mentioned earlier in the bitcoin network ,the users are called as a miners and they were trying
to solve a unique and very complicated mathematical puzzle. The puzzle or quize which is
solved by calculating and firstly varying a nonce that produces a hash value secondly,in which it
has value lower than a predefined condition previously, which is called a target. The duty of
miner is to verify so the miners verifies a transaction by calculating very difficult mathematical
and statistical equation to crack out the puzzle and adding the block to the blockchain when it’s
confirmed and verified after all the evaluation and verification by other users. As in today
world,Bitcoin miners who get a reward of 12.5 bitcoins by solving a puzzle.
If the block is added once in tha blockchain then the bitcoins which is associated with the
transactions that can be spent and the transfer from one account to the another can be easily done.
Their is a technique to generate the hash which is used by Bitcoin miners that is SHA-256
hashing algorithm and that define the hash value. If it is less than the defined Target condition
then the puzzle is deemed to be solved. If it is not solved properly or not getting correct answer
then they modify the nonce value in better way and repeat that ptocess by the he SHA-256
hashing function to generate the hash value again, and this process is to be continued until they
get the hash value that is less than the target.
Example: Transfer of 10 Bitcoins

15
Suppose ,Beyonce wants to share with Jennifer his 10 bitcoins .For the further strps firstly he
have to fo is First the transaction data is shared with bitcoin users from the memory pool. The
transaction are floating in the pool of memory transactions which is completely unmined or
simple word we can say raw transaction. In a memory pool, until they are verified and included
in a new block,the unconfirmed or raw transaction have to wait there.Bitcoin miners compete
with eachother to validate by calculating the puzzeled data and solving the transaction using
proof of work. The miner who solves the puzzle firsyly they have to share the result across the
other nodes. Once the block has been verified, the nonce has been generated as mentioned earlier
then the nodes will start granting their approval. If maximum nodes grant their approval by
accepting it ,the block becomes correct and is added to the blockchain. The miner who has
solved the puzzle will also rewarded with 12.5 bitcoins, which as of today is around $98,000.
Beyonce transferred the Bitcoin yo Jennifer the 10 bitcoins for which the transaction was
initiated.
Proof of Work: a Closer Look
Proof of work is the process which is predefined condition that is adjusted for every 2,016
blocks, which reach approximately every 14 days.The average time is taken of 10 minutes to
mine any particular block, and to keep the time which is already predetermined that was framed
for block generation within 10 minutes, the target being continues to adjusting itself.
The difficulty of the puzzle changes by fluctuations which is depending on the how much time
is taken to mine a block. This shows how much the the difficulty level is to generate a block :
that value of hash target of the first block is basically divided by the hash target value of the
current block. This difficulty is faced in being fluctuate or changed after every 2,016 blocks,
generally it is very tough and not at all possible to generate the proof of work—but it is usually
very easy for them those who mines that is for the miners to valuate it by verifying it ,once if
someone have solved the puzzle perfectly. And once the majority of the miners which basically
reach at a consensus, the block then validated and easily can be added to the blockchain.

16
The difficulty level is completely depends upon the hash target, the value is being kept changing
or fluctuating after every 2,016 blocks, and from bitcoin’s day of inception in 2009, it requires
more amount of hashing power to do the mining today properly.
Needs of Bitcoins
Bitcoin in Independent from government or banks,the main fact that people like it is not
controlled by under any government authorities or banks.People can also spend according to
their need , Bitcoins are spent fairly anonymously. All transactions are recorded properly,
nobody would findout which 'account number' was yours unless you disclose it by yourself with
others. A conversation with social media users in the an online chat at the year January 2021, the
world's richest man the well known Elon Musk,had said that he was a very big supporter ,who
supports digitalised currency of Bitcoin. He even went soo far as to change the bio of his Twitter
account to "#bitcoin".
He has shown his contribution by all his supporting towards online currencies at current years
and caused some major changes in their values because of his own personal wealth and influence
reportedly .This particular endorsement Of this digital currency led to the value of Bitcoin to rise
significantly.
Advantages of Bitcoins
 As Compared with the traditional fiat currencies, their is one thing that the assets can be
easily transferred quickly with the help of the bitcoin network.
 Their is one more benefit that is the transaction fees is very low and affordable due yo
it’s decentralized nature and there are no other intermediaries, and it is secured
cryptographically secure—the identities are not disclosed and kept hidden of sender and

17
the receiver , and it is not at all possible to counterfeit or hack the transactions if you
operate it carefully.
 Anyone can easily view transaction ,it is visible publicly shown in the ledger.
Pooling Resources for Bitcoin Mining
As an example of a lottery in which their is probablity of winning are not easy. If individuals
person buy multiple tickets to get lottery and pool their tickets together, then this will help to
increase their chances to win. If someone wins the lottery, then it is based upon the contribution,
the distribution of reward is done among all the participants.
Btcoin mining pool is same as compared to the:Multiple number of nodes share their resources
to mine a block. When a block is solved by solving mathematical puzzles, the miners split the
reward which is generally based on thetotal amount of processing power they have invested.
Then the pool members duty is to generate a final hash value, then the bitcoin reward gets
distributed in a proportional manner among the participants those who are based on the resources
they contributed.
Prevention of Hacking
Blockchain, according to its names ,it is a chain of blocks—we call it as the blocks A, B and C
respectively.Individually each block has to solve a difficult puzzle and then generate tha value

18
of a hash by its own,it is its identifier. Suppose if any individual person wants to tamper with
block B and does some changes in all the data. The aggregated data in the block,then the data of
the block changes, then it will definitely shows its effect on hash value also the value of hash
that is the signatured in digital terms of the block will also automatically change. Therefore it
corrupted the chain after that—the blocks ahead of block B will lose the link, because the at
previously the hash value of block C will not remain valid.
To built the whole blockchain to be valid for the block B by the hacker and that has been
changed, they would have to do some changes in are the hash value of the entire blocks ahead of
block B. This would require a to calculate efficiently the large amount of computing power and
skills and is next to impossible.This method helps to secure from hacking, blockchain is non-
hackable and prevents data modification.
3.1 Security Of Bitcoin
All the transaction is being recorded publicly so it is easy
and simple to copy Bitcoins, it is secure but ,make fake ones
or spend ones you don't own. There are possibility of lossing
your Bitcoin wallet or delete your Bitcoins and chances of
loosing them forever. There are lots of thefts in websites that
let you for keeping or storing your Bitcoins remotely. The
value of Bitcoins fluctuate over the years since it was created
in 2009 It goes sometimes up or somethimes down and some
people doesn't thought that is it safe to convert your 'real'
money into Bitcoins. This concern was firstly expressed by the head of The Bank of England,
Andrew Bailey, in the past year October 2020. He said that "very nervous" about those people
who is using Bitcoin for doing the payments and highlighting that investors should have to
realise its price which is extremely volatile. He meant that the value could drop down or reduce
significantly at any time and investors have to face a big loss and could lose a lot of money.

19
3.2 Comparison with other currencies:
Bitcoin vs. Traditional Currencies
Consumers tends to believe only in real currency or printed currency ,that has a reason behind it
that is , as we know U.S. dollar is completely backed by a central bank of the U.S., called the
Federal Reserve. Inclusion to a host of other responsibilities, the Federal Reserve has to
regulates the production of something modern or new kind of money, and the decision of the
federal government is to prosecutes the use of counterfeit currency.
Including digital payments using the U.S. dollar which has completely backed up with a central
authority. When you purchase something online and making payment by using your debit or
credit card, for example, that transaction is called as a payment processing company such as
Master card or Visa. Addition with the recording of your history transaction which was done
earlier, those companies has to evaluate and check for proper verification that transactions are
free from any kind of fraudulent, which is one of the reason your debit or credit card may be
disabled or suspended while traveling.
As mentioned earlier that Bitcoin is not at all regulated by any kind of a central authority. Instead
of it bitcoin is backed by tremendous number of computers across the world which is called
“nodes.” This kind of network of computers which performs the same function by following the
same process as the Federal Reserve, Visa, and Master card, but have few differences. The
nature of Nodes is to store information and complete details about prior transactions and help to
check or verify their authenticity. Unlike those central authorities which is however, bitcoin
nodes are spreaded out across the world wide and keep record of each and every transaction data
in a public list or ledger and that can be accessed by anyone.
Traditional Money vs Crypto Currency
Esblishing the main differences amoung the traditional fiat money like euros, dollars, pounds, etc.
and crypto inclues (bitcoin, Ether, etc.). The main difference may be that crypto is a
decentralized currency and world wide globally digitalised currency, or, in different terms
outside the there is no control of the banks and not at all backed by a central government.
Crptocurrency is a very new thing and it is immune to the traditional ways of government control
and interference as a result.
There is no fundamental difference otherwise.Both fiat currency and cryptocurrency can be
called money or currency in simple and clear words. Both, are the essence, are mediums for the
process of doing exchange that are used for storing and transfering the value. Both of them the
cryptocurrency, as well as fiat currency, can be easily used to exchange by purchasing the goods
and services. They have their value governed by supply, demand, work, scarcity, and other
economic factors.

20
Fiat Currency vs Crypto Currency
The Fiat currency is backed by the Government and control by government authorities and can
be in the form of printed currency which is tangible and of physical money or somethimes it
maybe represented by electronically where cryptocurrency is a digitalised encrypted,
decentralized currency that is note at all linked to the purpose of regulated under government.
Fiat currency is generally issued by the central bank easily with some easy process where
cryptocurrency is independently free from government hands. Intermediaries Required to make
some transfer where cryptocurrency is not required . Fiat currency would be in terms of Dollar,
Rupee, Euro, Pond where cryptocurrencies are Bitcoin includes Ethereum, Litecoin. Fiat
currencies are declared Legal in all countries where cryptocurrencies are Illegal in some of the
countries. The supply is limitless and also fiat currencies is unlimited where The supply of the
cryptocurrencies is very limited.The use of Exchange Fiat money may be is to make digital or
physical kind of payments or and also transfers of funds but only a digital transfer of funds is
possible with cryptocurrency not the real currency. Fiat currencies are represented in general
terms by Coins, Notes and Bills where cryptocurrencies include Private and Public pieces of
some code. Tangibility Fiat currencies have a quality of tangible appearance in the form of coins
and notes as we all know. Cryptocurrencies is intangible which cannot be touched or sensed in
any way. Fiat currencies are safely stored in bank accounts. Cryptocurrencies Can be stored in
digital wallets. Tracking: The difference between fiat currencies and cryptocurrencies there is
that fiat currency transactions which can be easily monitored and easy to findout by the help of
issuer and recipient. The medium of Exchange: The difference between fiat currency and
cryptocurrency is that fiat currency is a tangible which can be easily sensed or old process of
exchange, whereas cryptocurrency is completely done only in degital ways of exchange. Safety:
Fiat currency is completely more safer when compared to Cryptocurrency as they are backed by
the Government and its government responsibility to keep it safe and the transfer of money can
be tracked. Transactions can happen anonymously in cryptocurrencies. Supply: Fiat money has a
limitless supply,it simply means that the central banks have no limit to how much money they
can print,they are limitless or unlimited. Many cryptocurrencies have a supply limit, which make
sures that only the transaction must be done in limited terms,a limited number of coins will be
accessible. Legality: It is on thae hands of Governments who regulate the supply of fiat money
and issue all the practiced rules and policies that influence its value. Cryptocurrencies are digital
assets as said earlier that function as a medium of trade and are not regulated by governments.
One more thing is that Fiat currencies don't have intrinsic value; instead of this the value of fiat
currencies is to be determined by the governmen authority that issue them.Cryptocurrencies are a
Money which is completely digitalised that’s powered by blockchain technology.Unlike fiat
currencies, and also there are many cryptocurrencies which are decentralized, immutable,in
which no one could trust. As an Ultimate the cryptocurrencies offer as a concrete and great
advantages over fiat currencies, but mainstream adoption is still elusive.

21
CHAPTER -4.
RESEARCH METHODOLOGY.
4.2.RESEARCH OBJECTIVE.
4.3. SOURCES OF DATA.
4.4 POPULATION.
4.5. SAMPLE DESIGN.
4.6.METHOD OF DATA COLLECTION.

22
4.1.RESEARCH METHODOLOGY
In cryptocurrency valuation firstly you have to note down that these are not companies they don't
have any cash-flow. Hence using discounted cash flows (DCF), Multiplier models, Asset based
models’ analysis is not suitable
Bitcoin’s fixed supply of 21M bitcoin is produced in ever-decreasing amounts, making bitcoin
inflation resistant. Every day 144 blocks are produced by the protocol, with the average and the
miner get rewarded with each block with particular specified amount of bitcoin. In the year 2009
at its launch 50 bitcoin per block is reward amount. In every 4 years the 210000 blocks are
predicted and reliable, this bitcoin reward is halved. Decling growth rate in the Bitcoin supply
which is asymptotically practices of 0% form now to till the year 2140 is driven rewad halving.
At current the rate is 1.3% per year of running , the growth rate in bitcoin’s supply is at on par
with the historical annual growth rate in the supply of gold.The Gold has the nature of being
reliable ant it is its quality and helps in reliable store, because of the scarcity of it and due to the
low annual supply growth – But before bitcoin, no form of money has ever had any kind of
reliably lower annual supply growth rate than the gold. The growth rate of bitcoin is at in par
with the gold today,In 2024 at the next halving the growth rate of bitcoin will below then 1 % it
is lower as compare to the lower bond the supply growth rate of gold during the past 100 and
more than 100 years on over any point. According to the believe of the supply is irrelevant
because it is very easy to copy the botcoin code and serve as a replacement of it . This
perspective misses a critical point. The Bitcoin’s code is very infinitely replicable, but not the
ecosystem. Basically all the workers , members of the Bitcoin’s developers, miners, users,
merchants, and exchanges done among others, which drive the network and also effect that and
creates its $331B moat and a unique prominence. The process of mining in Bitcoin which shows
by reprenting it by the overwhelming majority of globally energy is fully dedicated to the
security of the whole or overall in digital asset industry. And also ot is important to evaluate it
properly because the base of the Bitcoin’s code can be very easily copied, but the credibility and
immutability of it is very hard money policies cannot. Being catchable is very long past of
Bitcoin.

24
Valuing the bitcoin network
Basically in simple words valuting of a bitcoin is like valuation of any asset that is subjective and
we have to approach this topic with humility.Other then bitcoin and bonds ,in Bitcoin there is no
cashflow and discount.First think we have to do is approaching the bitcoin as a network and after
that we have to observe at other successful network and different models of perfect business
model to develop a basic valuation framework.Viewing Bitcoin as a network rest have a logic
behind it on our core insight that any kind of money which is successful must be necessarily to
be powered by a network effect.To understand it properly firstly imagine a world without any
successful money (e.g., increasingly Venezuela, Lebanon, and Turkey today, Zimbabwe 10
years ago, etc.).Here In such kind of a world, people are decreased to barter system that means
the exchange of goods and services are exchanged directly only with goods and services without
any monetary transaction if exchange process. Looking purely through the lens of the monetary
network, such kind of economy is extraordinarily inefficient, as it requires (n * (n+1))/2 prices,
which means, n is the number of specific goods or services. The example which is simplified that
is the modern economy which say that one billion of goods and services throughout a nation
supply chain, the barter system of exchange would be requires as about price of 500 quadrillion
of individual . As per the introduction of a successful money, that the same economy needs only
one billion prices, one for each good and service. As n gets larger, the network power of a
successful money expands. The two terms Money and language were the first, and remain the
most important thing which human created networks. One of the local critique of bitcoin is that,
because it is used very rarely as a medium of exchange, it cannot be a money.As the
fundamental point of view of the nature of money that critique misses .As per the fact that
bitcoin, like gold, is not very widely used in individual transactions today is irrelevant. Bitcoin is
a store of value because the only need is that its holders expect to someday use it in a
transaction,and otherwise they would not hold it at the first according to every particular person
who is the members of Bitcoin including fierces holders that means., very long-term holders like
ourselves, it is necessarily implies that the zero Bit-coiner believes that is they (or their
descendants) will never ever exchange the bitcoin for something else at somewhere in any point
at the future, even if that the transaction is very far away from the future. In this whole context, it
becomes very visible and clear why we believe that bitcoin’s fundamental value is best modeled
as a network.
METCALFE’S LAW AND BITCOIN
Metcalfe’s Law, named after the founder of Ethernet technology, Robert Metcalfe, states that the
value of a network is proportional to the square of the number of its nodes, n2 . The Metcalfe’s
has an empirical support from the academic research or experiment on technology related to
Facebook or Google, and Ten-cent among the others. According to my point of view that, for a
successful money it is essential that the fundamental value of the bitcoin derives it from its
network effects, bitcoin’s value should be quite roughly adhere to Metcalfe’s Law. Developing
or built up on and simplifying prior researches in the area, our analysis is visible to the bitcoin’s
valuation is well described by the most fundamental factor intrinsic to its network: the total

25
number of address which hold bitcoin. This may be very essential insight for investment
purposes by professionals who should understand requires anchoring around the fundamental
valuation and allover framework as much needed component of their allocation diligence and
basically Metcalfe’s law is basically related to the fact that the total number of unique possible
condition of connection in the network of ' n' nodes can easily be expressed in the terms of the
mathematical calculations as the triangular number n(n-1)/2, which is asymptotically
proportional to n2
.While not precisely equal to the number of people or institutions that is
holding bitcoin, the total number of address holding of bitcoin is an intuitive and also
parsimonious proxy for Bitcoin’s user base.
A Model for Bitcoin: Metcalfe’s Law
Bitcoin’s price is best modeled as a network. For the creation of new bitcoin Metcalfe’s law is
adjusted of new bitcoins over time, is the best suited to this task. This function and approach
which provides insight into the very long-term value of the bitcoin, but it does not going to
attempt for the explanation of the short term price movements, which will accepted and can be
driven by a multitude of factors. There are Some Critics in Bitcoin is knows that the supply is
very important to fixed in the short term, because in general point to some changes in demand as
responsible for all price changes. That may be true in the short term, but it is also an
oversimplification. The Demand-side approaches are often mis specified due to the reason of the
ignorance by the non-proportional value added through the addition of a new user. Whereas most
network laws are propositions, Metcalfe’s law is a mathematical tautology. There are typically
no “groups of groups” in a buy-sell financial transaction ecosystem as Reed [2001] according to
the Van Hove (2016b)Argus Metcalfe’s law is the best which suited to those cases direct
network effects dominate indirect network effects. Further, Metcalfe’s law assumes homogeneity

26
among connections. This assumption is met for Bitcoin, because each bitcoin user transacts only
in bitcoin. However the social networks which transact in a various variety of media, it is
heterogeneous in nature, and due to its heterogeneous nature the value is subjective. Metcalfe
2013 has great success and is very successfully fitted with his law to the Facebook’s annual
revenues records from the period of the year 2004-2013 and concluded that “Facebook creates
more value than is captured and monetized and evaluated by the Facebook selling
advertisement.” Madureira et al. 2013 came up accross with together, different test of Metcalfe’s
law as well as a various alternative that they call Briscoe’s law, but found Metcalfe’s law
superior. Van Hove (2016) find out that the Metcalfe’s law outperforms competing to the
network laws. Zhang et al. 2015 repeated that the Metcalfe’s test in an organized and very
systematic way using data for both Facebook and (Chinese equivalent) Tencent and found that
Metcalfe’s law fits the better than competing laws.
SIGMOID FUNCTION

27
GOMPERTZ SIGMOID FUNCTION.
Gompertz sigmoid:
HISTORY-
Benjamin Gompertz was educated privately and also an actuary in Londond. He was elected as a
fellow in the Royal Society at the year 1819 .The function was presented in the month of June at
the year 1825 paper at the bottom page 518.Gompertz function helps to collect and analyse the
data in easy way, because its very difficult to arrange and solve the large amount of puzzled data
to get the correct answer.This function help and reduced a significant collection of data in life
table into single basically it is based on assumption that the mortality rate increases exponentially
as a person ages.The resulting Gompertz function is for the number of individuals living at a
given age as a function of age.
GOMPERTZ LAW IN BITCOIN
Gompertz function is a mathematical model for the time series,named after Benjamin Gompertz
1779-1865. Gompert sigmoid helps to calculate the growth as being slowest at the start and end
of given time period the important thing is to find out the right hand or future value of the
function is approached gradually by the curve than left hand or lower value asymptote.This is in
contrast to simple logistic function in which both asymptotic by the curve systematically.It is
simple case of generalized logistic function.
After finding out transaction pair value we have to go ahead yo get the final result by finding out
Gompertz Sigmoid value by putting the formula .
Formula of gompertz sigmoid
Gompertz sigmoid=No .of Bitcoin×ln (21000000÷bitcoin).
In this scenario the calculation if Gompertz sigmoid is done colleting all the data regarding the
total number of Bitcoins of ther year 2014 -2021and then multiplying it with the highest amount
of bitcoin i.e.21000000 , '21000000' is tha last or the higest level of amount the no.of bitcoin has
the limit of 21000000,more than this the number of bitcoin couldn't be increased, so this amount
is divided by number of bitcoin in (ln) then we get the results as Gompertz sigmoid value.

28
APPLICATION OF THE GOMPERTZ SIGMOID LAW
Before calculation of Metcalfe it is important to find out the mid value of Metcalfe value as per
the formula of Metcalfe i.e ,
 Metcalf value=A×ln(transaction pair value)÷ Gompertz sigmoid.
So here to find the value of 'A' we have to put the formula,
 A= Closing price × Gompertz sigmoid ÷ln(Transaction value).
So,to findout the main mid value of metcalfe law, Gompertz sigmoid plays very important role
without this the further steps to get the correct result is fully waste ,It is necessary to find the
correct Gompertz sigmoid to get correct Metcalf value.The whole calculation is depends upon
the correct value of each and every steps because all the steps are interrelated with eachother ,so
it one by one it is calculated for the final value as a final result.
Highlights:
 Bitcoin is decentralized cryptocurrency.
 The Transaction fees is very low.
 The currency is created and based on cyberspace that mean "miners".No control of
Banking system and Government bodies.Miners solve complex algorithms for
verification of bitcoin transactions.
 The Currency is transferred from person to person in digitalize manner.
 Bitcoin solve problems through distributed networks that is-
(1)Proof of work.
(2)Hash.
 Open to anyone-
1. Public ledger
2. Blockchain.
 Transparent in nature (Open Source).
 In Bitcoin Blockchain Technology allow us to store and transfer monetary unit without
need of central authority,similar to cash.
 Historical bitcoin's correlation to traditional assets classes has been very low.
 Lately its correlation has been rising.In 2020 is the highest year on records for Bitcoin
correlation to traditional assets.
4.2. RESEARCH OBJECTIVE.
The main objective of this research is to do the valuation of the financial statement and financial
modeling of bitcoin ,to find out the financial statement there are some steps or processes which
should be followed to verify the whole process and also the most important thing without the
proper collection of the details and information regarding to the proper modulation of the
financial statement could not be found out.By collecting the data of past 8 years i.e. from 2014 to

29
2021 of the month February,June,October.here we have to calculate by using the formula of
Gompert’s Sigmoid and Metcalfe’s law with the help of collecting data like Bitcoin
wallet,Bitcoin Price Value,Number of Bitcoin and transaction Pair value with the help of all this
only we can put the value of them in the formula of Gompert’s Sigmoid and Metcalfe’s Law to
get the correct answer as a result of calculation of financial statement modulation in a correct
manner.After all this the correlation and the standered value is to be find out ,you will understand
it properly by reading this research report ahead.
4.3. SOURCES OF DATA.
WHAT ARE THE SOURCES OF DATA IN A RESEARCH REPORT?
During the time of study the place from where the data is collected is called as the sources of
data collection ,from where the information is gathered to proceed the research ahead.It is
basically used to express the method of collection of data or tools and techniques.
Here in this research study the sources of collecting data is from-
‘WEBSITE’ ,So the data which is collected is Secondary data .Secondary data is that kind of that
which is already exsist somewhere and we have collected from website directly .
Secondary data is used to expand the sampling size.This help us to learn large amount of data to
do the research and also help us to understant it clearly.Secondary data is basically common
data,we have gathered the data from website to know that exact history of bitcoin from the year
2014 to 2021.So it is beneficiary to collect the data from website for this research process.
4.4.POPULATION.
 TICK DATA : Tick size is termed as the minimum amount available on the exchange
process of of quoting and also trading.When the bitcon was worth in dollars,a penny tick
size takes place.The Tick size is resonable when it worth $100 penny.
High volume trader of the bitcoin are using systematization algorithms.manual or simple Bot
orders are used by average traders.Unlike the bitcoin behaves any other financial asset many
have been treated ever.
Especially it is very much true with one penny ticks due to there is small order sizes and tiny
spreads has a combination.
Here in this research the Tick data of Bitcoin price, No.of Bitcoin and No. Of Wallet is collected
for the study.

30
4.5. SAMPLE DESIGN.
It may be defined as a Sample Design is a definite plan to obtaining a sample from a given
population to it.Generally it is refers to the tools,techniques or the process which is adopted in
the selection of the items for the sample.
SAMPLE SIZE-It is very substantial portion of the largest population that are received as a
sample reliable result.
In this research study the Sample size is total of 23 from the moth of February 2014 to June 2021
on interval of four month.
4.6.METHOD OF DATA COLLECTION.
‘CSV EXPORT’ is the method which is used for Data collection.
CSV Export creates complete CSV file of the object that have been submitted.With the help of
organized row column function the process and calculation is done easily and correctly.It creates
spreadsheet and share data with programs that accept CSV files in the form of input.

32
5.0. DATA ANALYSIS.
667.86 6.50407857
1
1292316 12.4 835039.68 6.53264196
7
1.38838252
3
5.834107381
467.86 6.14816910
6
1740222 12.9 1514185.43 6.28610713 1.23370131
1
5.50424314
367.96 5.90797423
7
2412721 13.4 2910610.11 6.02018759
2
1.11376645
1
5.309537353
232.05 5.44695286
6
2977411 13.8 4432486.64 5.79398306
9
1.02469624
7
5.150021285
235.76 5.46230521
7
3560971 14.3 6340255.45 5.49495947
7
0.98502329
9
5.284198729
260.29 5.56179639
4
4619591 14.7 10670308.19 5.24312167
6
0.96270789
8
5.508126885
402.31 5.99722293
6
6059096 15.2 18356319.14 4.91305055 0.94171711
6
5.853995888
635.09 6.45376672
1
7549230 15.7 28495433.02 4.56652908
8
0.92574733
3
6.28056013
634.1 6.45220667
1
9282480 15.9 43082212.83 4.42343292
3
0.93768002
2
6.654933002
1048.1 6.95502047
1
1190199
3
16.2 70828712.83 4.20408136
7
0.97633439
6
7.406269371
2607.8
9
7.86629674
4
1469966
8
16.4 108040112.3
1
4.05754087 1.00770797
6
8.030720196
5347.4
5
8.58437509
1
1770000
0
16.6 156644991.1
5
3.90298772
3
0.98813235
7
8.274970736
93761.
1
9.14592664
3
2300000
0
16.9 264499988.5
0
3.67082987 0.93763204 8.482469065

33
6808.6
6
8.82595061 2530000
0
17.1 320044987.3
5
3.51309195
9
0.85775020
5
8.154757535
6491.3
1
8.77821963
8
2930000
0
17.3 429244985.3
5
3.35301569
7
0.80895036
2
8.128803022
3666.7
3
8.20705553
6
3330000
0
17.5 554444983.3
5
3.19062724
4
0.76019869
1
8.088684391
June.
2019
9060.1 9.11163543
7
3950000
0
17.8 780124980.2
5
2.94276685
2
0.73313927
1
8.542876588
OCT.
2019
8343.5
9
9.02924885
8
4270000
0
18.0 911644978.6
5
2.77471223
7
0.68587987
1
8.514758433
FEB.
2020
9567.8
5
9.16616379
9
4590000
0
18.2 1053404977 2.60443535
4
0.6529367 8.671981362
JUNE.
2020
9438.6
8
9.15257141
9
5020000
0
18.4 1260019974.
9
2.43196062
5
0.65100232
3
9.307423831
OCT.
2020
11709.
6
9.36816600
5
5500000
0
18.5 1512499972.
5
2.34490655
4
0.65073279
2
9.69964272
FEB.
2021
45279.
6
10.7206129
8
6750000
0
18.6 2278124966.
2
2.25731194 0.66185201
6
10.36830401
JUNE.
2021
35522.
8
10.4779308
7
7410000
0
18.7 2745404962.
9
2.16917968
9
0.63936266
7
10.47793087

34
GRAPH NO.5.1.
GRAPH NO.5.2.

35
Change in Bitcoin Price vs Change in Metcalfe Value
GRAPH NO.5.3
Standard error 0.073305335
R square 0.931807556

37
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https://glassnode.com
https://www.blockchain.com

40
CONCLUSION
At present time Bitcoin is very hot topic almost everywhere in media,financial authority and
investors.The awareness of Bitcoin has risen and it has caught an eye of world well known
investors and influencers.
The purpose of this paper is to see the correlation.All the data are collected from the year
2014-2021 of the month, February,June, October as shown in the observation table
previously.In the record of this seven years there is obviously fluctuations in price,or no.of
bitcoin's.In different years different customers buys number of bitcoin and earns profit in
different percentage at every year.
Correlation helps by analyzing the value able information regarding to the variables.The
correlation method used in this paper,the coefficient and variance to indicate the statistical
significance of coefficient.
The wallet value is an practice approach, which seems look at the value of bitcoin which is
basically based on the number of cryptocurrency wallets there are out there. Then the practice
comes as a mining profit approach, which seem looks at the value of bitcoin which is
generally based on the total number of miners. After all this then the approach came up as
The miner cost approach, which seems looks at the value of the bitcoin which is basically
based on the cost to mine it. And then the alternative coin approach, which seems looks at
the value of bitcoin based on the competition from other options of the cryptocurrencies that
are out there. Now, we have separate schedules regarding to this particular financial model
and the data that we have gathered as it relates or connected to the bitcoin. So, we have the
details about mining schedules, wallet growth, etc. And the point here is not to disclose that
this is the gospel truth for bitcoin's value or anything of the sort. Instead of it to give an
example to know about how we can use a financial model to put a value on something that's
otherwise very confusing. As per the facts when we look at the value or observe the value of
bitcoin under each of these scenarios, our approach is very common or similar. Finding out
what is the value of one bitcoin will be in a particular year, over the next few years and then,
findout the current value of that particular bitcoin based on the approach.

Financial Modelling Of Bitcoin

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