How I put a price on BTC

in bitcoin •  7 years ago 

Some people look at Bitcoin's price and see tremendous room for growth. Others take one look and feel that they’ve missed the boat. It seems that few are able to put a price on BTC, and unless one is able to do this, one can never know whether or not now is the time to buy, hodl, or sell.

By making some assumptions (which you may well disagree with), I feel it is possible to develop a framework of thinking around this.

If we assume that Bitcoin’s function becomes analogous to gold, that is, it becomes a long term digital store of value, then one is suddenly able to put an approximate value on BTC with the following equation:

Screen Shot 2018-01-13 at 4.21.45 PM.png

I’m going to assume a 10% chance of BTC becoming digital gold. We can then roughly estimate:

Screen Shot 2018-01-13 at 4.22.02 PM.png

This produces a value far in excess of the current price of 1 BTC, $14,250 USD.

But...

Perhaps instead of a 10% chance of becoming digital gold, BTC has only a 1% or a 0.1% chance. Maybe the analogy between BTC and gold is incorrect. Or perhaps the total number of BTC will end up exceeding 21 million, for whatever reason.

Either way, I thought it might be useful to share my framework of thinking around this. What do you think a Bitcoin is worth and why?

Thanks for reading. If you like my content, feel free to follow me. Have a great day!

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thanks for guide bro . it is a attractive idea . i will try it

No worries, thanks for reading!

that is a clever thought ! :D found this post very good

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