[In Case You Missed It] - One of the Most Comprehensive Bitcoin Articles from Outside the Cryptosphere - "BTC to $848"?

^{This "In Case You Missed It" article was originally posted on Zero Hedge. Below is a brief summary.
Source : http://www.zerohedge.com/news/2016-10-27/needham-raises-bitcoin-price-target-848-heres-why}

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Needham Raises Bitcoin Price Target To $848: Here's Why

Bitcoin Metrics & Fundamentals

While Bitcoin is notoriously volatile—especially relative to the world’s major currencies—its volatility has declined significantly in recent years and is similar to several more well-known assets.

Correlation

Aside from its upside potential, one of the most appealing aspects of Bitcoin for institutional investors in our opinion is its low correlation to major asset classes.

Liquidity

Bitcoin’s daily dollar volume roughly resembles that of a US MidCap security.

Supply

In July, Bitcoin incurred its second “halving”—where the rate of supply of new Bitcoins falls in half every 210,000 blocks (approximately every 4 years). As a result, the “block reward” (newly created Bitcoin rewarded to miners for processing transactions and adding a block to the blockchain) fell from 25 Bitcoin to 12.5 Bitcoin per block.

Transaction Volume

Daily USD on-chain transaction volume, as estimated by Blockchain.info, has grown at an impressive 224% CAGR since January 2013. Spikes in USD-equivalent transaction volume tend to occur when price rises significantly. In particular, we note that transaction volume in mid-2016 has grown more than threefold over a year ago.

Hash rate

Hash rate is a measure of the amount of computing power that is securing the Bitcoin blockchain. At current levels, Bitcoin is estimated to have many thousands of times more computing power than the world’s top-500 supercomputers combined.

Price Action

The price of Bitcoin, as measured by the CoinDesk Bitcoin Price Index (BPI), is up 46%—from $415 to $608—since we published our initiation report in March, and a couple recent events (Brexit, Bitfinex hack) have highlighted some interesting price action.

Price Resilience

The other interesting recent price move was following the news of a ~120,000 Bitcoins ($60M+) heist from one of the world’s largest Bitcoin exchanges, Bitfinex. The exchange theft was the second largest in Bitcoin’s history after the 2014 Mt. Gox incident, but the resulting price move wasn’t nearly as severe.

Bitcoin Keeps Improving & the Outlook Is Compelling

Bitcoin has improved significantly since it was initially released nearly 8 years ago, and we think the outlook is bright.

Segregated Witness

As the number of transactions on the Bitcoin network has grown over time, the finite space available for transactions in each block on the blockchain is increasingly under pressure to the point where most blocks added to the blockchain are now at capacity. The consequence is upward pressure on transaction fees. Now, after many months of contentious debate, Bitcoin’s first real move toward increasing transaction capacity is likely to be deployed over the coming months.

Lightning Networks

Lightning networks/payment channels show significant promise for enabling high-volume, low-value transactions. A lightning network is a method for decentralized, off-chain transactions between untrusted parties. Relative to what is currently possible on the Bitcoin network, a lightning network allows for drastically higher throughput (potentially beyond Visa-level capacity) at faster speeds (near instantaneous), with greater privacy, and at significantly lower cost.

Sidechains

Sidechains have been a concept for more than two years, but sidechain projects are finally inching their way toward more widespread deployment. The concept and potential value of sidechains is relatively straightforward: With sidechains, developers get the freedom to try new concepts, features and functionality in a production environment while still leveraging Bitcoin’s first-in-class network effects (its security in particular).

Privacy

The gold standard for privacy is the ability to be able to withhold as much information as possible (transaction amounts, addresses, etc) but to have the ability to selectively reveal transaction activity and information exclusively to intended parties. We’re optimistic that this will eventually be possible in Bitcoin.

Smart Contracts

The basic premise of smart contracts is to reduce mutual agreements between businesses, individuals, or machines to transparent software code that self-executes and self-enforces.

Market Opportunity, Assumptions & Valuation

Based on evaluations of the movement of individual Bitcoin6,7 we estimate that roughly 75% of all Bitcoin is currently dormant or held as an investment in Bitcoin as a “digital gold”. Bitcoin’s appeal in this segment is largely attributable to its known finite supply and its value as a liquid speculative investment in a nascent technology. Given a current total Bitcoin market capitalization of $9.6 billion, we estimate that the portion of Bitcoin’s total market capitalization associated with its value as a “digital gold” is roughly $7 billion.

Accelerated Adoption

The pace of Bitcoin adoption has exceeded our expectations (as outlined in our estimates published in March) and we are adjusting our forecast accordingly. At the end of August 2016, estimated TTM transaction volume was roughly 30% higher than we projected in March, and as a result of this fasterthan- expected growth we are raising our 2020 market share estimates by a more conservative 10%.