Calculating bitcoin intrinsic value

[godislove]

An intrinsic value of bitcoin can be calculated: If you assume there is not going to be a flood of competing cryptocurrencies and the "winner takes all" for at least a decade (which is possible since the larger base of "first to market" will add to trustworthiness and stability of price via a momentum I'm describing here) then the intrinsic value should be something like 1,000 times the daily volume of marketplace transactions, not associated with speculators buying and selling on the exchanges.  My reasoning is like this: in order for the asset to have value as a currency, it must have price stability. This can only occur if there are a lot more people holding it as an asset rather than using it to buy and sell. Right now bitcoins have a great deal of value simply because they are increasing in price, but someday the value could shift to being a store of value.  My guess is 1,000 times more in asset price over non-exchange market transactions so that any given day has only 0.1% of the asset value changing hands in the market place.  The exchanges will be a battle ground between large players with algorithms trying to out-compete each other and small players, profiting on small price changes, just as occurs in all other exchanges like the London Metal Exchange which trades 1% of gold's world asset value per day (20 million ounces per day). MtGox is an excellent parallel to the London Metal Exchange and trades $30 million per day, so if that should be 1% of the asset value, then about $3 billion should be the total asset value in bitcoin ... and it is.  Likewise, if the $2000 per minute estimate for bitcoin marketplace transactions ($3 million per day) is correct, then my factor of 1000 also gives about $3 billion.  So the current value of bitcoin seems justified....if you assume its use in the market place will not increase.  If its use increases by a factor of 100, then I do not see why $300 billion in bitcoins  ($20,000 per bitcoin) is not realistically an EXPECTATION rather than a mere hope or dream.

[Gator-hex]

When people say, "what is a bitcoin worth", my answer is "try making one" then you'll know!

You can also try putting numbers into this... http://www.bitcoinx.com/profit/ and see how much they cost to generate!

It assumes a BFL 50 GH/s Bitcoin Miner $2,499 @ 100w which currently has a 198 day break-even if BTC was $300.

Of course that assumes you have one mining today, which of course you won't, there's a looooong lead time until delivery!

[balanghai]

It's value lies on the limited number of coins. And also it is not that necessarily hard. You can start cloud mining. But the bottom line is the number of limited coins. Which makes is "rare".