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Author Topic: 0.25 BTC Bounty - Bitcoin Valuation Analysis  (Read 1024 times)
canth
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March 24, 2015, 11:24:47 PM
 #1

I'm working on an analysis for a presentation and need a bit of help putting together one aspect.

I'm willing to put up 0.25 BTC for the first response that meets my requirements. Bonus - if you feel like working on this now and getting it done by 11PM Eastern, the bounty will be 0.5 BTC. You'll have to trust me as the sole arbiter of what counts as solid work and what doesn't - there will be only one winner.

Requirements:
I'm look looking for a mathematical and graphical demonstration of bitcoin valuation based on (a) the frequency of usage of bitcoin for payment (without payments being converted to fiat) and (b) transaction size (if applicable).  For example, as bitcoin is used more (or less) frequently for payments and as transactions increase (or decrease) in size, the effect on the value of bitcoin is _____. 

The mathematical portion should show a rigorous derivation and example of valuation based on the above parameters.  The graphical portion of the demonstration should provide an image or two that explain the valuation and its parameters in a way that is easy to understand.  It should be as visually intuitive as possible (but economics graphs are totally fine).

Oh - and I don't care if you reuse someone else's analysis, as long as it meets the goals. Have at it.

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alani123
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March 24, 2015, 11:38:25 PM
 #2

a https://www.cryptocoinsnews.com/more-than-4400-bitpay-merchants-keep-bitcoins/

b https://blockchain.info/charts

I can't think of any other reliable sources to get decent enough information for such a research.



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canth
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March 25, 2015, 12:12:25 AM
 #3

I'm look looking for a mathematical and graphical demonstration of bitcoin valuation based on (a) the frequency of usage of bitcoin for payment (without payments being converted to fiat) and (b) transaction size (if applicable).  For example, as bitcoin is used more (or less) frequently for payments and as transactions increase (or decrease) in size, the effect on the value of bitcoin is _____.  

Got credible data?

I bet 10,000 MØ there isn't because it's so embarrassing for BTC to show nearly a complete lack of seller adoption.

I'm not looking for anything based upon historical data - I honestly don't think that there's enough of a bitcoin economy to base it upon that. More so, I'm looking for the math/econ approach to how the value would be affected based upon payment and transaction volume.

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March 25, 2015, 02:04:49 AM
Last edit: March 25, 2015, 02:19:38 AM by johnyj
 #4

Interesting topic, but I'm not interested in the bounty. You can have a look at my signature, it is based on some polls done here before and followed by modelling and calculations, but mostly from a store of value point of view

You can also do some poll in the main board to see how many people spend how many coins monthly and the average holding time etc...

I think spending have a less impact to bitcoin's value than holding, since the reduce in money's velocity is the most when people hold coins for years or decades. You can only spend all of your salary each month, but you can continuously increase your holding each month, that makes the effect of spending quite small comparing with the effect of saving

I have another analysis showing that in fiat money system, when saving is taking place, the money supply must increase by 10 fold to counter the reduction of money in circulation


canth
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March 25, 2015, 03:29:43 PM
 #5

I'm not looking for anything based upon historical data

So we can make up anything we want?

I guess that would be par for conventional BTC economic analysis.

I honestly don't think that there's enough of a bitcoin economy to base it upon that.

Indeed.

More so, I'm looking for the math/econ approach to how the value would be affected based upon payment and transaction volume.

Just do it like the Keynesians: reach a conclusion, put a few closed forms behind it, and proclaim to the faithful how true it is even after discredited by true economists.

0.5 BTC is too high a price for that.

Predicting the future Bitcoin supply curve is trivial. Predicting the future demand curve is less so and using historical trends would largely be useless - we don't have enough of a history of cryptocurrency, IMO. For that reason, I'll take a theoretical analysis since it's the only one that I would feel comfortable with.

canth
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March 25, 2015, 06:18:32 PM
 #6

Predicting the future Bitcoin supply curve is trivial. Predicting the future demand curve is less so and using historical trends would largely be useless - we don't have enough of a history of cryptocurrency, IMO. For that reason, I'll take a theoretical analysis since it's the only one that I would feel comfortable with.

Since you don't care about data, you can make up anything you want within minutes.

It might look a little more credible if you use the quantity theory of money.

You know M & somewhat V over time.  P should be easy to extrapolate against the PCE.  

You'll have to throw darts to get Q which is the whole damn point, making this a joke without data.

Done.

Indeed, that's what I'm looking for. Everything in economics requires making assumptions of holding variables fixed or assuming factors such as Q. Economists choose the arguments that support their "dart throwing" and extrapolate from there.

Offer is still open and I'm happy to reward someone with a bit of effort.

canth
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March 26, 2015, 09:58:15 PM
 #7

Bump. Offer is still open for the next few days.

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