I don't understand how "chance of success" factors in.
Isn't it either 0% or 100%? If it's 0% then obviously the value of bitcoins is 0. If it's 100% then the value is determined by the other variables.
What is 25% success. Isn't this what the other variables are for.
The whole exercise seems a bit sketchy albeit admittedly fun.
Well you won't know if it is successful on a long term scale until after the fact. 25% says over the next decade (or two) there is a 25% chance that Bitcoin reaches the marketshare predictions (the next three values) and a 75% chance the network fails and value goes to zero or some very small niche low usage, low valuation scenario.
Then IF the 25% occurs the next three values are your prediction on the marketshare Bitcoin will command.
So hypothetically if you put in
25%
2%
5%
1%
you are saying "I think Bitcoin has a 25% chance of success and am willing to write up the other 75% as a complete loss. I define success as 2% of store of value, 5% of illicit trade, and 1% of global commerce. The calculator estimates that gives Bitcoin a fair valuation of $1,267. If Bitcoin IS successful the value won't be $1,267 because it would be more like $5,000 the $1,267 is the risk adjusted (i.e. 1 in 4 chance of success) valuation.
An analogy might help. Lets say I tell you that you can roll a dice and if it comes up six I will give you $120 how much would you value the opportunity at. Obviously not $0 or $120 although those are the only possible end states. Since you have a 1 in 6 chance of getting $120 the opportunity is worth $20. This means the fair valuation is $20. In the long run if you cam across an infinite number of scenarios and paid the fair valuation you would neither be ahead nor behind. On the other hand if I tried to get you to pay $30 for a roll of the dice it would be a "bad deal" but if I offered you a chance to roll the dice for $1 it is a no brainer to take it right? Granted you could still pay $1 and not roll a six. That doesn't mean that at the time of making the choice it was a bad choice.