Could we calculate an “objective” value for bitcoin?

[Don Pedro Dinero]

This idea has gone around my mind for a while, but I’ve finally decided to open a post about it after watching this video:

https://www.youtube.com/watch?v=iqyLByXUksg

Value investors in the stock market measure what they calculate is an objective value for assets using different factors. There are different methods for this but usually most value investors agree on an approximate price on many companies, especially the big ones.

They may take all the assets a company has, substract all the debt, take into account ratios, cash flow, growth projections, etc.

In that video, the author says that the 1000% return of bitcoin in a year is not justified by a fundamental ratio of bitcoin, which is the number of transactions completed using the cryptocurrency. He goes into consider different aspects and says that the only factor that could justify that price raise could be bitcoin taking over gold as a reserve currency, but he doesn’t agree 100% with that view.

So, what he says is that bitcoin is in a bubble in the sense that it is overheated, meaning that the actual price is above the fair value. Which leads me again to what I said in the beginning:

Could we calculate a fair value for bitcoin? If so, what ratios should we use?

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[fiulpro]

Well I don't think we should calculate an objective value of bitcoins that can be considered as fair..
Because the biggest merit of a cryptocurrency like bitcoin is its ability to change with respect to time.. the fact that its value unexpectedly rises is one of the factor that attracts investors on a daily basis... And the demand and supply rule helps in increasing the value even further.
Bitcoins is decentralized and the only authority that should have that right to calculate its fair value should be its owners itself and there is no owner or controlling body.. well yes there are creators but they have never tried to own bitcoins ^ if you know what I mean.
Also its all advantages and applications are yet to be discovered by a major part of the community thus its value does hold the potential to rise even further.. so whatever we calculate right now won't be eligible to stick up for the future and a fair value itself if calculated for bitcoins must change with respect to time.. and the change itself will be very non static..
Thus I don't think its right to do so.

[davis196]

We can`t calculate the value of bitcoin the same way we calculate the value of some big company.
Bitcoin is just a digital currency and the market decides it`s value.Some people say that there is a growing bitcoin speculation bubble.So what?Every asset with limited supply and high demand creates speculation bubbles.There will be price correction and after that,bitcoin will continue it`s way to the moon. 

[13abyknight]

It's really a hard thing to set kind of like a fixed price tag on Bitcoin if you think practically as the factors that influence its price are basically supply and demand. When supply and demand can never be fixed for obvious reasons, it is fair enough to say setting a fixed price for Bitcoin wouldn't exactly be possible.

[Don Pedro Dinero]

I think some very interesting ideas have been pointed out here.

I agree that to calculate an exact price would be probably impossible. But what about a range? I think they author of the video I put the link to has an idea about that.

So, let’s say that we could establish that current objective fair value is between 2.000-3.000$. That way we would know that current price is overheated.

It is true that price is highly volatile and not static, so I think a range would be better.

When John McAfee calculates price of bitcoin will reach 500.000$ in three years he will have some parameters in mind to calculate projecting future growth.

Another thing is, if bitcoin becomes the worldwide currency in the future (which I’m not so sure of), it won’t make so much sense to value it because it will be the reference other assets will measured against.

[Gozie51]

The angle I want to look at OP's question is from the perspective of the growth of bitcoin. The objective value of bitcoin is its proportional growth which is witnessed or inebriated by the number of subscribers to it.

For instance, last year, bitcoin didn't witness the growth is going riding on now and the previous year before the last, didn't witness the growth of last year.

Hence, by calculating the value of bitcoin, it has more-or-less witnessed an astronomical growth which means more and more people, investors , subscribers and "likers" are adopting it for transacting of distinct businesses.

[strocifer]

At least you can compute a max "fondamental value" that corresponds to the electricity you have to spend in order to mine 1 BTC.
It will depend on the country since electricity doesn't cost the same around the globe. The country (with a decent mining production) where the electricity costs the least will set your max value.

[Basmic]

During the stage of initial accumulation of capital, there is no algorithm allowing to objectively calculate the value of the asset. The growing popularity is constantly pushing prices up. We haven't even discovered half the possibilities of bitcoin. As they will open the price will rise.

[killerfrost]

I think it is impossible to calculate the fair value of bitcoin as you say because the price of Bitcoin is never stable and it continually decreases so this is not possible. Actually, Bitcoin's prices are very high compared to everyone's expectations and it could also be gone forever because of the sudden price increase, but I think it will not happen to Bitcoin at this time.

[Akash1243]

Bitcoin is very volatile and unpredictable in nature so calculating an objective value for bitcoins would be an impossible task.Bitcoins value depend on the demand from the people and the money invested in bitcoins.So i think giving a range would be more possible than any approximate value.

[krigger]

We can calculate an objective value for Bitcoin by looking at the natural progression of money. First money was just a subjective ledger. We used our heads to remember to keep track of debt. Then we used collectibles as an objective ledger by using whatever was scarce in the environment. It was also durable, divisible, transportable, recognizable, and fungible. Gold then became the first universal ledger and now BTC is the first immutable universal ledger.

[Don Pedro Dinero]

I think it is impossible to calculate the fair value of bitcoin as you say because the price of Bitcoin is never stable and it continually decreases so this is not possible. Actually, Bitcoin's prices are very high compared to everyone's expectations and it could also be gone forever because of the sudden price increase, but I think it will not happen to Bitcoin at this time.

I don’t think prices are very high compared to everyone's expectations as John Mcafee predicted the price of bitcoin will be 500.000$ in three years. Actually, he made that prediction on July 17th this year, when price was at around 2.000$. That means it has to grow a lot to reach that figure. A lot. If he is right, we haven't seen anything yet.

https://www.cryptocoinsnews.com/john-mcafee-claims-bitcoin-will-worth-500000-three-years/

[Don Pedro Dinero]

I am locking this thread as I've realised there was one opened before that I hadn't seen.

https://bitcointalk.org/index.php?topic=2324183.0