What is a Bitcoin Really Worth?

[eatrader]

From an economic standpoint, 1 BTC is worth the sum of all transaction fees that the system will ever pay it's miners, divided by 21,000,000. Considering the advantages over all other payment methods, I would imagine that this pool is worth considerably more that present market price.

Let's say $15 on every $1M in which the system acts as agent.  Without an increase in usage, the system produces $25,000 per day. That puts the present P/E at ~1400.

That being said, I believe that there will be a growth in E. Present Bitcoin transaction total is about $500B. The total transaction globally is over $500T. So if Bitcoin was the chosen means of transaction for all transactions in the world, BTC would generate $435 per BTC per year. 

I am comfortable estimating that the method will be the choice for 25% of the world's transactions. And this model has a huge economic moat so it will command a sizable multiple. Doing the math I estimate the crypto market is worth $2.2B in revenue and a 25 multiple. That is ~$55B of which BTC presently hold 50% of the market.  At stable marketshare, BTC is worth $1325.

[Barek]

Transaction fees are used up for maintaining the network.

You can't calculate the value of a Bitcoin. Then again, if you are happy with $1325, all the better. Whatever works for you.

[yenom]

I feel you are on a fool's errand. A bitcoin is worth what a buyer and seller are willing to transact at. There is no objective value. If you are stranded on a desert island with no water and I offer you a litre of water or a brand new Ferrari, which would you take? Which is more valuable? The Ferrari or the water?

LIkewise, if the major economies of the world enter hyper-inflation what would be worth more? Bitcoins or fiat? Value and worth are subjective and depend on a variety of factors at that point in time of the transaction. They cannot be objectively calculated. Trades are conducted mostly by rational humans, but we know that humans are governed by emotion and trade based on emotion and justify their decisions with reason later. Just look at the price action of the last two days for an illustration of this.

[eatrader]

Paypal sees the value proposition of the transaction processing system that bitcoin is based.

Now they use the source code to create the Paypal Processing System based on the bitcoin model.  Instead of paying miners in crypto, they pay in fiat.  All of the costs to validate their existing system go away driving the minimum cost to transact to almost 0 even after Paypal includes a nominal profit buffer.

You are left with all of the advantages of bitcoin, but the transactions will be in fiat.

[fenican]

My guess is 1 Litecoin.  Within 24 months, LTC and BTC will have price parity.

Competition, particularly among currencies, is a GOOD THING

[Johnny Bitcoinseed]

The value of bitcoin will rise with its usefulness as a medium of exchange.  Seeings as how the infrastructure for enabling easy exchange of goods and services for bitcoin is still in its infancy, there is huge room for growth.  Imagine the day when every grocery store, bar, and online business accepts bitcoin as a form of payment.

Imagine the day when colonies on the moon and mars accept bitcoin payments from residents on earth.

That is potential value of bitcoin.

[eatrader]

Could not agree more. Remember when Michael J Fox in Back to the Future when he plays the electic guitar. 'You guys arent ready for this, but your kids are going to love it!'

Same here. The tipping point for Bitcoin is a rival system paying in fiat.

[User_513]

What is it worth to you to have money that no central authority can deflate the value thereof? What is it worth to you to have money that no government claims for itself a right to take from you via taxation?

What's a Bitcoin worth? I don't know the answer to that question. But I do know that a much better question to be asking is this... What's your economic freedom worth?

[QuestionAuthority]

It's worth only what you can cash it out for at any time. If you can sell 1BTC and receive $1,000 in your hands then it's worth $1,000. If you haven't tried this lately then you should. You can always easily buy btc back after your experiment. However, if it takes you three months to receive fiat in your hands after cashing out then you need to factor in the associated CPI increase and loss of buying power into the equation.

[eatrader]

If fiat is the most accepted means of transfer of wealth then a Rival system paying in fiat from the beginning is exactly what BTC needs. If you choose to deal in fiat then use the Rival system. If you choose to deal in a decentralized unit, then deal in Bitcoin.

A fully respected fiat BTC equivalent will always lose to BTC in terms of cost because of the profit required by the Rival system.

So we would have 2 systems. Fiat based charging $35/$1M and BTC charging $15/$1M. The consumer could chose either method. Some would pay the extra small fee to transact in fiat. Some would pay less and accept the hassle required to transfer to fiat.

Here is my message to PayPal...

http://www.cryptocoinsnews.com/2013/12/07/message-paypal/

[Trongersoll]

OP, your "economic standpoint" is flawed. In any fundemental Economics class they will teach you that anything is only worth what someone else is will to pay for it.

[yenom]

OP, your "economic standpoint" is flawed. In any fundemental Economics class they will teach you that anything is only worth what someone else is will to pay for it.

Exactly, and people are likely to be more willing to pay higher prices for a bitcoin when the utility value of bitcoin increases.