"True Value" $ 350,000 ?: The five craziest predictions of Bitcoin

economy

Wednesday, November 28, 2018

By Max Borowski

What is a Bitcoin really worth? Experts of all kinds offer bold forecasts and models for the future development of digital money. An unpretentious selection with completeness – more a serious approach.

With almost no investment, the price fluctuates as much as that of crypto-currencies. Nearly a year ago, the price of a Bitcoin was still climbing to $ 20,000, after being multiplied by more than twenty a year. Then the price has collapsed to currently well under $ 4,000. However, even further than the highs and lows of the Bitcoin price gap, what self-proclaimed and real experts would have calculated as the "true" value of Bitcoin.

Here, without pretending to be complete, there are five models and scenarios that you should never follow – and a realistic approach:

1. Cryptos replace official currencies: At the height of Bitcoin's hype, some experts have predicted that digital currencies would totally or largely replace the conventional liquidities issued by the state in the future. Featured investor Tim Draper estimates that taxpayers' money totals $ 86 trillion. Bitcoins and other cryptos would account for about half that figure in the future, predicts Draper, concluding that the price of bitcoin would reach $ 250,000.

2. The new gold: Other prophesies suggest that Bitcoin will become the new gold. The simplest calculation is as follows: The total gold stock in the world is estimated at approximately $ 7.5 trillion. If it is replaced by 21 million possible Bitcoins, it should be worth more than $ 350,000 per piece. Some amateurs even achieve even higher scores because they calculate the large number of lost or non-tradable bitcoins. The problem with the invoice is the same as for the comparison with the currencies: it is not clear if crypto-currencies can significantly replace the traditional means of payment, gold or other investments. On the other hand, Bitcoin alone can accomplish that.

3. Zero target: Some well-known economists point out that Bitcoin, like other cryptocurrencies, did not represent a tangible value and offered no real value compared to alternatives already established for transactions and investments. Others claim that the technology behind Bitcoin, like all technologies, is likely to be outdated or obsolete by better or even to be. However, this does not mean that cryptocurrency is totally zero for investors. As long as a group of people agrees to give value to Bitcoin, it has this value. Some enthusiasts should be able to find themselves, at least for a long time. Technologically, Bitcoin can evolve and has done in the past.

4. The "Côtes du Rhône Theory": This calculation is known as the grape variety that hedge fund managers Savvas Savouri and economist Richard Jackman would have consumed in calculation. In addition to the stimulating effect of wine, the calculation is based on the generally accepted monetary theory of one of the pioneers of the economy: Irving Fisher. The theory, however, does not appear to be transferable to Bitcoin & Co. Bitcoin price movements can not be explained by the fact that coins in circulation, orbital speed and the value of goods purchased are counted. In addition, different economists end up with completely different results, based on the same theory, between $ 20 and $ 15,000. However, Savouri and Jackman must be credited for not having probably meant their calculation seriously enough.

5. Network theory: This idea is one of the most sophisticated and reasonably well-founded attempts to calculate a "true" or "just" bitcoin value, based on the badumption that digital currencies are networks. whose utility is increasing as more and more participants join. One is that of Metcalfe. According to Law, "the value of a network increases exponentially in proportion to the number of users". Several badysts have refined this method for Bitcoin, for example by including the number of transactions.
   With "Metcalfe's Law", badysts have been able to explain the price of bitcoin at an incredible time and to identify as such the bubble that went through digital currency in 2013. But they were surprised by the violence of the crash after the extreme rally of late last year. At the end of this year, lead badyst Tom Lee also predicted a $ 25,000 bitcoin price using a sophisticated network-based model. Given the recent drop in prices, a difficult target for even volatile cryptocurrency.

The Surrender badysts: At the height of the Bitcoinhypes, even the big Wall Street banks were discussing the creation of "crypto-commerce offices" or bitcoinfunds. But reputable bank badysts said: "A real value for cryptocurrency is probably impossible to calculate," Bank of America experts Merrill Lynch said in an badysis.

Source: n-tv.de