How to Value Bitcoin: Ticket to the Moon or Rat Poison?

Inside: reasonable approaches to valuing cryptoassets based on Store of Value

How do you value a Bitcoin? Can you measure what it’s actually worth? Super important questions, particularly with the price recently breaking firmly above $10,000 and the bulls coming out reiterating seemingly crazy price targets, often upwards of $100,000.

How do they reach these seemingly random targets?

To understand the answer to these questions, let’s start with the worst case and best case scenarios. The ultra-bear and ultra-bull arguments. The reality will likely fall somewhere in between and we will look at that too.

The Extreme Arguments

The ultra-bear case is simple, Bitcoin will go to zero. It’s a ponzi scheme. It’s not backed by anything. It’s a fad. It’s tulip mania 2.0. It’s rat poison squared, if you believe Warren Buffet.

Whatever the ultra-bear argument is, it puts the price at zero.

Let’s take the other extreme, “hyperbitcoinization” — all seven syllables of it. What if Bitcoin became the defacto currency of the world. What if it replaced transactions globally and was used in every country? What if other…