What is the valuation and rising logic of Bitcoin?
We often see some media or big V say how much money Bitcoin will rise in the future, such as $1 million.
Then, what is the basis for its rise, is it not to say that, for example, when BMW said that it wants to produce a car, and this car is characterized by a speed of 5,000 km/h, then it must be deceptive because The fastest "Concorde" supersonic airliner now has a speed of 2,330 km/h.
So what price bitcoin can rise to, it does not exist in isolation in this world, it can also find its benchmark.
Recently, in the analysis course of Xiao Lei, I saw a unique perspective on the valuation of Bitcoin and shared it with everyone. At the same time, I will summarize my own thinking.
1. Find the benchmark to evaluate the value of Bitcoin
For any investment, its price cannot rise indefinitely, and it always has a price ceiling. For a new thing, when it was born, we were full of expectations for it, but its final price still had to be in line with actual value.
The same is true for Bitcoin, and we are full of expectations because its characteristics will make it more convenient and valuable for us to replace things that are unsatisfactory or flawed in our existing lives.
Then we can look at this point and see what Bitcoin can replace in our existing life. The value of things that may be replaced is now worthwhile, so when Bitcoin replaces them, the market value that Bitcoin can occupy can be estimated.
2. What are the things that Bitcoin can replace?
Every time we talk about bitcoin, when it comes to its subversiveness, we always talk about its three characteristics: payment, anonymity and decentralization.
Then can these three characteristics find the opposite thing in real life?
1) Payment function . Bitcoin has long been expected to be widely used in the field of micropayments. So which company or format corresponds to micropayments in reality? We Chinese soon think of two answers: Alipay and WeChat.
Since the main function of Alipay is to pay, I will compare the payment function of Alipay and Bitcoin. What is the current valuation of Alipay? In May 2018, Alipay's parent company, Ant Financial, completed $14 billion in financing, valued at $150 billion.
Note that here is the overall valuation of Ant Financial is $150 billion, Alipay is only its subsidiary, so Alipay's valuation is currently up to $150 billion.
There are two other payment companies in the world that have been established earlier and cover a wider area: VISA and MASTER CARD. So what is the current market value of the two companies? The current market value of VISA is about $360 billion, and the market value of MASTER CARD is about $260 billion.
Among the three major companies, the largest market value is VISA, which is $360 billion.
As a payment instrument, Bitcoin can't be compared with the above three companies in terms of the number of users. If the payment function of Bitcoin reaches the level of VISA, the valuation of this item may be close to 360 billion US dollars.
2) Anonymous privacy features . Anonymity mainly refers to the holder of Bitcoin whose identity is anonymous. In real life we can find this benchmark, it is the famous Swiss bank.
Swiss banks have been known worldwide for their anonymous protection of account privacy due to their unique geographical location and historical factors, attracting numerous global wealthy individuals to deposit a large amount of private wealth in Swiss banks.
So what is the market value of Swiss banks? At the peak of 2007, it was close to $240 billion. So if the anonymity of Bitcoin is applied to the level of Swiss banks, the valuation ceiling is about $240 billion.
3) Decentralization function . The so-called decentralization refers to the fact that it does not rely on intermediary authority, specifically, it can become a currency without relying on the government. This is the most important emphasis of Satoshi Nakamoto in the Bitcoin white paper, and it is also the most important feature of all people in the world who understand blockchain and bitcoin.
In real life, we can also find the right target. This is the king of commodities that has reached a consensus through thousands of years of human history. Marx called "natural currency": gold.
Whether gold is used as a currency or as a value store in ancient times, it naturally does not rely on any government for credit endorsement. All human beings agree on its "decentralization" characteristics.
In the circle, Bitcoin is the most popular and analogous to the public is the gold of the virtual world.
However, gold itself contains many characteristics. It is used for industrial purposes and for commercial use. It is also used in the jewelry industry. It is also a value storage and risk hedging tool used by major institutions including global central banks to hedge risks and Protect assets.
When we decentralize bitcoin against the target gold, we must remove the industrial and commodity attributes of gold, only to see it as the value represented by value storage and risk hedging instruments, that is, the value of investment. Then this part of the investment value accounts for about 30% of the total value of gold. At present, the total value of global gold is 8 trillion US dollars, 30% is 2.4 trillion US dollars.
So if we look at the decentralized nature of Bitcoin and use it as a decentralized value store and risk hedging tool, the value of the benchmark is about $2.4 trillion.
So, if Bitcoin can completely replace gold as a decentralized value store and risk hedging tool, its valuation ceiling is about $2.4 trillion.
In summary, Bitcoin's payment function, anonymous function and decentralization function are estimated at US$360 billion, US$240 billion and US$2.4 trillion, respectively. The corresponding bitcoin unit price is US$21,000 and US$14,000 respectively. And $140,000.
The current market value of Bitcoin is approximately $100 billion on May 4, 2019, and the unit price is $5,800.
Does this idea lead us to consider the valuation of Bitcoin more rationally? At least as an investor, we have a rough logic in our minds, not blindly being clouded.
At least let us understand that there is still a good room to invest in Bitcoin.
The above analysis logic is to analyze the three characteristics of Bitcoin separately. Can we find things that have these three characteristics in real life? If we combine the three characteristics and analyze it, how should we calculate the valuation of Bitcoin? I will analyze it with you next time.
Author: Road, said Block Chaining