Valuing BTC Using a Macro Framework

Meanwhile, BTC has switched from being a mechanism for some people to find an alternative
to gold to something more of a transactional currency and a way around capital controls.
China love
In China, BTC use has been explosive. There has even been tacit Chinese Government
approval on its use with a TV programme dedicated to it, along with newspaper articles. The
Chinese are using it for online gambling and for getting around capital controls. Bitcoins being
exchanged into or out of RMB now accounts for 21% of all volumes (versus 65% versus USD
and 6% versus Euro). The main Chinese Bitcoin exchange is now the third largest in the
world and soon likely become the largest (we are seeing equally strong demand in other
Asian countries).
What is driving a renewed surge in demand is that Baidu, the most visited website in the
world, is allowing one of its subsidiaries to accept payment in Bitcoin.
It’s just supply and demand
Thus we have a classic supply and demand imbalance in the making and acceptance is
growing rapidly.
I think we are in the take-off stage.
Valuing BTC using a macro valuation model
OK, this all sounds good but what the hell is the fair value of such a currency?
Again, we can turn to gold. If Bitcoin exhibits the same properties as gold in that it is finite in
amount, is an exchange of value, is transportable and it costs more and more to mine the
remaining reserves, then it should have a relative value versus gold which is vaguely
quantifiable.
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