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Bank of America's analysis of price made a lot of sense to me, and to the best extent possible, they justified their valuation ($1300 max). This is just mindles
by logn 13y ago
Bank of America's analysis of price made a lot of sense to me, and to the best extent possible, they justified their valuation ($1300 max). This is just mindless speculation like CNBC saying BUY BUY.
- ekianjo 13y agoJustified the 1300 value how ? They have no real method to get to that number.
- logn 13y agoYou can read it here: http://cryptome.org/2013/12/boa-bitcoin.pdf http://cryptome.org/2013/12/boa-bitcoin.pdf They look at comparables such as gold, silver, PayPal market cap, etc and then deduced where BTC would fit in.
- ekianjo 13y agoYou can draw comparisons, but in the end Bitcoin is like nothing else you mentioned here. Even if you compared it to Gold, it has several advantages over it. It's like an electronic Gold currency that can be transferred faster and cheaper than Paypal. You cannot deduce the value of Bitcoin in this way, because its value exceeds the sum of its properties.
- vidarh 13y agoIf by "deduced" you mean "guessed" based on assumptions they have not really justified. IF you agree with them that Bitcoin will be used as a medium of exchange for about 10% of online transactions, and IF you agree that it will be used as a money transmission method and will compete as one of the top three money transmitters for volume and that this will add to the Bitcoin valuation according to the valuation of the top companies in this market, and IF you agree that since, "by the way, $5bn is not too far from the current value of total US silver eagles minted", $5bn is the maximum market cap of Bitcoins as a store of value, THEN their estimate may make sense. They dismissed any use for illicit transactions out of hand because they "don't have any informed view on this subject". They ignore B2B transactions after saying "we cannot rule out that Bitcoin can become a dominant medium of exchange for B2B transactions". Their total upside is calculated without even trying to make any assumptions about B2B usage. They've just hand-waved the storage of value bit with a comparison to silver eagles and the relative value of gold vs silver on the basis of long term reputation and volatility, making up a "roof" of 300bn, and then scaling that down to 1/60th based on the difference between gold and silver. Part of this they justify with the volatility, without considering whether or not volatility will flatten out if Bitcoin starts hitting a valuation roof. Partly they ignore the other possible upsides for storage, such as ability to more easily hide funds (e.g. they themselves pointed out a large swing up in Bitcoin value after the threat of the Cypriot "haircut"; they've also not considered the extensive use of e.g. strips of plated gold as a medium of short to medium term storage in high risk areas). I don't have any better assessment, but this one reads like an attempt to justify pre-existing opinion rather than an attempt to be thorough.
- EGreg 13y agoI think they justified their assumptions. Maybe you disagree with their justification?
- KaoruAoiShiho 13y agoYou should try reading it... It's actually very well thought out.
- vidarh 13y agoI just read it, and it has huge, gaping holes and tons of hand-waving. E.g. ignoring all B2B usage; ignoring all illicit usage; estimates of market penetration they've just pulled out of their ass.
- fragsworth 13y agoIt poses a real threat to the speculation value currently hoarded in Gold. It is not unreasonable to expect bitcoins to eventually replace a substantial part of that value.
- Tenoke 13y agoI am sorry buy BOA's analysis was just as much mindless speculation as the comments by the Winklevii (if not more)..