

The current price of 1 BTC should be $2.50 USD - contactdick

The real value of a currency depends on the value of the goods that can be purchased with it. If we assume the majority of bitcoin transactions for 'real' goods (not currency speculation) are on silk road we can do the following calculation.<p>The demand in USD is about 1.9 million per month (http://arstechnica.com/tech-policy/2012/08/study-estimates-2-million-a-month-in-bitcoin-drug-sales/) which works out to be $63,333 per day (the demand)<p>There are currently 10118337 bit coins that have been created and each coin is spent on average once every 399.357 days (http://abe.bitcoinstats.org:2750/)<p>This means that each day there are 10118337 / 399 = 25,359 bitcoins available to use for transactions each day (the supply)<p>The price of 1 BTC should then be supply / demand = $63,333 / BTC 25,359 = $2.49 USD per coin<p>Does anyone have alternative suggestions for calculating the price?
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oortlieb
The method you've used is similar to ones that FOREX traders use to value
traditional currencies, which would speak to its validity. A market-basket of
goods is defined, and a relative exchange rate for two currencies is based on
the price differences of the two market-baskets.

A potential issue with this analysis is that your market-basket only contains
illegal items -- however, even if your final valuation isn't accurate, it
suggests to me that there are likely other cross-market pricing
inconsistencies. I assume those are what you're interested in finding.

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contactdick
Pretty much, I'm simply trying to understand what the fundamental value of the
currency is. The reason i'm using illegal goods is that they are the only ones
i can find whose exchange must be in bitcoing (yes there are some other
smaller goods but nothing on that scale).

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noonespecial
What someone else will pay me for one?

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contactdick
that's the current market value yes, i'm trying to estimate the fundamental
value

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dmm
All value is subjective and relative. There is no "fundamental value".

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benaiah
Precisely. The OP needs to read his Van Mises.

