Summary of “What Bitcoin Is Really Worth May No Longer Be Such a Mystery”

It took two economists one three-course meal and two bottles of wine to calculate the fair value of one Bitcoin: $200. It took an extra day for them to realize they were one decimal place out: $20, they decided, was the right price for a virtual currency that was worth $1,200 a year ago, flirted with $20,000 in December, and is still around $8,000.
Answering this question isn’t easy: Buying Bitcoin won’t net you any cash flows, or any ownership of the blockchain technology underpinning it, or really anything much at all beyond the ability to spend or save it.
Maybe that’s why Warren Buffett once said the idea that Bitcoin had “Huge intrinsic value” was a “Joke”-there’s no earnings potential that can be used to estimate its value.
If Bitcoin is a currency, and currencies have value, surely some kind of stab-even in the dark-should be made at gauging its worth.
Estimating Bitcoin’s supply at about 15 million coins, and assuming each one is used an average of about four times a year, led Jackman and Savouri to calculate that 60 million Bitcoin payments were supporting their assumed $1.2 billion worth of total U.S. dollar-denominated purchases.
Using the theory popularized by Fisher and his followers, you can-simplifying things somewhat-divide the $1.2 billion by the 60 million Bitcoin payments to get the price of Bitcoin in dollars.
Such a value would be not too far off $1 million-where the frequently mocked, frizzy-haired self-help guru James Altucher expects Bitcoin to be in 2020.
“They’re always talking about a new paradigm, but I say it’s the same meat, different gravy,” says Côtes du Rhône theorist Savouri, who maintains traditional economic theory should be embraced rather than ignored by the Bitcoin faithful.

The orginal article.