Bitcoin (BTC) was created for digital trading without any restrictions, regardless of the distance between transaction participants. Thanks to the Bitcoin network, anyone can send money without any intermediaries. How much is a bitcoin worth, though?
The first step in formulating any valuation is to indicate the internal value of the instrument. Internal value tells us what value an asset has, provided that we have all available information. Due to the lack of this information, we have to make assumptions and assess, which makes the internal value somewhat unclear.
In some cases, such estimates are quite tangible, while in others the assumptions themselves are already difficult. Consider the shares and their internal values of shares. If we know the financial statements and the current economic situation, we can assume the course of future events and discount future profits based on current value. Different analysts take into account different assumptions, which means that sometimes they achieve quite radically different valuations. However, they are at least able to agree on internal valuation methods that are well sanctioned by financial literature. This is not the case with Bitcoin.
Bitcoin valuation – capitalization
The market capitalization of bitcoin as we know it is calculated by multiplying the number of coins in circulation by the current coin price. Hence 17,905,500 BTC at $ 9,622 per coin (at the time of writing), gives a market capitalization of $ 172.32 billion.
This calculation method assumes that all coins have the same market value, while most of them were purchased at different times – and at radically different prices.
According to CoinMetrics, the value that we could define as “real capitalization” takes this factor into account. He gives no price based on almost 18 million coins, many of which are lost forever. It works based on the value for which the cryptocurrency was recently exchanged:
The application of this method shows that the total, “actual” market capitalization of bitcoin is only $ 100 billion – which is a 41% reduction compared to the value displayed on CoinMarketCap.
Bitcoin rate – what does it depend on?
Bitcoin exchange rate depends primarily on how investors perceive the value of this digital asset. As bitcoin is not controlled by any major organizations, its price is set by the free market – supply and demand. Additional factors include:
- publicity in industry and mainstream media, which cause new investors to enter the market;
- Bitcoin acceptance by large centralized market players;
- implementation of blockchain technology by international organizations and corporations;
- legal regulations favorable for the decentralized market and cryptocurrencies;
- difficulty extracting the Bitcoin network;
- political and global events
If you want to buy bitcoins, then the bitcoin exchange is a place where you can do it in a simple and safe way, without unnecessary formalities.