How can you calculate Bitcoin’s value in the medium and long term, from the sidelines, far from the daily volatility noise? Is there a way to figure out how much a Bitcoin will be worth , let’s say five years from now? Indeed, there is, according to public TV Bitcoin analyst Tom Lee.
Lee explained in a Business Insider video interview: “…in the short-term we think bitcoin has really followed very closely the idea of acting like a social network. Meaning the more engagement there is, the greater the value rises. And in the short-term, we think bitcoin will reach at least $6,000 by mid-2018.”
If Bitcoin captures 5% of the gold market, it’s worth at least $25,000 per unit.
But what about long-term? Does the same method apply? Well, actually not; in the long-term, Bitcoin could actually become a rock-solid store of value as gold was for decades. “What we were trying to do is recognize that the creation of value in the future is in the digital world. I mean, all future great business are going to be digital. And with that concept, bitcoin represents a store of value because it’s an encrypted — personal encrypted database, that for seven years hasn’t been hacked. I mean, that is a way to store value. And if personal information is our gold, bitcoin is our digital gold. So, we think that the gold market, which is 9 trillion, and for a generation of investors gold was their store of value. I think this next generation of young people view bitcoin as their store of value. And if it captures 5% of the gold market, it’s worth at least $25,000 per unit,” Lee added.
Yet the 5% is a pessimistic projection. If Bitcoin has 10% or 15% of the gold market, it could be worth six-figures, $100,000 or even $200,000.
Nevertheless, the future looks bright for bitcoin.