Markets, prices and a quantity theory of bitcoin
Cables run from a network switch box to graphics processing units at the HydroMiner cryptocurrency mining facility near Waidhofen an der Ybbs, Austria © Bloomberg Sir, We often read in your pages the view that bitcoin has no value and therefore , in a rational market, would have no price. But that surely is wrong. Bitcoin was developed as a form of money (the clue is in the name), and money has value even though most money, like bitcoin, has no substance other than the electronic. Bitcoin will retain some fundamental value as long as it is the preferred medium of exchange for some forms of transactions. And on this basis it is fairly easy to calculate, approximately, what its fundamental value is. The supply of bitcoin increases only slowly towards its famous fixed limit and is now around 15m. The use of bitcoin as a means of payment is currently around $100m per month, or $1,200m a year. Were bitcoin just like ordinary money each bitcoin would be used around four times a year i...