A great inflow of spectators and investors has flooded the bitcoin “business”. This is due to the price explosion in the past month.
December 8th of the past year witnessed the market capitalization of BTC soar above that of VISA INC at more than USD300billion.
Nakomoto, the original creator of BTC defined the of Block creation(i.e. mining) to be adjusted every 2016 blocks with a two week adjustment period with which the amount of BTC created per block decreases by 50% per 210000 blocks. Thus, the number of bitcoin wouldn’t expect more than 21 million in existence.
Even with this model for the supply of BTC the intrinsic value of BTC is hard to determine as result of cryptocurrency inability to generate interest making it impractical to adopt the existing valuing formulas. The price of Bitcoin is determined by mostly the chaotic process of continuous double auction mechanism (CDA). Fundstrat has shown that most of the variation of BTC price can be explained using two blockchain stats
However, Metcalfe has similar model wherein the value of telecommunications network is as similar as the square of the number of the connected nodes.
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