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A Valuation Framework for Bitcoin

A Valuation Framework for Bitcoin

The best framework I have so far is to think of Bitcoin ownership as ownership of a piece of art. More specifically:

  • There are a maximum of 21,000,000 Bitcoins, but this number is somewhat irrelevant. Any finite arbitrary number could have been chosen.

  • By owning Bitcoin one owns a fractional share in the idea of Bitcoin – embodied by the Bitcoin white-paper, the Bitcoin public ledger, the evolution of the protocol over time, and the evolution that has yet to come.

I see this as analogous to owning a fractional share in a piece of art (such as the Mona Lisa, if it were possible to own a fractional share). Value is subjective.

P.S. With thanks to my Dad for ideas around infinite divisibility.

P.P.S. Bitcoin is not currently infinitely divisible. It is divisible down to eight decimal places (which is one Satoshi). However, there is no reason why the protocol could not be updated to allow for greater divisibility over time.

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