How The Hell Do You Value Bitcoin?

Featuring Raoul Pal

Is there any way to make sense of bitcoin’s incredible rally? Raoul Pal asks Paul Brodsky, Chris Burniske, Nick Colas, Peter Brandt and Thomas Lee to lay out their frameworks for valuing bitcoin. With those methods on the table, each expert provides a forecast for what will happen to the bitcoin price over the next year, as does Raoul.

Published on
4 December, 2017
Technical Analysis, Crypto-currencies, Sentiment
37 minutes
Asset class


  • hj

    henrik j.

    15 5 2018 16:05

    0       0

    its clear Paul Brodsky dont know a lot about fundamental value of technology in the space own bitcoin cash own ripple no thank you !!!!

  • MP

    Mayank P.

    25 12 2017 16:36

    1       0

    Raoul's comments in the last couple of minutes sums it up for me.

  • HS

    Hendrik S.

    12 12 2017 11:20

    1       0

    In my view Bitcoin's characteristics are rather similar to CMGI's (a dotcom incubator during the dotcom boom). Almost unlimited promises. Back of an enveloppe calculations that run into the trillions. POMO (pain of missing out) rather than FOMO keeping millions of people up every night (what if I only bought for USD 5.000....). People buying because its going up. Nassim Taleb is very right that Bitcoin could reach USD 100k before crashing.My own view is we are in the third wave only. But I'm not participating anymore.

  • ii

    ida i.

    11 12 2017 06:50

    0       1

    this is a balanced explanation of bitcoin I have found

    it is in 5 parts

  • AP

    Alex P.

    10 12 2017 17:19

    3       8

    I am so dam tired of all the crypto content .. I think half of RTV content over the last 12 months has been devoted to cryptos.
    I get it , all the equity bears that missed the equity bull market of the last 10 years looking to redemption in crypto currency.. I also get that blockchain its an interesting technology. I have concluded by now, from all the content barrage, that crypto assets can worth millions or 0.. I am just not sure if there is more point to beat this dead horse.. I don't believe I have learned anything new on cryptos last few dozen videos or publications that I have not learned from the 1st few dozen of videos..

  • HH

    Heath H.

    8 12 2017 20:44

    2       1

    Raoul Pal is one of RealVision's 1-on-1 hour long interviewers. It's very disappointing to keep seeing him on these short scattershot Big Story episodes.

  • TK

    Thomas K.

    7 12 2017 17:41

    7       1

    Great piece Raoul. I invested in bitcoin after your first RVTV piece on it so THANK YOU! I would like to take some of the gains off the table and invest them in the blockchain equity space. A piece discussing the investment options for blockchain equities would be great.

  • AT

    Alex T.

    7 12 2017 11:55

    2       2

    This video was great until the end, most of what Raoul says is just plain wrong.

    The claim that forking the bitcoin is "diluting" is like claiming that cutting a one ounce gold coin in half "creates more gold", the claim is so wrong that to make it shows a fundamental misunderstanding of what forking is.

    As for blockchain without bitcoin, its called a database and companies already have these. Databases with all due respect are not innovative.

    Finally I don't understand how someone can make these 2 claims with a straight face - "bitcoin is not destined for the heights I first thought" and "I sold out at $2000" (its now $15,000).

    While, I agree bitcoin will, more than likely, be significantly lower next year - this is a case of getting the right medicine with a totally incorrect diagnosis.

  • DB

    Douglas B.

    6 12 2017 18:53

    1       0

    Lyle, those consequences you speak of were definited intended.

  • JH

    Jesse H.

    6 12 2017 18:48

    1       0

    Excellent video - balanced, thoughtful, vintage RV.

  • BS

    Brandon S.

    5 12 2017 22:51

    7       0

    I booked 400% from Bitcoin. I like the analogy, it's like VC, it could be awesome, or it could go to zero. There is no real substantive argument that can be made for value other than you hope someone pays more for it than you did.

  • SS

    Sam S.

    5 12 2017 20:32

    0       0

    Just heard Senator Dianne Feinstein is working on a bill to change the legal definition of Bitcoin Miners & Exchanges into financial institutions from financial accounts, thus changing the laws in the name of protection against money laundering and terrorists. Some of you out there in CryptoLand may know more about this. Any updates appreciated. This is what I was referring to in my earlier comment about "what may or what if". All the best.

  • ii

    ida i.

    5 12 2017 18:21

    6       0

    I agree with a lot of opinions here, I was looking into buying bitcoin around 18 months ago (to pay for my real vision subscription), but then there were news items about thefts and nobody would explain a year ago the safest channels to purchase and keep bitcoin to avoid thefts..... but what puzzles me now is why do I get so much spam email every morning, with titles like: "buy bitcoin!" from improbable sources, for my experience nobody comes and tries to convince you to get in a good investment by email

  • TM

    The-First-James M.

    5 12 2017 15:02

    5       0

    I really enjoyed this video and thank you for taking the time to put ut together. Just one question for Raoul. Is there any possibility of getting Chris MacIntosh of Capitalist Exploits in to discuss this topic with you? Chris has talked at length about the Network Effect and Metcalfe's Law. His most recent public blog post is here:

    There is an oblique reference to Metcalfe's Law in the bottom-most chart.

  • ES

    Edward S.

    5 12 2017 14:20

    2       1

    Helpful, thanks guys.

    I had been struggling to think of any bull market of this magnitude and with this much probably only semi-informed backing from small private investors that hadn't subsequently burst horribly. The microsoft when it was private example is interesting.

    I tend to agree however with Peter B and Raul that this is going to end badly. I hope not too many millenials lose their shirt if/when this fairly clear bubble bursts. This for many could be their first experience of the markets and the sharp end of capitalism. I also hope that such a bad experience of unfettered capitalism doesn't reinforce this sustained wave of socialism (Sanders, Corbyn, Podemos, etc) that has captured the hearts of so many western youngsters.

  • TM

    Tony10 M.

    5 12 2017 13:07

    2       0

    Thoughts Gambling demand for Bitcoin

    I think that Bitcoin may catch some of the global gambling spend. I have noticed people that I know who like to gamble are VERY keen on bitcoin. They are using bitcoin similar to an online roulette game. This could be a substantial market segment.

    It would be great to hear from someone who has knowledge of gambling psychology/addiction on Real Vision.

    The self reinforcing nature of this market seem like the perfect environment to sucker in gamblers.

    For the record I am still bullish on bitcoin.

  • PN

    Paul N.

    5 12 2017 08:57

    1       0

    Any cryptocurrency team that markets their coin as being more efficient or being able to handle more transactions than bitcoin needs to understand this: Alipay can do 250000 transactions per second. Thats who you are competing with, not bitcoin.

    In addition, theres a list a hundred miles long of altcoins that have no fees (because noones using them). Good luck altcoin developers!

  • PN

    Paul N.

    5 12 2017 08:44

    5       2

    Couple thoughts here:
    1. If bitcoin forks are dilutive then so are altcoins. They are basically the same as launching an altcoin except you bribe current bitcoin holders with the initial float, and you try to take the bitcoin brand with you. I dont buy it, the code is not whats scarce its all the parts of the network (infrastructure, users, mining, development talent, etc).
    2. Networks are inherently voluntary systems. You run code confirming to its rules or you dont. Nobody can force the total btc amount to change because as long as people still run the original bitcoin its still alive. All youve just made is an altcoin. Whether the market decides its better than the original is a different question.
    3. Private ledgers compete with bitcoin about as much as boats compete with airplanes. You can either be centralized, fast, efficient, & censorable or decentralized, slow, & censorship resistant. What ticks me off is pretending that one is the other, as if big VCs marketed boats as wingless airplane technology. Private DLT has nothing to do with Satoshis invention.
    4. A fall in bitcoins volatility isnt just a hope. Its volatility has been falling the past 8 years fairly consistently as liquidity and adoption grows.

  • TH

    Timo H.

    5 12 2017 05:51

    7       2

    I think Raoul himself nailed it the best.

    A cryptocurrency can have value for two reasons. It may act as a store of value ("digital gold") or it may act as a settlement instrument of a digital transaction.

    As a store of value its problem is the undisputed fact that a new cryptocurrency can be created (or an existing one hard-forked) at will. Hence, a cryptocurrency is not "digital gold". The different cryptocurrencies are technically roughly equal. Why should I pay 1000000000 dollars for a bitcoin, if there is an unlimited number of other alternatives available?

    The other reason for a cryptocurrency having value could be its "monopoly" as a settlement instrument in a valuable blockchain. There are two problems here:

    1) The transaction rates of the public blockchain systems are generally unacceptable for any widespread use. With a global transaction rate of e.g. 50 txn/sec you can't do much. The public blockchains are yet to demonstrate any real business cases. All the cool stuff happens in the private ledgers.

    2) Integrating a fiat currency and a traditional bank payment system as the settlement mechanism for a distributed ledger is a trivial exercise, especially after the banks are forced to open APIs to their payment services. This makes it possible to make a smart contract in the ledger that gets money automatically from your bank account when the conditions of the debit are met in the ledger.

    So... the cryptocurrency valuations are probably in a huge bubble. However, it may take a while for the general audience to understand this. Until then, enjoy the ride :-)

  • TS

    Thomas S.

    5 12 2017 04:52

    5       0

    I think the potential that Lightning and other sidechains bring to bitcoin (not blockchain) is (potentially) underestimated and misunderstood. Lighting network will be built on top of Bitcoin because of Segwit allows for that. If you want a good perspective on that, Raoul should interview someone from Lightning.

  • LS

    Lance S.

    5 12 2017 03:00

    0       0

    One wildcard that I don't think was adequately addressed is the probably impact of CME/CBOE stepping in and launching options. The high level of volatility we have seen is inevitable with current limits on the ability to hedge. As I expect we'll start seeing more institutional dollars flowing in will valuation align with demand, utility or ???

  • TM

    Todd M.

    5 12 2017 01:12

    10       4

    Very well done.

    The use case for private Blockchains (a bit of a cumbersome database) does not compete with the uses of Bitcoin as a store of value and digital currency. Raoul is overreaching trying to diminish BTC and is missing the point. Derivative technologies are great - and Goldman/JPM can go right on with bills of lading and receipts for your TBills.

    Bitcoin will not give a hoot about a private blockchain- it will just rock on being Bitcoin.

    With the global pitfalls identified here on the regular - you should understand a desire to keep secure, uncensorable digital wealth. Quite a bit easier than piles of gold bars.....

    And oh - what an odd way to misunderstand those forks. Own BTC - own it all. A BTC on July 31, 2017 is worth ~ $11,700 BTC + $1550 BCH + $325 BCG so XBT = 13,575. BTC is the superposition - hold it, hold the forks. Who cares what wins later. On we go!

    Prediction: Raoul will be back to BTC and welcomed!

  • SR

    Steve R.

    4 12 2017 22:44

    0       2

    Not really very surprising....

  • AG

    Amir G.

    4 12 2017 21:37

    6       0

    I have read/listened to/watched various articles/podcasts/videos on cryptocurrencies and this one wasn’t particularly any different than the rest.
    This video as Raoul Pal introduced in the beginning was supposed to be about understanding the underlying fundamentals of Bitcoins, yet none of the guests really explained that and all discussions and comments were more about forward speculations and how it’s going to evolve in the future, which left me with more questions and even more confused as before.
    As for Peter Brandt whom I have a lot of respect for and read is unique book on trading, he doesn’t not necessarily understand it and only ‘Trades’ it based technical charts, so I guess it’s okay to be in it for a short term “trade” to potentially gain 20-30% at these levels, but for a long term “investment” it doesn’t make a whole lot of sense.
    The last 3 minutes with Raoul Pal made the most sense to me especially on the volatility aspect. That is to say if volatility keeps exploding as it has so far, how can this possibly replace Fiat currency? It would be a total chaos. Do you want your house to be worth a million dollars today and the very next day only $800K?! And if the volatility were to implode then what is the point of investing in this!

  • SS

    Sam S.

    4 12 2017 21:21

    1       1

    If the "hard fork" had taken place, where would be price of Bitcoin be today? The same bull bear tug-of-war publications caused my thinking to pause and I likewise sold in the $2000 per coin range. Great profit but not the smart move. The smart move, in my humble never perfect opinion, "only buy or sell when the FACTS change". I sold because of the "maybe's and the assumptions" of where was going or could be going, but not the facts. Assumptions can be the mother of all F****up's.

  • JM

    JP M.

    4 12 2017 21:12

    11       0

    Interesting set of views. My 2cents:

    a) Everything requiring trust will flow to THE blockchain - as all information flows to the Internet.
    b) Additional layers to be built upon THE blockchain (smart contracts RSK, Lightning, etc) - increasing functionality of the trust generating machine
    c) Unexpected, emerging properties of The blockchain will become apparent and change economies. Wait 10 years.
    d) Currency is the killer app for THE blockchain - good money chases out bad money
    e) Disrupted industries: banking, payment networks, insurance, custody, notaries, auditors, etc.

    Valuation = f(c+d+e)
    THE blockchain = for now its Bitcoin

  • VS

    Vikram S.

    4 12 2017 20:58

    4       3

    Bitcoin is the most secure and most decentralised blockchain by a long way (as any software developer will explain). Rick Fakvigne predicts Bitcoin will take up 5% of the FX market and will be valued over $3million. It is still early days for Bitcoin. Invest a small amount and hold for the long term.

  • SR

    Steve R.

    4 12 2017 20:57

    5       7

    Great piece Raoul!
    And yes, I do pretty much agree with your conclusion - blockchain is the future/technology, not bitcoin.
    Having been in the tech space for over 30 years I've seen all this before, albeit on a much smaller scale, with other technologies.
    With bitcoin, because it's money, you now have so many vested interests in keeping the price high, it almost smacks of a 'scam'. The constant stream of crap on CNBC and the FOMO mantra spouted everywhere tells me all you need to know.

    I also find it quite ironic that all the crypto-maniacs on twitter claiming the price will 'go to the moon' own such small amounts of bitcoin it's not going to be 'life changing' even if the price does double or triple again. So what does this tell me? It tells me they are just following the CNBC/FOMO matra to move the price higher to sell on to the next fool. It provides the liquidity for the big holders to exit at the expense of the latecomers. Sound familiar? These days, particularly the millennial snowflakes, just so believe in the 'something for nothing' mantra, it's such an easy story to sell - but seriously, this just ain't gonna end well!

    You also didn't touch on global regulation, which is tightening all the time, from yesterday's Guardian:

    I was surprised at how many 'experts' view bitcoin as a store of value - to me it's anything but. By its very nature, anything that can be materially changed cannot be a store of value. Just look at how technology has advanced over just the last decade. Technologies come and go all the time. But, hey ho, these are just MY opinions, each to their own, good luck if you hold.

  • MC

    Minum C.

    4 12 2017 20:25

    0       1

    I wonder how expensive put and call premiums will be and if a properly implemented options strategy might be the best way to manufacture a profit in Bitcoin going forward?

  • TP

    Tom P.

    4 12 2017 20:19

    8       2

    Did no one think to look at the expected cost to mine a bitcoin? Surely that is the fair value. Assuming fixed hash rates + fixed electricity prices:

    (yearly mining farm hardware cost + yearly mining farm electricity bill) / expected number of mined bitcoin per year

    The fact it's WAAAAY cheaper to mine a bitcoin than it is to buy a bitcoin is something that shouldn't be ignored.

  • AS

    Andrew S.

    4 12 2017 19:51

    4       0

    Nobody know exactly how this plays out but IMO if you have any wealth to protect, you would be crazy not to own some Bitcoin and some gold.

  • TS

    Tor S.

    4 12 2017 19:27

    5       2

    Great stuff! I liked this one :) I allso like you Raoul but i think you are a litle to bearish this time. I’d say its a bold move to enter 2018 with 0% crypto exposure, given all the facts. You need to be a «hodler» again Raoul! :)

  • HJ

    Harry J.

    4 12 2017 17:19

    0       7

    If i can’t be relatively sure of value before i put up real money it’s just a roll of the dice!
    I’ll go to vegas first more predictable
    And fun!
    Good luck I always like to see sucess happen.
    Good LUCK

  • LK

    Lyle K.

    4 12 2017 17:15

    3       3

    Interesting thought if cryptos start to take market share from fiat, makes sense because of the tradability and portability and speed of them. I wonder if the government will start cracking down on this because in a sense it is counterfeiting it is producing excess money and I wonder if cryptos will cause hyperinflation because of the extra money that is created out of thin air. Seems to me their might be some unintended consequences of this new asset class.

  • DB

    David B.

    4 12 2017 16:12

    26       0

    Raoul, You are awesome...really awesome! Be careful about equating chain forks with dilution. It is simply a share split but shares that have slightly different characteristics. But the most important thing is that a holder of one bitcoin is NOT diluted in any way. That holder (HODLER) continues to own the same share of the combined (forked) networks. There could 100 forks and the holder owns the same share of all forked chains. There is truly no dilution. Now many of the forked chains may ultimately become worthless, but it does not matter because holding the original bitcoin ensures that you own whatever chain, or chains, ultimately win.

  • bf

    bart f.

    4 12 2017 15:51

    3       2

    I fully sympathize with Raoul’s negative view: volatility vs store of value, forks, no monopoly on block chain, higher price = more incentive for OTC initiative, no decentralization with miners pooling and concentrating. However adoption rate is low and financial institutions (who are losing the monopoly on money) will custody and start trading it. Individuals can owe privately any size (which is not possible with stocks). So I am wary about leaving that train too early. Now I agree that it might not be the final underlying to play the blockchain disruption (same way dotcom stocks were not a good play on internet).

  • RM

    Richard M.

    4 12 2017 15:48

    4       0

    Very informative! I've been trying to wrap my head around this whole crypto/blockchain world and this helped a lot. Thanks.

  • CL

    Cameron L.

    4 12 2017 12:00

    2       0

    Great Stuff, but guys can you please run log charts for future image overlays... linear charts are just ridiculous in crypto space, very difficult to ascertain anything from them at all, will take your analyst half a second extra to change settings in excel.