When attempting to value a company one of the primary metrics that can be used is the earnings per share and the resulting P/E ratio. You can view BitShares systems as companies that earn revenue from transaction fees and have expenses paid to people providing resources to the company.
I have put together a basic chart that shows the earnings BTSX would see at various transaction rates and trading volumes and then assumes an industry average 20 P/E ratio to derive an expected market cap valuation for the network.
Based upon these numbers the valuation of BitShares X with 1 transaction per second and $500K volume per day on the internal exchange is $62 million dollars. However, if the internal exchange volume reaches similar levels to the external exchanges today, then the expected transaction rate would yield a valuation of $300 million dollars. Once the exchange volume hits $10 million per day, the resulting transaction volume of 10 transactions per second the valuation would be about $700 million dollars.
These valuations are based entirely on P/E ratios which are clearly not sufficient for valuing a crypto-currency. Bitcoin for example has huge negative earnings, a transaction rate of less than 5 TPS and a valuation over $5 billion. Using Bitcoin as a metric we could claim that a network is worth about $1 billion per TPS. The vast majority of Bitcoin transaction volume occurs on exchanges, with BTSX many of the on-exchange trades will move onto the protocol itself and thus BTSX should have on-network transaction volumes equal to Bitcoin in a much shorter period of time.
The assumed P/E ratio of 20 implies a 5% ROI; however, most banks these days give depositors less than 1% ROI. If BTSX is able to maintain its peg by backing bitUSD with BTSX and can share the transaction fees with bitUSD holders, then the demand for bitUSD will be enormous. Due to the collateral system that requires effectively 3x the value of all bitUSD deposits to be held as collateral in BTSX, we can estimate the value of BTSX to be about 3x the demand for USD deposits at 5% ROI. Considering the vast sums of money currently tied up in low-yield treasuries, savings accounts, etc the demand for bitUSD will be enormous.
Of course, the more bitUSD that is created and “held” without corresponding transaction volume, the lower the ROI will become until supply equals demand.
All of this is to say that the fundamentals on BTSX are very strong when analyzed like a traditional business and even stronger when compared to other crypto-currency systems on the market.