Author Topic: BTSX Valuation based upon standard P/E ratio of 20.  (Read 8082 times)

0 Members and 1 Guest are viewing this topic.

Offline santaclause102

  • Hero Member
  • *****
  • Posts: 2486
    • View Profile
Another way of evaluating a company is comparing it to other companies that more or less do a similar service. I picked visa http://finance.yahoo.com/q?s=V which has a market cap of $113bn. Leaving all practical and risk distribution considerations aside I would be about indifferent if I owned either all btsx or 1/100 of all Visa stock atm. That gives BTSX a valuation of $1.13bn. If BTSX found mainstream adoption and there would be no legal challenges I would rather own all BTSX than all Visa shares...Here is where I think most of the risk/challenges in the btsx investment lies (ordered by importance):
1) Legal challenges (BitUSd specific issues; AGS; DAC/delegates/DPOS specific issues)
...long nothing....
other things often discussed and worked on like competitors / complementary products, main stream adoption, market peg holding under all circumstances and mainstream having enough confidence in it.

Offline kisa

  • Sr. Member
  • ****
  • Posts: 240
    • View Profile
Based on the premise in the OP would the value of BTSX really be 3*bitUSD + 3*bitEUR * 3*bitGLD issued etc etc ?

If someone values BTSX at P/E of 20 means then annually generating 5% of BTSX market cap in trading fees,
which is 15% of bitAssets market cap!

At trading fee of, let' say 0,15% of transaction volume, means that we would need trading volume equal to 100xbitAssets market cap p.a. E.g. 100 times as actively traded as fiat/BTC nowdays... Sorry not learnt yet / not sure what trading fee assumption is more realistic...
« Last Edit: September 25, 2014, 09:07:49 am by kisa0145 »

Offline jsidhu

  • Hero Member
  • *****
  • Posts: 1335
    • View Profile
Based on the premise in the OP would the value of BTSX really be 3*bitUSD + 3*bitEUR * 3*bitGLD issued etc etc ?
Hired by blockchain | Developer
delegate: dev.sidhujag

Offline Riverhead

If Dilbert ever ventured into comp sci
« Last Edit: September 16, 2014, 04:05:45 am by Riverhead »


Offline James212

  • Sr. Member
  • ****
  • Posts: 312
    • View Profile
is there an animated video in the works aimed at explaining bitassets? similar to - https://www.youtube.com/watch?v=XaY_KIsouTY ..

I hope they are working on a slicker more modern looking version!
BTS: theangelwaveproject

Offline James212

  • Sr. Member
  • ****
  • Posts: 312
    • View Profile
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.

It all depends on time to market and other difficult to predict factors. If Bitshares X can market BitUSD effectively so people know about it and tell their friends then the opportunity for 5% yield could perhaps go viral. How do you engineer taking BitUSD viral?

You also have many competitors who will copy or try to copy BitUSD so it's a matter of quickly rolling out the features while also always continuosly adding new features. It is likely that the competitors will achieve feature parity in a short amount of time which means any particular set of features which look like they would bring in enormous demand today might not be as novel in a few months.

So for September 2014 BitUSD is quite novel and BitUSD with 5% is even more novel. The question is will the Bitshares platform win the innovation arms race? I see it as an innovation arms race and I tend to invest in the companies which have a 6 month lead in that arms race. If Bitshares can maintain their innovation lead then there will always be new investors who will want to invest in the most innovative technology.

There will be forks, clones, and other communities which attempt to copy the innovations from Bitshares and what matters is the rate at which team Bitshares pushes out new innovations. This way people who just copy and paste cannot keep up because the newest ideas will always come from the main chain.

tl;dr

Make Bitshares X as contagious and sticky as you can.

Agreed.  What also matters is the rate of adoption.  This will depend on marketing, which should be rolling at full steam by the end of Sept at the latest(?), and the critically important positioning of the product in the eyes of the mass market.   
BTS: theangelwaveproject

Offline liondani

  • Hero Member
  • *****
  • Posts: 3737
  • Inch by inch, play by play
    • View Profile
    • My detailed info
  • BitShares: liondani
  • GitHub: liondani
I am a fan of the Bitshares platform, but lets keep our heads on.

First, there is no such thing as a "standard PE ratio". Valuation is much more complex than that, especially for a business in a highly dynamic area of innovation where leadership can shift quickly. 

Second, its way too early to talk pie-in-the-sky numbers when there are still very basic issues that need to be resolved, contrary to some other posts I've read claiming an early victory. At this point there is still no mechanism in place to ensure that BitAssets will remain close to their pegs. Last I looked the highest bid on USD was 11% below the feed price, for BTC 12% and for CNY 15% below. The current mechanism to generate yield on USD (being based on a transaction fee pool) could never ensure this pegging, and is effectively subsidised (I think unsustainably) by BTSX holders. Further, there remains very limited liquidity in these markets and high spreads, which makes them unattractive for traders and potential commercial users of USD. Yes, I know its all still early, and I don't want to be a wet rag. But let's keep our heads focused, continue working as a community to get this to work, prove it to the outside world and then the rewards will come, whatever they may be.

 +5%

Offline starspirit

  • Hero Member
  • *****
  • Posts: 948
  • Financial markets pro over 20 years
    • View Profile
  • BitShares: starspirit
I am a fan of the Bitshares platform, but lets keep our heads on.

First, there is no such thing as a "standard PE ratio". Valuation is much more complex than that, especially for a business in a highly dynamic area of innovation where leadership can shift quickly. 

Second, its way too early to talk pie-in-the-sky numbers when there are still very basic issues that need to be resolved, contrary to some other posts I've read claiming an early victory. At this point there is still no mechanism in place to ensure that BitAssets will remain close to their pegs. Last I looked the highest bid on USD was 11% below the feed price, for BTC 12% and for CNY 15% below. The current mechanism to generate yield on USD (being based on a transaction fee pool) could never ensure this pegging, and is effectively subsidised (I think unsustainably) by BTSX holders. Further, there remains very limited liquidity in these markets and high spreads, which makes them unattractive for traders and potential commercial users of USD. Yes, I know its all still early, and I don't want to be a wet rag. But let's keep our heads focused, continue working as a community to get this to work, prove it to the outside world and then the rewards will come, whatever they may be.

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
For me retirement (being rich) is when I can work without the need to get a paycheck.
While I do not really envision myself  doing nothing, I will much prefer to do something that keeps my brain busy, gives me some 'moral' satisfaction and that occupation does not need to necessarily bring  financial benefits on any short term bases (weekly/monthly/yearly).

I feel the same way, being rich to me is having enough "fuck-you" money to be able to decide for yourself what you'd like to do with your time, not have it imposed on you by the necessity of having a steady salary for paying down mortgage, food, etc.. I hope to "retire" before I'm fourty, but retirement in my case merely means quitting my dayjob to work for myself on things that I'm passionate about. Hint: Bitshares is one of those things :)

Post contents inspired by www.mrmoneymustache.com, check it out if you have time :)

Nice site! Still reading small chunks of it. Have been doing most of the basic stuff (opening blog post suggestions) already without being able too save more than 5-10% of my income. And that's on a good month ... those good months are, as once Mark Twain said, all months except... "July, September, March, December, August, October, April, January, November, February, May, June..."
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline oldman

  • Hero Member
  • *****
  • Posts: 556
    • View Profile
... I expect to see at least 0.30 per share a year from now.
0.30 denoted in BTC, USD, EUR, or CNY?

USD

That's approximately 8 times the current value, and give BTSX a valuation of 600M$. That's kind of bullish, but not unseen in the crypto-world. Knowing the quality of the product/features offered and the quality of the devs supporting the whole project, nothing's impossible! It's all about appealing to the masses and deep pocketed investors...

Are you familiar with the bitcoin bubble cycles?

lol - my first reaction was 200-300x seems realistic.  500x+ is bullish

A 200x increase would put the BTSX market cap at $16,000,000,000 USD. I don't see that happening all in one bubble cycle. I'll be happy with a 5x increase over the next year or so.

Not out of the realm of possibility if BTC hits $60-600bn on the next bubble ($10-100k/BTC).

Offline oldman

  • Hero Member
  • *****
  • Posts: 556
    • View Profile
So lets say we get a large portion of the BTC crowd in bitBTC. Wouldn't someone cashing out a very large stake upset the peg? If their bitBTC reaches a point they want to sell $5MM worth they'd still have convert it to BTC on the open market. I guess we're assuming that one or more of the following will come about:

1) The centralized exchanges support bitBTC so they can cash out 1/1 bitBTC/BTC
2) They can go from bitBTC->bitUSD->fiat directly
3) bitBTC->fiat Coinbase style.

Going from BTC->USD in large enough quantity would cause a price slump. Going from bitBTC->BTC in large enough quantity may give the market a heads up to start dumping some BTC...

Yes, agree with BM on liquidity providers.

However, my initial reaction is the majority of 'cashing out' will be from bitBTC to bitFiat or bitGLD/SLV.

I think most folks savy enough to make the BTC -> bitBTC transition are likely to keep the value in the crypto-space.

Those looking to convert large quantities of BTC into real fiat in the near term would not likely assume the extra risk of a bitBTC for the small ROI increase from the yield.

So a large movement of value out of the bitAsset economy is going to put pressure on the peg, but I'm not sure it is going to be a frequent thing as the platform matures.

Would be an interesting exercise to stress-test the bitUSD peg periodically as liquidity increases. Should be able to quantify the 'strength' of the peg rather nicely...
« Last Edit: September 12, 2014, 04:17:51 pm by OldMan »

Offline CLains

  • Hero Member
  • *****
  • Posts: 2606
    • View Profile
  • BitShares: clains
Liquidity providers are essentially lenders that will "hold" while you wait for a buyer to come on the market.

Again a new angle of understanding on something familiar, great!

The marketers should create infographics based on all these back-of-the-envelope calculations of fees as burned dividend, fees as pay to delegates, market cap in relation to bitUSD, fees from trading in relation to yeild on bitUSD, .. If this is presented clearly in a picture with extrapolations, people will have more confidence and feel they are investing scientifically.

Offline bytemaster

So lets say we get a large portion of the BTC crowd in bitBTC. Wouldn't someone cashing out a very large stake upset the peg? If their bitBTC reaches a point they want to sell $5MM worth they'd still have convert it to BTC on the open market. I guess we're assuming that one or more of the following will come about:

1) The centralized exchanges support bitBTC so they can cash out 1/1 bitBTC/BTC
2) They can go from bitBTC->bitUSD->fiat directly
3) bitBTC->fiat Coinbase style.

Going from BTC->USD in large enough quantity would cause a price slump. Going from bitBTC->BTC in large enough quantity may give the market a heads up to start dumping some BTC...

It all depends upon the cost of liquidity... if someone wants to go from bitBTC to BTSX or BTC then there will be what ever discount is necessary to bring in the liquidity providers.  Liquidity providers are essentially lenders that will "hold" while you wait for a buyer to come on the market.   The cost of this loan depends upon how many real buyers there are and how long the liquidity provider would expect to be holding.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Method-X

  • Hero Member
  • *****
  • Posts: 1131
  • VIRAL
    • View Profile
    • Learn to code
  • BitShares: methodx
So lets say we get a large portion of the BTC crowd in bitBTC. Wouldn't someone cashing out a very large stake upset the peg? If their bitBTC reaches a point they want to sell $5MM worth they'd still have convert it to BTC on the open market. I guess we're assuming that one or more of the following will come about:

1) The centralized exchanges support bitBTC so they can cash out 1/1 bitBTC/BTC
2) They can go from bitBTC->bitUSD->fiat directly
3) bitBTC->fiat Coinbase style.

Going from BTC->USD in large enough quantity would cause a price slump. Going from bitBTC->BTC in large enough quantity may give the market a heads up to start dumping some BTC...

I don't think BitBTC will ever be that attractive... Why double your risk when you can just hold the real thing? I mean, is a 5% yield worth the risk of BTSX failing, plus the risks associated with BTC itself? It's like two layers of risk.

Offline Riverhead

So lets say we get a large portion of the BTC crowd in bitBTC. Wouldn't someone cashing out a very large stake upset the peg? If their bitBTC reaches a point they want to sell $5MM worth they'd still have convert it to BTC on the open market. I guess we're assuming that one or more of the following will come about:

1) The centralized exchanges support bitBTC so they can cash out 1/1 bitBTC/BTC
2) They can go from bitBTC->bitUSD->fiat directly
3) bitBTC->fiat Coinbase style.

Going from BTC->USD in large enough quantity would cause a price slump. Going from bitBTC->BTC in large enough quantity may give the market a heads up to start dumping some BTC...

Offline oldman

  • Hero Member
  • *****
  • Posts: 556
    • View Profile
A 200x increase would put the BTSX market cap at $16,000,000,000 USD. I don't see that happening all in one bubble cycle. I'll be happy with a 5x increase over the next year or so.

BitShares is currently trading at over 5x its value of just one month ago...things move fast when something truly revolutionary is afoot. I personally believe we'll all be caught off guard at how quickly things explode if BitYield works as planned and an impressive trading software suite rolls out. The potential here is absolutely monumentally enormous...can't wait.  8)

The velocity of crypto-capital is unprecedented.

Moving value from fiat -> BTC has been painfully slow, and still is for the majority of folks.

But even with a severe on-ramp handicap the increase in BTC market cap over the last five years has been breathtaking.

Moving value from BTC -> BTSX takes minutes...

I don't think we can underestimate the velocity with which value can move into BTSX.

Hell, it is possible to hit a cap of $1bn in few months if a substantial marketing campaign is rolled out.

At the very least, why not hold bitBTC and earn some yield?

BTC holders don't have desert for the BTSX camp... they can maintain their portfolio allocations and improve ROI.

Once there is depth and solid peg I know I'll be moving some value from BTC to bitBTC.

Just need to get the platform stabilized, a reasonable feature set in place and then get the word out.

The ride could be epic.

Offline santaclause102

  • Hero Member
  • *****
  • Posts: 2486
    • View Profile
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.
This is all sound. The obvious assumption to make for the part that begins with "The assumed P/E ratio of 20 implies " is: Savers / investors who buy bitUSD for the ~ 5% return are confident enough that the risk that the market peg fails is so small that this risk does not have any considerable effect on the whole valuation of BitUSD and therefore BTSX.*
The Market peg / BitAssets will have to prove to be reliable under all conditions empirically over time and theoretically (theoretically insofar as a consensus among credible observers has to establish about the validity of conclusions and the validity of assumptions, which will increase trust in the reliability of the peg; with this I am not saying that BitAssets dont work if individuals people trust do not say that it works. But it is a fact that the masses rely on the judgement of those they trust).

I think it is advisable to make this explicit. People will put that forward as a critique if it is not stated in the first place.

* You could make the analogy here to the "no one will violate any rules if the chances to be caught are 100%". Similarly, everyone will go into BitUSD if returns above what I get at the bank are guaranteed no matter what. I am not trying to say fix it at 5%! It more refers to what I said above. Like any analogy it can only illustrate things and not prove anything...
« Last Edit: September 12, 2014, 03:17:16 pm by delulo »

Offline nomoreheroes7

  • Hero Member
  • *****
  • Posts: 756
  • King of all the land
    • View Profile
  • BitShares: nomoreheroes7
A 200x increase would put the BTSX market cap at $16,000,000,000 USD. I don't see that happening all in one bubble cycle. I'll be happy with a 5x increase over the next year or so.

BitShares is currently trading at over 5x its value of just one month ago...things move fast when something truly revolutionary is afoot. I personally believe we'll all be caught off guard at how quickly things explode if BitYield works as planned and an impressive trading software suite rolls out. The potential here is absolutely monumentally enormous...can't wait.  8)

Offline Method-X

  • Hero Member
  • *****
  • Posts: 1131
  • VIRAL
    • View Profile
    • Learn to code
  • BitShares: methodx
... I expect to see at least 0.30 per share a year from now.
0.30 denoted in BTC, USD, EUR, or CNY?

USD

That's approximately 8 times the current value, and give BTSX a valuation of 600M$. That's kind of bullish, but not unseen in the crypto-world. Knowing the quality of the product/features offered and the quality of the devs supporting the whole project, nothing's impossible! It's all about appealing to the masses and deep pocketed investors...

Are you familiar with the bitcoin bubble cycles?

lol - my first reaction was 200-300x seems realistic.  500x+ is bullish

A 200x increase would put the BTSX market cap at $16,000,000,000 USD. I don't see that happening all in one bubble cycle. I'll be happy with a 5x increase over the next year or so.

Offline oldman

  • Hero Member
  • *****
  • Posts: 556
    • View Profile
>$1USD/BTSX in < 1 year.

Based on absolutely nothing.

Offline G1ng3rBr34dM4n

... I expect to see at least 0.30 per share a year from now.
0.30 denoted in BTC, USD, EUR, or CNY?

USD

That's approximately 8 times the current value, and give BTSX a valuation of 600M$. That's kind of bullish, but not unseen in the crypto-world. Knowing the quality of the product/features offered and the quality of the devs supporting the whole project, nothing's impossible! It's all about appealing to the masses and deep pocketed investors...

Are you familiar with the bitcoin bubble cycles?

lol - my first reaction was 200-300x seems realistic.  500x+ is bullish

Offline Method-X

  • Hero Member
  • *****
  • Posts: 1131
  • VIRAL
    • View Profile
    • Learn to code
  • BitShares: methodx
... I expect to see at least 0.30 per share a year from now.
0.30 denoted in BTC, USD, EUR, or CNY?

USD

That's approximately 8 times the current value, and give BTSX a valuation of 600M$. That's kind of bullish, but not unseen in the crypto-world. Knowing the quality of the product/features offered and the quality of the devs supporting the whole project, nothing's impossible! It's all about appealing to the masses and deep pocketed investors...

Are you familiar with the bitcoin bubble cycles?

Offline Chuckone

  • Sr. Member
  • ****
  • Posts: 314
    • View Profile
... I expect to see at least 0.30 per share a year from now.
0.30 denoted in BTC, USD, EUR, or CNY?

USD

That's approximately 8 times the current value, and give BTSX a valuation of 600M$. That's kind of bullish, but not unseen in the crypto-world. Knowing the quality of the product/features offered and the quality of the devs supporting the whole project, nothing's impossible! It's all about appealing to the masses and deep pocketed investors...

Offline Method-X

  • Hero Member
  • *****
  • Posts: 1131
  • VIRAL
    • View Profile
    • Learn to code
  • BitShares: methodx

Offline xeroc

  • Board Moderator
  • Hero Member
  • *****
  • Posts: 12920
  • ChainSquad GmbH
    • View Profile
    • ChainSquad GmbH
  • BitShares: xeroc
  • GitHub: xeroc
... I expect to see at least 0.30 per share a year from now.
0.30 denoted in BTC, USD, EUR, or CNY?

Offline Method-X

  • Hero Member
  • *****
  • Posts: 1131
  • VIRAL
    • View Profile
    • Learn to code
  • BitShares: methodx
Anyone getting in on BTSX now is still very early to the game, in my opinion. I expect to see at least 0.30 per share a year from now.

Offline Chuckone

  • Sr. Member
  • ****
  • Posts: 314
    • View Profile
Good for you all if your stake in BTSX is large enough to be rich if it catches on  8)


I certainly won't get rich but might be able to switch to part time work, or a job that is less demanding of my time. May even be able to make a go of working in crypto.

On my part since I lost almost all my small BTC investment in the MtGox demise (except for 1 BTC, invested totally in PTS/AGS, after the feb. 28th snapshot, and then in BTSX just after the DNS/Vote snapshot), I won't get anywhere near being able to do anything special with my gains lol.

Not too late to invest more in promising DACs though! Too late for the "get in early, get rich", but I don't mind. I didn't expect to stop working before I'm 70 (not yet 30, so I've got a long way to go haha). And I have a good job, so no financial worries anyway!

I see Bitshares as a very interesting experiment I like to follow and participate in, so if I can make a few bucks in the process that's good, but I'm not expecting to get rich.

I like to see early investors getting wealthy though, that's quite inspiring. I'm not envious (not my type), and it's fun to see that hard working people and early believers get their dues.

Cheers!

Offline Riverhead

Good for you all if your stake in BTSX is large enough to be rich if it catches on  8)


I certainly won't get rich but might be able to switch to part time work, or a job that is less demanding of my time. May even be able to make a go of working in crypto.

Offline voldemort628

  • Full Member
  • ***
  • Posts: 117
    • View Profile
How much do u think is "big enough"? :))

Offline Chuckone

  • Sr. Member
  • ****
  • Posts: 314
    • View Profile
Good for you all if your stake in BTSX is large enough to be rich if it catches on  8)


Offline svk

For me retirement (being rich) is when I can work without the need to get a paycheck.
While I do not really envision myself  doing nothing, I will much prefer to do something that keeps my brain busy, gives me some 'moral' satisfaction and that occupation does not need to necessarily bring  financial benefits on any short term bases (weekly/monthly/yearly).

I feel the same way, being rich to me is having enough "fuck-you" money to be able to decide for yourself what you'd like to do with your time, not have it imposed on you by the necessity of having a steady salary for paying down mortgage, food, etc.. I hope to "retire" before I'm fourty, but retirement in my case merely means quitting my dayjob to work for myself on things that I'm passionate about. Hint: Bitshares is one of those things :)

Post contents inspired by www.mrmoneymustache.com, check it out if you have time :)
Worker: dev.bitsharesblocks

Offline xeroc

  • Board Moderator
  • Hero Member
  • *****
  • Posts: 12920
  • ChainSquad GmbH
    • View Profile
    • ChainSquad GmbH
  • BitShares: xeroc
  • GitHub: xeroc
In a way I am truly scared by this possibility. I just checked and I AM in the top ten of all time posters...
welcome to the club :-)

If all this makes me "rich" (actually I am already rich: good health, lovely wife, roof over the top) .. so that I can retire I will as a consequence probably be busy enough to manage the fee flow ...  hoping to move around millions some day :-)
« Last Edit: July 31, 2019, 08:45:52 am by xeroc »

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
For me retirement (being rich) is when I can work without the need to get a paycheck.
While I do not really envision myself  doing nothing, I will much prefer to do something that keeps my brain busy, gives me some 'moral' satisfaction and that occupation does not need to necessarily bring  financial benefits on any short term bases (weekly/monthly/yearly).

Oh, shit! you're starting to sound like you want to be as eagleeye already is (in his own mind).

In a way I am truly scared by this possibility. I just checked and I AM in the top ten of all time posters...

I guess chickenbrain-menism is contagions, and spread by forum posts....
« Last Edit: September 12, 2014, 02:26:31 am by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline onceuponatime

For me retirement (being rich) is when I can work without the need to get a paycheck.
While I do not really envision myself  doing nothing, I will much prefer to do something that keeps my brain busy, gives me some 'moral' satisfaction and that occupation does not need to necessarily bring  financial benefits on any short term bases (weekly/monthly/yearly).

Oh, shit! you're starting to sound like you want to be as eagleeye already is (in his own mind).

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
For me retirement (being rich) is when I can work without the need to get a paycheck.
While I do not really envision myself  doing nothing, I will much prefer to do something that keeps my brain busy, gives me some 'moral' satisfaction and that occupation does not need to necessarily bring  financial benefits on any short term bases (weekly/monthly/yearly).
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Riverhead

This leads me to not quite on topic but semi-related question -What do Billionaires do in their free time?

PS
I am just trying to be prepared that's all.


While I don't think I'll get super rich from BitShares I do hope to be able to retire sooner than expected. I have had conversations with my wife about this. I've never not had a job, deadlines, someone to report to. I'm sure I'll be able to keep busy but the fear of being rudderless surprised me.
« Last Edit: September 12, 2014, 01:52:47 am by Riverhead »

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
  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,

This is where the value is for me and what other companies don't have. Every dollar worth of our product in circulation probably equals two to three dollars worth of value for BTSX?

I imagine the valuation will be primarily driven by how much 'BitAssets In Circulation' are increasing on average per month, not earnings from fees.

I mean a normal vault just earns a small percentage from the fees for each dollar of storage demand or trading in the case of an exchange & so their value is derived from that, but in BTSX, every $10 million of new outside BitAsset storage demand also directly adds at least $10 millon, probably $20-30 million to the value of the BTSX CAP, that's huge, no? How do you value that?

Like in the first month there are already circa $500 000 worth of BitAssets already in circulation. How many will be added per month as more BitAssets are introduced and now that we have BitYield!!  8) 8)  and how much will that rate be increasing by per month as adoption & demand continues and the system becomes perceived as more robust and safe? I think it's conservative to guestimate even now that the amount of BitAssets in circulation could be increasing by $2 million a month on avg. by month 12. That requires $70 million a year (3x value of BitAsset Deposits) of BTSX to be additionally tied up per year  most of which will have be added to the current CAP.  Multiply that by a few years and then add the earnings to the valuation too. It seems like BTSX will be worth a fortune based on legitimate valuations very early on.

This leads me to not quite on topic but semi-related question -What do Billionaires do in their free time?

PS
I am just trying to be prepared that's all.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline voldemort628

  • Full Member
  • ***
  • Posts: 117
    • View Profile
If it catches on, 2M per month in net in flow of capital is the worst case scenario imho.

Offline Empirical1.1

  • Hero Member
  • *****
  • Posts: 886
    • View Profile
  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,

This is where the value is for me and what other companies don't have. Every dollar worth of our product in circulation probably equals two to three dollars worth of value for BTSX?

I imagine the valuation will be primarily driven by how much 'BitAssets In Circulation' are increasing on average per month, not earnings from fees.

I mean a normal vault just earns a small percentage from the fees for each dollar of storage demand or trading in the case of an exchange & so their value is derived from that, but in BTSX, every $10 million of new outside BitAsset storage demand also directly adds at least $10 millon, probably $20-30 million to the value of the BTSX CAP, that's huge, no? How do you value that?

Like in the first month there are already circa $500 000 worth of BitAssets already in circulation. How many will be added per month as more BitAssets are introduced and now that we have BitYield!!  8) 8)  and how much will that rate be increasing by per month as adoption & demand continues and the system becomes perceived as more robust and safe? I think it's conservative to guestimate even now that the amount of BitAssets in circulation could be increasing by $2 million a month on avg. by month 12. That requires $70 million a year (3x value of BitAsset Deposits) of BTSX to be additionally tied up per year  most of which will have be added to the current CAP.  Multiply that by a few years and then add the earnings to the valuation too. It seems like BTSX will be worth a fortune based on legitimate valuations very early on.
« Last Edit: September 11, 2014, 01:23:48 pm by Empirical1.1 »

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
I had a friend read BM's op, this is what he sent back:

"This guys argument is really poor. To use a P/E ratio you have to use it for all similar companies (for Apple you would use the tech industry average). The only benchmark you have for bitshares is bit coin which has negative earnings and is extremely overvalued. He brings up return on investment (roi) but that's going to be way higher because it's an unsecured virtual currency so accounting for that would drive his valuation way down. He also mentions that bitx is securitized by bitusd-this is a red flag. Who has conidence in securitizing with something equally as unsecuritized"

If anyone has any response for him, I will pass along

Sent from my iPhone using Tapatalk

Tell him to invest in Facebook shares then... in other words everyone is entitled to his (wrong) opinion. And no BTSX is not securitized by bitUSD...
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline voldemort628

  • Full Member
  • ***
  • Posts: 117
    • View Profile
Well, your friend has some valid points there but i guess he is not so familiar with the crypto industry(?). Because apparently bitshares is the first of its kind in the industry, it's meant to improve on bitcoin's weaknesses, so basically we cant use p/e pf btc(as a company) to do valuation for bitshares.

I think a conservative p/e from a "similar" industry ( ie banking in real world) would do for an estimation of our valuation analysis. :)

bitbro

  • Guest
I had a friend read BM's op, this is what he sent back:

"This guys argument is really poor. To use a P/E ratio you have to use it for all similar companies (for Apple you would use the tech industry average). The only benchmark you have for bitshares is bit coin which has negative earnings and is extremely overvalued. He brings up return on investment (roi) but that's going to be way higher because it's an unsecured virtual currency so accounting for that would drive his valuation way down. He also mentions that bitx is securitized by bitusd-this is a red flag. Who has conidence in securitizing with something equally as unsecuritized"

If anyone has any response for him, I will pass along

Sent from my iPhone using Tapatalk
« Last Edit: September 10, 2014, 10:59:27 pm by bitbro »

Offline liondani

  • Hero Member
  • *****
  • Posts: 3737
  • Inch by inch, play by play
    • View Profile
    • My detailed info
  • BitShares: liondani
  • GitHub: liondani
The marketing team needs to show up, because from this point on it's all marketing.

 +5%

Offline Riverhead

The marketing team needs to show up, because from this point on it's all marketing.

Brian has not posted recently... In my mind that means he is hard at work. I am eagerly waiting. Something big must be coming up.


Agreed.  +5%

Offline Bitshark

  • Full Member
  • ***
  • Posts: 75
    • View Profile
is there an animated video in the works aimed at explaining bitassets? similar to - https://www.youtube.com/watch?v=XaY_KIsouTY ..

Offline yellowecho

The marketing team needs to show up, because from this point on it's all marketing.

They are just about ready... we still don't have a stable / bug free client but we are almost there.

Will the new client that cass is working on be available prior to the marketing push?
696c6f766562726f776e696573

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
The marketing team needs to show up, because from this point on it's all marketing.

Brian has not posted recently... In my mind that means he is hard at work. I am eagerly waiting. Something big must be coming up.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Riverhead

5AM in China and the price is starting to climb...go bitCNY!!!


This is a pretty sweet analysis. I think we're going to see a snowball effect.


« Last Edit: September 10, 2014, 09:13:49 pm by Riverhead »

Offline bytemaster

The marketing team needs to show up, because from this point on it's all marketing.

They are just about ready... we still don't have a stable / bug free client but we are almost there.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Method-X

  • Hero Member
  • *****
  • Posts: 1131
  • VIRAL
    • View Profile
    • Learn to code
  • BitShares: methodx
The marketing team needs to show up, because from this point on it's all marketing.

Offline luckybit

  • Hero Member
  • *****
  • Posts: 2921
    • View Profile
  • BitShares: Luckybit
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.

It all depends on time to market and other difficult to predict factors. If Bitshares X can market BitUSD effectively so people know about it and tell their friends then the opportunity for 5% yield could perhaps go viral. How do you engineer taking BitUSD viral?

You also have many competitors who will copy or try to copy BitUSD so it's a matter of quickly rolling out the features while also always continuosly adding new features. It is likely that the competitors will achieve feature parity in a short amount of time which means any particular set of features which look like they would bring in enormous demand today might not be as novel in a few months.

So for September 2014 BitUSD is quite novel and BitUSD with 5% is even more novel. The question is will the Bitshares platform win the innovation arms race? I see it as an innovation arms race and I tend to invest in the companies which have a 6 month lead in that arms race. If Bitshares can maintain their innovation lead then there will always be new investors who will want to invest in the most innovative technology.

There will be forks, clones, and other communities which attempt to copy the innovations from Bitshares and what matters is the rate at which team Bitshares pushes out new innovations. This way people who just copy and paste cannot keep up because the newest ideas will always come from the main chain.

tl;dr

Make Bitshares X as contagious and sticky as you can.
« Last Edit: September 10, 2014, 01:28:45 pm by luckybit »
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads


Offline bitrose

  • Jr. Member
  • **
  • Posts: 43
  • ROSE
    • View Profile
    • rose
Please Vote : x.ebit , rose.ebit
http://www.roseebit.com

Offline yellowecho

696c6f766562726f776e696573

Offline ripplexiaoshan

  • Board Moderator
  • Hero Member
  • *****
  • Posts: 2300
    • View Profile
  • BitShares: jademont
The trumpet to fight with bitcoin is finally sounded?   +5% +5% +5%
BTS committee member:jademont

Offline bytemaster

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.   




 



For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.