# Should the current value of 1 BTC really be \$2.50 USD? [closed]

The real value of a currency depends on the value of the goods that can be purchased with it. If we assume the majority of bitcoin transactions for 'real' goods (not currency speculation) are on silk road we can do the following calculation.

The demand in USD is about 1.9 million per month (http://arstechnica.com/tech-policy/2012/08/study-estimates-2-million-a-month-in-bitcoin-drug-sales/) which works out to be \$63,333 per day (the demand)

There are currently 10118337 bit coins that have been created and each coin is spent on average once every 399.357 days (http://abe.bitcoinstats.org:2750/)

This means that each day there are 10118337 / 399 = 25,359 bitcoins available to use for transactions each day (the supply)

The price of 1 BTC should then be supply / demand = \$63,333 / BTC 25,359 = \$2.49 USD per coin

Does anyone have alternative suggestions for calculating the price or is Bitcoin in a bubble?

• It appears you are trying to come up with the valuation based on the velocity of money, but aren't making a clear case. The largest number of transactions are for online gambling, so that's one instance of demand for coins. – Stephen Gornick Oct 8 '12 at 21:27
• Thanks Stephen, how would I find out the largest number of transactions are for online gambling? All the reading I've done points at silk road being the main place coins are spent. – UpDwD5gN Oct 8 '12 at 22:49