Bitcoin functions as a a quasi-commodity currency and I believe it can be priced according to particular factors, variables, instead of simply by the supply and demand in the exchange order book.
The pricing of bitcoins reminds me of the days before options contracts had a standard pricing mechanism. Today, options are valued popularly by the Black-Scholes equation, and no matter how many buyers and sellers there are for an option, that contract will always have a particular known and predictable price, with one variable (Implied Volatility) to account for mispricing outside of that formula. Options of course, are derivatives of an underlying asset and an infinite number of the contracts can be created. Bitcoin on the other hand behaves more like commodity futures to their spot price, where there is a known quantity and a known amount of effort to acquire them.
Ignoring the overly simplistic idea of "supply and demand" imbalances, bitcoin is influenced by the following factors:
- the rate at which new coins can be currently mined
- the future rate at which new coins can be mined, based on perception of mining hardware and how that will affect network difficulty rates
- how many bitcoins remain to be mined
I think these factors can be a greater influence than the speculators currently are, but it would require these factors to be reduced to a formula, as bitcoins are converging to a particular amount. This would allow for changes in volatility (wild swings in bitcoin price) to occur only in anticipation of real world events related to bitcoin.
Has anyone put any effort into pricing bitcoins or cryptocurrencies in general? Perhaps this is an area of study that you might be aware of