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How would you valuate Bitcoin?

Bitcoin Booz Allen interview question Valuation
Recent activity on Jun 08, 2018
1 Answer
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Georgy
Skilled
asked on Jun 08, 2018

So how would you go about it? Can you please share your structure?

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Vlad
Expert
replied on Jun 08, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi!

Similar to other typical McKinsey price factors cases (factors influencing Oil Prices, Real Estate Prices, etc) you should approach it with the supply - demand framework:

Supply factors:

  • Volumes of bitcoins mined
  • Upper cap on the total number of bitcoins
  • Tech specifications of the system (Forks, etc)
  • R&D explored innovations - potential to increase the speed of bitcoin transactions to compete with Visa / Master Card
  • Speculation

Demand Factors:

  • Volume of transactions
  • Number of people holding bitcoins
  • Availability of exchanges
  • Bitcoin adoption by payment systems, banks, sellers
  • Availability of alternative coins (Ripple, Bitcoin cash, etc)
  • Regulation (Taxation, restrictions, etc)
  • Speculation
  • Economy and prices for alternatives (Gold, real estate, etc)

Best!

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Vlad gave the best answer

Vlad

McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School
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