So how would you go about it? Can you please share your structure?
How would you valuate Bitcoin?
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:
- 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
- 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)
- Economy and prices for alternatives (Gold, real estate, etc)
Related BootCamp article(s)
Investments or single business cases need to be evaluated based on a certain set of criteria. Since financial performance is the key criterion in most cases you need to have an idea about future financial impacts. A key tool to asses this impact is the cost-benefit analysis which is used to determine the net effect of potential revenues and costs.
Opportunity costs are an economic concept to quantify benefits of (discarded) alternatives. They measure the lost benefits that occur if you choose the best alternative instead of the second best one.
Valuation case studies require you to estimate how much a firm, patent, or service is worth. For these cases, use the Discounted Cash Flow method or the Industry multiple method.
Your client, Gravestone Inc., is a mason producing gravestones situated in Switzerland. He is producing high-quality, hand-crafted gravestones with very skilled labour-force. In the recent past a technology was developed that would allow him to produce his gravestones with much less labour. He is ... Open whole case
We are a German owned water provider company based in the south west of the United States. As the biggest water provider in the region we serve the majority of the south west region. We measure our performance using the Economic Value Add (EVA) valuation technique. We are currently at a negative EV ... Open whole case