It doesn't matter why a liter of milk costs $1 - what matters is that it costs $1 now, it'll cost roughly $1 a year from now and in the interim, it'll still also cost $1. Predictability and consistency is a critical aspect of currency.
The actual numerical value is irrelevant.
You can't assign a fundamental value to the purchasing power of a bitcoin when treating it as a currency because there's nowhere in the world that bitcoin is used to denominate the sticker price of goods. If there was you could regress its value based on how much one bitcoin would buy you in terms of goods priced in it.
However, without that, you can only treat it as a purely speculative asset as jstolfi did. If that ever changes, our model will have to change. It has not, and IMO will not, even with El Salvador because its wildly fluctuating notional value determined predominantly by global speculators precludes it from being used to actually price things in a meaningful and consistent way.
[edit] Either way, the title of the write-up was 'Bitcoin as an investment' - currencies aren't an investment, so the analysis models it as an asset.
"what matters is that it costs $1 now, it'll cost roughly $1 a year from now and in the interim, it'll still also cost $1. Predictability and consistency is a critical aspect of currency."
The actual numerical value is irrelevant.
You can't assign a fundamental value to the purchasing power of a bitcoin when treating it as a currency because there's nowhere in the world that bitcoin is used to denominate the sticker price of goods. If there was you could regress its value based on how much one bitcoin would buy you in terms of goods priced in it.
However, without that, you can only treat it as a purely speculative asset as jstolfi did. If that ever changes, our model will have to change. It has not, and IMO will not, even with El Salvador because its wildly fluctuating notional value determined predominantly by global speculators precludes it from being used to actually price things in a meaningful and consistent way.
[edit] Either way, the title of the write-up was 'Bitcoin as an investment' - currencies aren't an investment, so the analysis models it as an asset.