Researchers figure out how to correctly value bitcoin - and they say it is ‘substantially’ overvalued
Bitcoin’s actual level of support is four times less than it should be, they said - and there may be several months of volatility ahead
Given bitcoin’s meteoric rise in 2017, and persistent slump this year, it’s easy to wonder just how much the digital currency is really worth.
Researchers at ETH Zurich say they may have found an answer: Bitcoin’s value is based on the network of people who use it.
And they suspect that the currency is overvalued.
Researchers at the Swiss university were able to observe how the cryptocurrency’s value rises with participation.
They used a modified version of a model that assigns networks a value proportional to the square of the number of active users, and an equation that can capture how speculative bubbles evolve and grow.