Our fair value analysis suggests that to justify the current Bitcoin valuation, it will need to (1) account for at least 10% of all global e-commerce B2C transactions, (2) become one of the top three players in the money transfer industry, and (3) acquire a store of value reputation close to silver.
That report came one day after former Fed Chairman Alan Greenspan was quoted as saying that "Bitcoin is a bubble with no intrinsic value." (here) Yesterday, Bill Fleckenstein was quoted as saying that "Everyone betting on Bitcoin with lose all their money". (here)
Such diverse opinion can only drive the market into a roller coaster, with the price above USD1200 on December 5 and plunged down to USD600 on December 7.
Bitcoin - and the other virtual or digital or crypto currencies out there - came into existence due to fear that existing fiat currencies would continue to be debased due to the unconventional monetary policies undertaken by central banks worldwide. I believe Bitcoin rally is a bubble that will end like all the other manias in the past, such as the Tulip mania in the Netherlands in the 17th century. Until the bubble busts, we will have a very exciting ride.