Valuing Bitcoin with Peter Dunworth

 
 

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“The first valuation framework is simple in that there’s $6.3 trillion of global trade that happens on a daily basis, and if you divide $6.3 trillion by the 900 BTC that are minted on the day you get to $7 billion a coin.”
— Peter Dunworth

SHOW DESCRIPTION

Peter Dunworth runs a multi-family office for high-net-worth families. In this interview, we discuss Bitcoin in Australia, and the reluctance of banks to embrace it despite it being the world’s most undervalued collateral. We also talk about the negative impact of state expenditure and taxation on inflation and the economy, and how markets are going to form around Bitcoin.

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Australia should be a natural home for Bitcoin. Back in 2013, the governor of the Reserve Bank of Australia (Australia’s central bank) stated “There would be nothing to stop people in this country deciding to transact in some other currency in a shop if they wanted to. There’s no law against that, so we do have competing currencies.” This sentiment provides content for the mild approach the Australian government has historically employed to Bitcoin regulation.

As Bitcoin and digital assets mature there are demands for legislation from some prominent Australian politicians. However, as in the US, regulators are struggling to determine how to deal with Bitcoin in comparison to other digital assets. The Australian Securities and Investments Commission, the Australian version of the SEC, does not currently deem Bitcoin to be a financial product.

This lack of regulatory clarity is why Bitcoin is yet to be fully embraced by mainstream banking in Australia. Whilst Bitcoin transactions are allowed, there are increasingly onerous banking limitations on transacting with exchanges. Essentially, banks don’t want money leaking out of their control as this reduces their ability to increase the flow of money through fractional reserve banking.

It is Peter Dunworth’s opinion though that we could be at a tipping point. Bitcoin, according to Peter, is the world’s most undervalued collateral. Banks will eventually lean into this as they will be able to add it to their balance sheets and solve their current capital adequacy problems. They will then be able to leverage it as any other balance sheet asset for loans. This is why Peter believes that, in terms of the future, Bitcoin is chronically undervalued.

TIMESTAMPS

00:01:44: Introductions
00:03:17: Shark stories
00:12:42: Bitcoin in Australia
00:15:58: Banks against Bitcoin
00:38:27: National Sorry Day and other societal issues
00:32:24: Government creep and taxation
00:38:05: Twisted government incentives
00:47:13: Bitcoin valuation frameworks
01:00:26: Bitcoin incentivises saving over borrowing
01:06:35: The four key functions of Bitcoin
01:14:10: Bitcoin for the masses
01:23:15: Bedford Bitcoin Conference
01:25:24: Collaborative custody and inheritance planning
01:38:32: Final comments

 

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SHOW NOTES

PodcastPeter McCormack