value investing is dead, it’s an attention economy now. the ability for global scale herds of people to coordinate in real time has changed the balance and changed the game
As an investor, why is crypto so hard to value?
61–70 of 193 posts
Re: As an investor, why is crypto so hard to value?
#62Earlier quoted context omitted.
The "Networks behind them" are also worthless, if you mean blockchain. Consider the oracle problem, the fact that running Hello World requires mining a block, that software contains errors and cannot be patched on the blockchain, the curious absence of real world applications of blockchain after all those years, and the inevitable precedence of the Law in the real world that makes any "the code is the law" ideas moot…
You could never ever patch log4j.
Of course you could, you make a new version of your smart contract or blockchain and people use that instead.
Re: As an investor, why is crypto so hard to value?
#63Earlier quoted context omitted.
Is this really something that people in the USA spend their days worrying about? Serious question, as it is not part of the law over here in the part of the world where I live. Also, with every crypto transaction recorded on the public ledger and the vast majority of wallets held in exchanges, why wouldn't the police just acquire the crypto too?
I'm sure they could seize it, since they can and do freeze and sieze bank accounts as well. However self custody ensures they can never get it even if they kill you, and since it is programmable money there is a way to ensure it gets to a friendly address, maybe years later, perhaps to a loved one. Seems the market places a worth on a possession that can not be taken from you by force, or even by your death, slightly…
It's true that the market places a worth on crypto assets, but there are many alternative reasons for why that could be as well (such as: I expect it to go up in price for whatever reason and then I'll be rich!). In any case, what is your plan for when https://xkcd.com/538/ happens?
Re: As an investor, why is crypto so hard to value?
#64Crypto is not hard to value. Valuation is the estimation of the present value of future free cash flows. Since most crypto tokens produce negligible free cash flows relative to their market cap, they have approximately zero intrinsic value relative to their market price.
> Since most crypto tokens produce negligible free cash flows relative to their market cap, they have approximately zero intrinsic value relative to their market price.
What's the intrinsic value of stocks that don't distribute dividends in this model?
Re: As an investor, why is crypto so hard to value?
#65Earlier quoted context omitted.
Everything is worthless in itself. We give value to things subjectively and mediate this valuation through intersubjective consensus mechanisms. I'm glad that now we are in a position where a personal decision and valuation really counts, this is why I'm only taking web3 related jobs from now on.
Everything that doesn't serve a human basic need, of which there are many. Food is not worthless in itself, nor is shelter, security, human contact, etc. Extreme subjectivism never fed nobody nor kept them worm. It only made them think they are smart.
You don't understand what in itself means, it is a philosophical term used to distinguish between being in itself of something versus being of that for someone. For example there is no food in itself, food is always food for an animal in itself its just some matter. In the same way there is no value inherent in anything as it is in itself, but becomes valued by humans on the basis of speculation, use and rarity.
Re: As an investor, why is crypto so hard to value?
#66Crypto is not hard to value. Valuation is the estimation of the present value of future free cash flows. Since most crypto tokens produce negligible free cash flows relative to their market cap, they have approximately zero intrinsic value relative to their market price.
> Since most crypto tokens produce negligible free cash flows relative to their market cap, they have approximately zero intrinsic value relative to their market price. What's the intrinsic value of stocks that don't distribute dividends in this model?
The simple answer is that if a stock is expected to never pay any dividends, it's intrinsic value is zero.
Note that from shareholders' perspective, paying dividends is economically equivalent to share buyback, plus some tax considerations, so there are exceptions.
Re: As an investor, why is crypto so hard to value?
#67Earlier quoted context omitted.
Pretty sure the parent was being sarcastic (and provocative). In real terms it’s worth whatever the next buyer is willing to pay. It annoys me that people cite the run-up over the last decade as evidence of it’s brilliance when it’s nothing of the sort, but I’d just sound like a loon screaming into the wind. Personally I think it’s worthless. Honestly I suspect Satoshi Nakamoto (if they’re still alive) probably think…
Although I agree with your view there is one aspect you aren't considering - Bitcoin is currently backed by a mining network that is managing to achieve around 200 Exahashes/second or however they measure it. A big number. While at a theoretical level different crypto tokens are the same that will not be how the market plays out. That sort of computing power isn't easily replaced and while it exists Bitcoin is unique…
Wouldn’t smaller tokens need comparatively lower resources though?
Re: As an investor, why is crypto so hard to value?
#68Crypto is worthless. All the VCs pouring money into crypto/web3 (a16h, sequoia) are worthless. All the companies pivoting to web3 are worthless (square). All the companies building up web3 teams are worthless (stripe, mastercard). All the fastest growing startups (coinbase, ftx, opensea) are worthless. All the devs who get started in crypto/web3 and won't go back, are worthless.
Money is hard to value. Fundamentally, it relies on a consensus that it's useful and valuable, but there's nothing inherent in money that makes it that way. It's a useful collective hallucination. So is crypto. Some people came up with a collective hallucination that they considered useful and valuable, and convinced some other people that it was, because, hey, we all like valuable things, especially when we can crea…
> there's nothing inherent in money that makes it that way
Yes there is. Typically money is legal tender, which means you’re mandated to accept it by a government with large numbers of guns and prison cells.
That’s what for all debts public and private means.
Re: As an investor, why is crypto so hard to value?
#69Crypto is worthless. All the VCs pouring money into crypto/web3 (a16h, sequoia) are worthless. All the companies pivoting to web3 are worthless (square). All the companies building up web3 teams are worthless (stripe, mastercard). All the fastest growing startups (coinbase, ftx, opensea) are worthless. All the devs who get started in crypto/web3 and won't go back, are worthless.
I must congratulate on your excellent demonstration of Poe's Law. Nonetheless, to the extent that you are being serious and not sarcastic, I largely agree with you.
If one assumes the content is sarcastic, it’s trying to point out that hey all these incredible big and successful entities support it so it can’t be worthless.
Problem is that if you’ve been alive awhile you’ve seen situations over and over and over again where things that important institutions valued very highly did in fact turn out to be worthless.
Re: As an investor, why is crypto so hard to value?
#70Crypto is worthless. All the VCs pouring money into crypto/web3 (a16h, sequoia) are worthless. All the companies pivoting to web3 are worthless (square). All the companies building up web3 teams are worthless (stripe, mastercard). All the fastest growing startups (coinbase, ftx, opensea) are worthless. All the devs who get started in crypto/web3 and won't go back, are worthless.
This article is just pointless.
Of course you can only do a valuation on cash producing assets. Non-cash producing assets can only be priced.
That obviously does not mean that gold, oil, crypto, art, any highly demanded collectible have a price of zero.