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As an investor, why is crypto so hard to value?

fundamentalinvestor.substack.com

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Re: As an investor, why is crypto so hard to value?

#111

Post by randomhodler84 »

giancarlostoro wrote: post #78
Quindecillion wrote: post #50

Most "cryptos" are just affinity scams riding on the coattails of the true innovation of Bitcoin. They offer nothing significantly new or important over Bitcoin. Most people in the space understand this and why. Institutional investors starting to come in understand this. State governments are starting to understand this. The energy sector is starting to understand this. Yes crypto is a bubble, and it will pop. When…

Tbh Bitcoin does nothing interesting compared to say Ethereum. I think Ethereum is a far more interesting ecosystem when you consider the only cryptocurrency CoinBase runs is built on top of Ethereum. Bitcoin is the most boring coin and its only valued so much based on speculation and brand recognition.

The problem is at ethereum is a science project. I have no guarantees that the thing will even work next year. Proof of Stake is a mistake. Who knows if it will ever be able to change. The chain is too expensive to use. EVM alternatives exist and will eventually out perform it for number tx’s. You can clone ethereum (EVM).

Bitcoin is mature, stable, has a known economic model and will absolutely work perfectly in a year, and beyond. It is cheap to send funds. It cannot be cloned and will be the best, proof of work, forever.

Did you know that 70% of eth was made out of nothing? Back in the day we would call it a Premined scam.

Re: As an investor, why is crypto so hard to value?

#112

Post by CPLX »

jkepler wrote: post #72
CPLX wrote: post #68

Earlier quoted context omitted.

> 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.

>> there's nothing inherent in money that makes it that way > Yes there is. Typically money is legal tender ... Parent comment was right, subjective value thesis says people will value things (including money) differently. And legal tender laws are only "typical" of government coercion in the central bank era, basically the past century or so. Prior to that the king or the local sovereign may have required taxes paid…

> multiple monies circulated and people freely chose which ones to spend, save, accept, or not

And were routinely scammed out of their savings as a result, it should be noted.

Re: As an investor, why is crypto so hard to value?

#113

Post by NicoJuicy »

stillsut wrote: post #97
hnarn wrote: post #80

Earlier quoted context omitted.

I don’t mean to sound tongue in cheek, but claiming that “predictability” is one of the major benefits of crypto currencies seems like a very rose-tinted way of describing how they behave in real life.

Agreed. Crypto is risky and volatile, and can go to zero and that makes it difficult for the average person to treat it as a savings vehicle. The distinction in predictability between the two system is kind of subtle: In bitcoin, the internal system mechanics are highly predictable. But there's no external "Open Market Committee" (e.g FOMC) that will change the market price to hit the targets mandated by its stakehol…

But Bitcoin isn't transparent either, because none of the companies infuencing Bitcoin are.

Re: As an investor, why is crypto so hard to value?

#116

Post by morpheos137 »

hnarn wrote: post #85
morpheos137 wrote: post #76

Simple answer: because it has no fundamental value. Crypto is not an equity or a claim of ownership. Thus the value is solely determined by market speculation. Gambling in crypto may be profitable but it is not an "investment."

There is no such thing as “fundamental value”, because the value of anything is decided at the moment it’s placed into a market.

Sure there is fundamental value of an asset. It is at least the present value of the expected income stream generated for the asset over its lifetime. Cryptocurrencies do not have an income stream so they can not have a fundamental value.

Re: As an investor, why is crypto so hard to value?

#117

Post by lariater »

lariater wrote: post #70
postcynical wrote: post #13

Crypto 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.

Downvote away.

Might want to look up Aswath Damodaran's youtube videos on this very subject to have a clue.

"A Viral Market Update III: Price vs Value"

Re: As an investor, why is crypto so hard to value?

#118

Post by hnarn »

eldelshell wrote: post #89
hnarn wrote: post #82

Earlier quoted context omitted.

I’m not exactly a proponent of crypto currencies, but this description seems like it holds true for any currency in the world, regardless of whether it’s crypto, fiat or natural. It’s not like you can carry dollars or a nugget of gold and expect any human being anywhere in the world to accept it as legal tender, and as long as that is true every type of payment is dependent on a “casino”, they just vary in size.

There are this things called "Exchanges" in every airport in the world. With the US dollar, Euro and some others, the world is your casino (following the comparison) and you can trade all of them. Same with gold and silver (although this are a bit harder to trade). Hell, try to pay a taxi in Djibouti, Sao Paolo or Islamabad with a BTC or USD and see which they'll accept and which will get you kicked out.

There's no need to be snarky, I know perfectly well that exchanges exist which isn't contrary to what I wrote in any way. I said:

> every type of payment is dependent on a “casino”, they just vary in size

So yes, in general terms it's easier to pay with USD than BTC because the “casino” is larger. That's exactly what I wrote. The point is that you cannot carry only USD and expect to be able to pay with it anywhere in the world, just as you cannot carry BTC or silver bars anywhere and expect to be able to pay with them. “The world” is most definitely not your casino with cash USD, EUR or any other major currency if you are not in an area of the world where they are commonly accepted.

Re: As an investor, why is crypto so hard to value?

#119

Post by hnarn »

morpheos137 wrote: post #116
hnarn wrote: post #85

Earlier quoted context omitted.

There is no such thing as “fundamental value”, because the value of anything is decided at the moment it’s placed into a market.

Sure there is fundamental value of an asset. It is at least the present value of the expected income stream generated for the asset over its lifetime. Cryptocurrencies do not have an income stream so they can not have a fundamental value.

The value of any asset is zero if nobody is buying it. If that asset happens to be shares in a company making a profit for example, that means that the risk of nobody wanting to buy it (at any price) is practically non-existent in a real world scenario, sure, but that doesn't mean it has some magical, inherent value disconnected from the market.

By your definition no currency in the world has any fundamental value, so what is then the point of even talking about it when discussing crypto currencies?

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