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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?

#131

Post by hotpotamus »

hnarn wrote: post #115
hotpotamus wrote: post #108

Earlier quoted context omitted.

If you had a profitable mine, would you sell shares in it?

I don't know what you're implying. Why do you think shares exist?

I believe shares exist to raise capital to exploit a natural resource in this case. But if I already have a profitable mine, I doubt I'd have much incentive to invite others to share ownership of that mine. However, if I have a hole in the ground that doesn't produce anything of value, then it's in my interest to sell shares of it since that might be my only income.

Just a thought really - in spite of hearing many good Twain quotes in my life, this was a new one to me, so I'm kind of working through it.

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

#132

Post by lostmsu »

tveita wrote: post #96

Financially, cryptocurrency is pretty much exactly like having stock in a long bankrupt company. You can trade it with other people, you can create contracts and derivatives involving it. What you can't do is ever get anything of value from holding the stock itself. This is easy to value, but some people are uncomfortable with the answer. With so much hype and magical thinking, it feels like there most be something m…

Complete bullshit.

First, even "financially" (thought what does it even mean???) holding crypto is not the same as holding a stock of a bankrupt company. Bankruptcy is a process with many mandated "financial" steps with set dates none of which are required from crypto.

Second, there are things beyond "financiality", such as easiness and reliability of "creating a derivative", and finding a buyer for it. So the premise of the whole comment is 100% useless in reality.

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

#133

Post by gizmo686 »

robcohen wrote: post #128
tveita wrote: post #96

Financially, cryptocurrency is pretty much exactly like having stock in a long bankrupt company. You can trade it with other people, you can create contracts and derivatives involving it. What you can't do is ever get anything of value from holding the stock itself. This is easy to value, but some people are uncomfortable with the answer. With so much hype and magical thinking, it feels like there most be something m…

I think this analogy is almost correct, but it's better to think of crypto as owning a deed to land. You can in fact hold on to it and trade it, but at the end of the day all you are doing is changing the name on the deed. The land stays the land. You can put a house on it (store tokens), or you can build a factory (smart contracts), but the only reason why it has any value is because some other person may want to pu…

A land deed gives you the right to have people with guns enforce your will on others who would use that land; and limits the amount that those same people with guns would interfere with your abilith to use that land.

Further, in practice, most owned land is near immidietly turned into something that provides direct value. Be it shelter, or widgets.

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

#134

Post by armenarmen »

augustuspolius wrote: post #126
0des wrote: post #121

.

You might have been in a unique situation, not sure. But both Paysend and Wise (ex-TransferWise) payments are basically instant and 10-100 times cheaper than crypto. I also find it a bit humorous that crypto used to boast 3 main advantages: anonymous, cheap, instant. Now KYC is very common, exchanges and transfers are incredibly expensive for PoW. It can still be fast in some cases, I give them that… if you have a qu…

I mean, cheap and instant still exist on different chains. For BTC and ETH they’re less so, a victim of their don success really.

And the anonymous part, that being less the case nowadays isn’t because of a flaw or oversight on cryptos part. It’s state action

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

#137

Post by BongoMcCat »

robcohen wrote: post #128
tveita wrote: post #96

Financially, cryptocurrency is pretty much exactly like having stock in a long bankrupt company. You can trade it with other people, you can create contracts and derivatives involving it. What you can't do is ever get anything of value from holding the stock itself. This is easy to value, but some people are uncomfortable with the answer. With so much hype and magical thinking, it feels like there most be something m…

I think this analogy is almost correct, but it's better to think of crypto as owning a deed to land. You can in fact hold on to it and trade it, but at the end of the day all you are doing is changing the name on the deed. The land stays the land. You can put a house on it (store tokens), or you can build a factory (smart contracts), but the only reason why it has any value is because some other person may want to pu…

so, almost correct, but at the same time the exact opposite?

If land has no intrinsic value, what does?

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

#138

Post by [deleted] »

augustuspolius wrote: post #126
0des wrote: post #121

.

You might have been in a unique situation, not sure. But both Paysend and Wise (ex-TransferWise) payments are basically instant and 10-100 times cheaper than crypto. I also find it a bit humorous that crypto used to boast 3 main advantages: anonymous, cheap, instant. Now KYC is very common, exchanges and transfers are incredibly expensive for PoW. It can still be fast in some cases, I give them that… if you have a qu…

[deleted]

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

#139

Post by [deleted] »

armenarmen wrote: post #134
augustuspolius wrote: post #126

Earlier quoted context omitted.

You might have been in a unique situation, not sure. But both Paysend and Wise (ex-TransferWise) payments are basically instant and 10-100 times cheaper than crypto. I also find it a bit humorous that crypto used to boast 3 main advantages: anonymous, cheap, instant. Now KYC is very common, exchanges and transfers are incredibly expensive for PoW. It can still be fast in some cases, I give them that… if you have a qu…

I mean, cheap and instant still exist on different chains. For BTC and ETH they’re less so, a victim of their don success really. And the anonymous part, that being less the case nowadays isn’t because of a flaw or oversight on cryptos part. It’s state action

[deleted]

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

#140

Post by hiq »

my50cents wrote: post #66
hiq wrote: post #64

Earlier quoted context omitted.

> 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.

> The simple answer is that if a stock is expected to never pay any dividends, it's intrinsic value is zero.

Which is obviously wrong, right? Any company that has liquid assets (and no debt) is at least worth the selling value of these assets, even if it doesn't pay dividends. So I'm not sure your model helps here.

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