The 7 Things You Need To Know From The Valuing Cryptocurrency Conference Call
Partner at CryptoOracle.io. Believer that Crypto (blockchain, cryptocurrency and decentralization..) is the biggest thing to happen in the history of mankind. The 7 Things You Need To Know From The Valuing Cryptocurrency Conference Call Click here for the invite on Medium for our next Conference Call on September 27th How & Why To Execute & Invest In An SEC Compliant ICO On September 7th, in partnership with Geektime , we held an hour long conference call with four cryptocurrency valuation thought leaders and over 400 participants. Each speaker shared their perspective on valuing crypto, for about 10 minutes each, and then the call was opened for questions from the audience. It was reiterated, time and again, that this talk was not meant for the purpose of investment advice, but as a discussion of valuation frameworks. A video replay of the call can be seen below. The slides from the call can be found on SlideShare (except Chris Burniskes slides). While the big take away from the call for me was how early we are in the development of valuation methodologies for cryptocurrency, I was immensely impressed by the thoughts shared by the four speakers. Below are what I believe to be the seven most important thoughts shared on the call. The 2nd, 3rd, and 4th thoughts below are pretty dense/include a lot of math, the others are more macro. The cryptoasset market can be broken in to three distinct assets: Ryan Selkis stated that the biggest problem in the market today is that everything is valued as if its a currency/a store of value. This mis-categorization has lead to grossly overvalued cryptoassets in the long tail as there will only be a couple of winners for the money use case and, there will be a power law distribution of that wealth creation. 2. A first step in valuing a Continue reading >>
Creating Intrinsic Value In Cryptocurrencies
The investment banker Jamie Dimon caused a stir when he declaredrecently that Bitcoin will collapse because it is worth nothing.Bitcoins current market value, he claimed, is driven almost entirely by speculation,rather than by any real and present intrinsic value that Bitcoin actuallyprovides. Casting aside the debate over whether Bitcoinhas intrinsic value or not, it seems fair to say that Dimon doesnt know thecryptocurrency market well. If he did, he might have noted that Bitcoin is onlyone of dozens of major tokens available. Some tokens were designed withintrinsic value as a specific goal. Particl, which was created last spring, isbuilding a decentralized eCommerce platform, a framework for third party apps,and a suite of privacy tools to go with it. PART solves various privacy problems associated with BTC, such asthe ability of third parties to trace transactions. Adding multiple cryptographicproofs like Ring Signature Confidential Transactions (RingCT) and ConfidentialTransaction (CT) plus trustless mechanisms like MAD escrow, Particl provides100 percent anonymity to people who buy and sell using PART. While the Particl privacy platform and upcoming Marketplace supportsmost major cryptocurrencies, PART serves as its utility token. The value of Bitcoin has risen astronomically over the pastseveral years in part because people believe Bitcoin will one day be widelyused and provide services that other forms of currency cannot. For this reason,the growth in value of Bitcoin has far outpaced actual Bitcoin adoption. PART is different. PARTs value is based on more than thepotential future worth of the Particl Platform or PART tokens. People who ownPART tokens derive immediate benefits from them, including the following. PART is a flexible cryptocurrency, especially wit Continue reading >>
What Determines The Value Of A Cryptocurrency?
What determines the value of a cryptocurrency? Join Tradimo's Premium Club And Choose a Membership Right For You. 1,000+ hours of videos, quizzes & projects 150,000+ students rate our courses 4,8/5 every month Private access to trading & investing mentorship Trading & investing signal community with 40% return p.a.* Completion certificate for your resumé & LinkedIn The trading and investing signals are provided for education purposes and if you use them with real money, you do so at your own risk. Your browser does not support HTML5 video. What determines the value of a cryptocurrency? The technology behind a cryptocurrency plays a very big role. Decentralised currencies are resistant to censorship but even more so, it is nearly impossible to just shut them down. Thanks to the use of public ledgers, there is no need for a third party to ensure additional trustworthiness or transparency. Another important part of the technology is its safety. The digital nature of cryptocurrencies implies that there could be bugs in the coding. For example, an ethereum-based smart contract for a democratic digital investment fund, the so-called DAO, had a bug that was ultimately exploited by a hacker who stole more than $30M worth of ether. To fix this issue, a change in the ether blockchain was discussed. Some in the Ethereum community agreed that it would fix the problem, but others didn’t want to change the code as a matter of principle and were afraid it would affect the credibility of ether. Ethereum was then split into two versions: Ethereum (the one with the new code) and Ethereum Classic (the original code). Both can still be traded and everyone who owned ether at that point received a version of the new one and the classic one. Such an event is called fork and can have a b Continue reading >>
How To Value Cryptocurrencies In The Future Steemcreated With Sketch.
= Utility Value of Cryptocurrency + Speculative Value of Cryptocurrency Below I'll go over these two aspects and how they fit into our model Utility Value Definition: Utility Value is the underlying value that the cryptocurrency has once all of the inflated hype is stripped away. Another way of thinking of Utility Value is to assume that if the coin crashed on the exchanges, this is the final value it would rest at. How do we determine the Utility Value of Bitcoin? It's a bit challenging since we have to know what it's basically worth today if we stripped away all speculation on the exchange markets. From my research I have identified 2 Different ways we could approach this Remittance Market: The Remittance Market's primary use is to allow an individual to send send money from one country to a person in another. It is often used by wage earners working outside of their native country and sending money back home. Since Bitcoin and other cryptos can likely disrupt this space we'll be using this sector to go through a series of exercises Mining Cost: The simplest and most utilitarian approach to value cryptocurrency's Utility Value is how much it costs to mine it. Simple. See, if the market value of the coin is less than the cost to mine it, no one would mine it after all. There are many cost factors to take into account when mining, from the cost of initial hardware, to electricity costs, to upkeep, to the increasing hash difficulty. As an example, the cost to mine 1 BTC can range in value from USD $500 to USD $1000 or more. And as the difficulty increases this cost will only increase itself. Of course, once the cost of mining reaches a threshold that makes it entire unprofitable we may have to revert to pure transaction fee model, which would flip this method on its hea Continue reading >>
5 Answers - How To Value Cryptocurrency To Find An Instrinic Value - Quora
I covered off on various methods for putting a value on Ethereum (that can be used for other coins as well) in this blog post: 7 Smart Ethereum Price Prediction Methods for HODLers It is incredibly difficult to predict where the price of Ethereum will go. This is not a matter of talent, or how smart you are I mean, shit, you have possibly made a good deal of money investing in Ethereum. But now you have additional money to invest, and are unsure if now is the best time to buy. Even the best Ethereum traders/investors in the world are left dumbfounded about when to invest. Luckily, Ethereum price prediction tools have emerged that are helping investors and analysts better predict where Ethereum prices are going to go. Why is it so difficult to predict Ethereum prices? Putting a value on a cryptocurrency is fundamentally different from a stock. Stock valuations are typically heavily based around one big component: cash flow. The most well-known methods for valuing stocks: DCF, Graham Formula and EBIT Multiples are all based in some form or another on cash flow and profitability. Cryptocurrencies do not have cash flow, and thus it becomes impossible to use the traditional methods of stock forecasting. What this means is we have to find alternative methods for pricing this amazing technology. I have outlined 7 different ways we can come to an Ethereum price prediction to help out future investing. 1. Chris Burniskes cryptoasset valuation, aka I am very thoughtful in my analysis Chris Burniske of Placeholder capital and author of the book Cryptoassets: The Innovative Investors Guide to Bitcoin and Beyond recently released a very promising and thoughtful piece on Medium outlining a new way to value Cryptoassets . Instead, valuing cryptoassets requires setting up models struc Continue reading >>
Valuation Models For Cryptocurrencies
Investing @ MGV. Previously @KKR_Co & @UCBerkeley | [email protected] This piece reviews valuation models used for traditional asset classes like equities, bonds, and real estate, then reviews models that may be useful in valuing cryptocurrencies. This piece is the first in a series of pieces exploring ways to think about valuing cryptocurrencies follow on Medium to stay updated. This piece will cover cryptocurrency valuation models proposed by other writers and future pieces will propose novel valuation models. These valuation models are a useful way to think about and analyze cryptocurrencies but should not, by themselves, be used as a justification for investment. As always, DYOR (do your own research). When it comes to valuing traditional asset classes like equities (also commonly referred to as stocks), bonds, and real estate, there are two categories of valuation models: absolute and relative. Dont worry about understanding every detail of the traditional valuation models presented: the important thing to focus on is what inputs/outputs are used in these models and how they compare to what is reasonable and available for cryptocurrencies. Absolute valuation models attempt to arrive at an intrinsic value for an investment by evaluating fundamentals like cash flow, dividends, assets held, etc. Two of the most famous absolute valuation models for equities are the discounted cash flow model (DCF) and the dividend-discount model (DDM). These descriptions provide a high-level overview of how these models are set up with links provided for additional information. Discounted Cash Flow (DCF): A discounted cash flow (DCF) analysis is a method of valuing a project, company, or asset by leveraging the concept of the time value of money . In a DCF analysis, cash flows (a Continue reading >>
How To Price Cryptocurrencies
Predicting cryptocurrency prices is a fools game, yet this fool is about to try. The drivers of a single cryptocurrencys value are currently too varied and vague to make assessments based on any one point. News is trending up on Bitcoin? Maybe theres a hack or an API failure that is driving it down at the same time. Ethereum looking sluggish? Who knows: Maybe someone will build a new smarter DAO tomorrow that will draw in the big spenders. So how do you invest? Or, more correctly, on which currency should you bet? The key to understanding what to buy or sell and when to hold is to use the tools associated with assessing the value of open-source projects. This has been said again and again, but to understand the current crypto boom you have to go back to the quiet rise of Linux. Linux appeared on most radars during the dot-com bubble. At that time, if you wanted to set up a web server, you had to physically ship a Windows server or Sun Sparc Station to a server farm where it would do the hard work of delivering Pets.com HTML. At the same time, Linux, like a freight train running on a parallel path to Microsoft and Sun, would consistently allow developers to build one-off projects very quickly and easily using an OS and toolset that were improving daily. In comparison, then, the massive hardware and software expenditures associated with the status quo solution providers were deeply inefficient, and very quickly all of the tech giants that made their money on software now made their money on services or, like Sun, folded. From the acorn of Linux an open-source forest bloomed. But there was one clear problem: You couldnt make money from open source. You could consult and you could sell products that used open-source components, but early builders built primarily for the be Continue reading >>
Guide To Valuing Cryptocurrency: How To Value A Cryptocurrency
Guide to Valuing Cryptocurrency: How to Value a Cryptocurrency Due diligence is a must By Aziz, Founder of Master the Crypto No responses Home Commentary Guide to Valuing Cryptocurrency: How to Value a Cryptocurrency This guide to valuing cryptocurrency is an introductory look at how to value a cryptocurrency. Assessing a number of important factors would be helpful in understanding the value and potential of a coin. For traditional investments in stocks or real estate, fundamental analysis entails evaluating the financial health and viability of a company according to its financial statements. If the numbers look good, we can be confident that the company has good fundamentals and we can, therefore, invest in it. Performing fundamental analysis for cryptocurrencies, however, is radically different since there are no financial statements to analyze. Why? Because: Cryptocurrencies are not corporations but are rather digital currencies that represent value or assets within a network. Heres a guide in understanding the differences between stocks and cryptocurrencies. Its viability is not based on generating a revenue, but rather directly depends on the participation of the community (users using the service, miners securing the network and of course the developers). Each cryptocurrency is a manifestation of the different applications of Blockchain technology, and are usually decentralized. (Read more: Coins, Tokens & Altcoins: Whats the Difference? ) The crypto space is in its infancy stages, and almost all of the cryptocurrencies are in development stages. Which means that there are limited uses cases in the real world currently and therefore, a lack of track record to show for. Thus, fundamental analysis on cryptocurrencies must be performed with a different methodology Continue reading >>
Skeptics Say Bitcoin Has No Value. Heres Why Theyre Wrong
On Tuesday, it was trading at $11,943 , a decline of 12 percent, according to CoinDesk. As bitcoin's popularity surges and its price rises and falls, more and more people are asking the same question: How does bitcoin , something that's essentially invisible and intangible, have value? In economics, something has value if it checks the following two boxes: scarcity and utility. Scarcity just means that something has a finite supply. In the case of bitcoin, the cryptocurrency has a set cap of 21 million bitcoins. Many analysts note that this set cap makes bitcoin more desirable than other assets, even gold. That's because unlike with gold, there's no need to worry about a digital Gold Rush. A treasure trove of bitcoin won't ever be "discovered," causing the crypto's price to crash with an influx in supply. "There are potentially millions of times more gold underground than actually has been extracted," said Tom Lee, head of research at Fundstrat Global Advisors. Lee was chief equity strategist at J.P. Morgan before co-founding Fundstrat in 2014. Ben Yu, a blockchain expert living in San Francisco, says technological advances are also making gold easier to mine. "Today we mine gold at four times the rate that we did just 100 years ago," Yu said. So if bitcoin has scarcity, what about its utility? Many believe the cryptocurrency's utility lies in its potential to be a more efficient commodity than we already have. Proponents of bitcoin like it for a number of reasons. First, bitcoin is decentralized, meaning no government, bank or single person has control over it; it can't be toppled by corruption at the top. It's also trivially divisible, meaning you can buy a small item like a doughnut with it as easily as you can buy a house or even a mansion. And finally, the code it Continue reading >>
The Easy Way To Measure Bitcoin's Fair Market Value: A Do-it-yourself Guide
The Easy Way To Measure Bitcoin's Fair Market Value: A Do-It-Yourself Guide How do you determine the fair market value of a currency that has appreciated faster than the shares of even the hottest technology stocks?This question has befuddled investors and analysts for years when it comes to Bitcoin . While the methods for valuing digital currencies are rather straightforward, the assumptions that underlie competing valuations vary widely. Don't rely on Wall Street analysts to thinkforyou. Instead, consider this framework and come up with your own fair market value estimates for bitcoin. Bitcoin has value because peoplethinkit has value. Your first question might be to ask whether Bitcoin has any value whatsoever. After all, many bitcoin skeptics have knocked the virtual currency for its lack of "intrinsic value", including world-class investors like Berkshire Hathaway Inc.'s (NYSE: BRK.B ) Warren Buffett (who called Bitcoin a " mirage ") and J.P. Morgan Chase & Co.'s (NYSE: JPM ) Jamie Dimon , and venerated economists like former Federal Reserve Chairman Alan Greenspan and Nobel laureate Paul Krugman (" Bitcoin is evil "). Despite this army of skeptics and a myriad of bad news for the industry so far in 2014, Bitcoin still continues to trade for multiples more than it did one year ago. The Winklevoss twins clearly disagree. See Investopedia's interview with Tyler Winklevoss.) Quite simply, Bitcoins have value because a small, but growing group of people believe that the underlying Bitcoin technology has value.In the future, the Bitcoin technology may be used for a wide array of financial services applications from payments, to contracts, to distributed exchanges. SinceBitcoins are the scarcecurrency units which are required to power these applications, they are valuab Continue reading >>
How To Value Cryptocurrencies (including Bitcoin, Ethereum, Etc)
How to Value Cryptocurrencies (including Bitcoin, Ethereum, etc) Cryptocurrencies are one of todays hottest asset classes to invest in. Bitcoin in particular has soared in price from pennies to thousands of dollars per unit in just a few years. But is it all a bubble, like the Dotcom era or tulip mania ? Or is this just the start of something bigger, or even revolutionary? I dont have the answers to those questions, but this article will provide a framework to help you think about how to value cryptocurrencies for yourself, including explaining a lot of the risks involved. Start here from the beginning or jump to the section you want: How to Value Bitcoin & Other Cryptocurrency Cryptocurrencies 101: A Blockchain Overview Bitcoin, the first cryptocurrency, was invented by an anonymous person or group named Satoshi Nakamoto and released publicly online in 2009 as open-source software and a white paper that explains the concept. Satoshi claimed to be a Japanese man in his thirties, but his identity has never been verified because all of his communication was via the Internet. He wrote with influences of British English, and had sleep/wake cycles according to his online activity that would presumably place him in North America, leading many to believe that hes not actually Japanese. Or maybe hes multi-ethnic. It might not even be a man. It could conceivably be a woman or a group of people. But most likely its a man using a pseudonym. And wherever he is, he has about a million bitcoins, worth billions of dollars now, which he has never spent. And he has gone dark; after having invented the concept, he no longer leads it and his whereabouts and identity are unknown. Anyway, Bitcoin was invented for the purpose of being a decentralized currency and method of payment. It does Continue reading >>
Here's The Fundamental Bitcoin Valuation Metric That Determines The Cryptocurrency's Price Moves
Here's The Fundamental Bitcoin Valuation Metric That Determines The Cryptocurrency's Price Moves I've been a full-time Bitcoin writer and researcher since early 2014. Opinions expressed by Forbes Contributors are their own. Note: This piece is a sort-of follow up to Comparing Bitcoin and Other Cryptocurrencies by 'Market Cap' Can Be Very Misleading . You may want to read that post before this one. With each passing day, there is more agreement among investors worldwide that the invention of Bitcoin has led to the creation of a new asset class. The Federal Reserve Bank of St. Louis even indicated as much in an article last week . Whether the price will continue to rise in the aftermath of historic gains in 2017 is still up for debate, but there seems to be a stronger understanding that this cryptoasset will not simply vanish out of thin air one day. Having said that, there are still plenty of gold bugs and Nobel-prize winning economists who still dont understand the value proposition of Bitcoin ( I tried to explain it to the gold bugs here ). With the creation of a new asset class comes the difficulty of assessing the fundamental, underlying value of these assets. While earnings reports can be used to calculate theoretically fairvaluationsof traditional stocks, no suchdata exists for Bitcoin. A number of different theories for valuing bitcoin and other cryptoassets have popped up over the past few years, but those who dare make price predictions based on some sort of traditional valuation analysis usually end up with egg on their face. Kyle Torpey (@kyletorpey) December 5, 2017 Of course, there is one theory that has been around for a number of years now that has been mostly overlooked. It is the theory that long-term holders have the biggest impact on the Bitcoin price Continue reading >>
Cryptocurrency Market Bloodbath: Bitcoin, Ripple, Et Al. Decline In Value
Cryptocurrency Market Bloodbath: Bitcoin, Ripple, et al. Decline in Value Join our community of 10 000 traders on Hacked.com for just $39 per month. Today, on January 16, the cryptocurrency market experienced a major correction, for the third time in the past 10 days. The price of most cryptocurrencies including bitcoin, Ripple, Ethereum, and Bitcoin Cash declined by around 10 percent, while small cryptocurrencies recorded larger losses. With the exception of NEO and Monero, all of the top 20 cryptocurrencies have fallen in value. Cryptocurrencies that have recorded a decline of over 10 percent include Ripple, Cardano, Bitcoin Cash, Stellar, EOS, Dash, Tron, Bitcoin Gold, and Ethereum Classic. Cryptocurrencies with lower market caps, specifically cryptocurrencies outside of the top 10 global rankings, have recorded larger losses than established digital currencies like bitcoin and Ethereum. Even cryptocurrencies with trading volumes heavily concentrated in South Korea such as Qtum and EOS have declined in value, even though the South Korean cryptocurrency market recovered from the latest trading ban FUD. The recent correction of the cryptocurrency market was not triggered by South Korea or China, as the market have already recovered from the FUD produced by the authorities in both regions. Rather, it is likely that the major correction was caused by the abrupt surge in the market valuation of most cryptocurrencies in the market within a short period of time, with minor corrections. Within the past 30 days, the market valuation of cryptocurrencies increased from $540 billion to $840 billion, with several cryptocurrencies with Tron that do not have enough users, decentralized applications, and user activity to justify their market valuations, surging by billions of dolla Continue reading >>
Bitcoins Price: Who Decides The Value Of Cryptocurrencies?
Bitcoins price: Who decides the value of cryptocurrencies? Graffiti on the outskirts of the city center of Vilnius, Lithuania. (Photo by Sean Gallup/Getty Images) Investing in a cryptocurrency like Bitcoin is a very existential experience. You get incredible highs and dizzying lows. And a lot of questions in between. After hitting a record of nearly $20,000 in December 2017, Bitcoins price has been a roller coaster of late. It went up to $11,440 per coin in mid-February 2018, a welcome recovery from trading as low as $6,000 just several days earlier. Other cryptocurrencies are also not having the steadiest of months. On February 2, over$100 billion was wiped from the global cryptocurrency market, all in 24 hours. The sell-off was prompted by concerns that prices of digital currencies were artificially inflated as well as regulation talk in India and South Korea, one of the biggest cryptocurrency markets in the world. why-bitcoin-is-better-than-gold-with-wences-casares Some analysts are not too concerned with such volatility, however, seeing in it a natural lifecycle of cryptocurrency stock. In fact, Tom Lee of Fundstrat Global Advisors predicts that by July 2018, Bitcoin will be back up to $20,000 and reach $25,000 by the end of the year. He finds that judging by historical performance, it takes Bitcoin about 85 days to recover prior highs after a period of bottoming out. Vitalik Buterin, the founder of the cryptocurrency Ethereum is less bullish. He warned last week that such currencies are really not the best place to put your lifes savings since they are new and hyper-volatile, with the possibility to drop to near-zero at any time. Instead, traditional assets are still your safest bet, added Buterin. This chart from Coinbase shows you the wild ride bitcoin has been Continue reading >>
Why Do Bitcoins Have Value?
Bitcoin was launched in 2009 as the world's first decentralized, private digital currency. Because it has no physical denominations , Bitcoin only exists inside of an interlinked computer network system. This is not entirely unique, as much of the U.S. dollar supply only exists in digital account balances instead of as actual green pieces of paper. Bitcoins are generated, or " mined ," through a sequence of complex mathematical formulas run through computers. The anonymous creator of Bitcoins set a cap on total Bitcoin volume. Once that number hits 21 million, no more Bitcoins can be generated. These digital coins can then be bought or sold with other currencies and used as an investment or money to buy goods from any sellers who accept them. Economics teaches society that values are subjective; items have economic value because people desire them for one reason or another. Currencies, or mediums of exchange, serve several different and crucial functions in an economy. For one, they make trade easier; money currencies trade for nearly any good or service. For example, suppose a person has 5 units of lumber and wishes to purchase a dog. Without currency, his only option is to find a lumber-wanting dog owner. With currency, like U.S. dollars, he can sell the lumber to anyone who wants it and then use the money to purchase a dog. Currency also provides a universal measurement for accounting purposes. For instance, without currency, it is difficult to compare companies that sell different goods. Currency is used as a store of value , which makes saving, investing and banking easier. Some currencies, like gold, have value because they are useful as a commodity. Government fiat currencies, like the U.S. dollar, have value because governments grant them legal tender status an Continue reading >>