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Famous NYU valuation professor on how to value bitcoin: http://aswathdamodaran.blogspot.com/2017/10/the-bitcoin-boom-asset-currency.html http://aswathdamodaran

by porter 9y ago

Famous NYU valuation professor on how to value bitcoin: http://aswathdamodaran.blogspot.com/2017/10/the-bitcoin-boom-asset-currency.html http://aswathdamodaran.blogspot.com/2017/10/the-bitcoin-boom...

nickysielicki 9y ago
Flawed argument because he doesn't understand the tech. > The only exception that I can think off is that if it becomes a necessary component of smart contracts, it could take on the role of a commodity; that may be ethereum's saving grace, since it has been marketed less as a currency and more as a smart contracting lubricant. This applies to bitcoin too, but he doesn't seem to be aware of it. So when he later claims > You cannot value Bitcoin, you can only price it: This follows from the acceptance that Bitcoin is a currency, not an asset or a commodity. Any one who claims to value Bitcoin either has a very different definition of value than I do or is just making up stuff as he or she goes along. It's just not true. There is obviously some actual inherent value to being able to do escrow via multisig rather than via mutual complete trust in some third party. You can argue that the value is very low, but obviously there's some inherent value to the system.
- jonwachob91 9y ago
  >Flawed argument because he doesn't understand the tech. People don't buy technology, they buy the experiences technology creates. If the price remains this volatile I have no reason to sell it, or to use it as a currency to purchase goods and services. The real problem is that the technology wasn't designed to increase the value of the coin, it was designed to create a currency for use in purchasing goods and services. In other words, if I can't use the technology for what it was intended for (purchasing goods and services) than I can't experience what the technology creates.
thanatropism 9y ago
Without having read the post I can attest: Damodaran is the real MVP.
- vog 9y ago
  Do you care to elaborate? That statement (or joke?) does not make any sense to me.
  - CamelCaseName 9y ago
    MVP probably refers to most valuable player here, not minimum viable product. He has a solid set of valuation videos on YouTube and offers a large library of finance teaching materials that most business students are sure to encounter during their studies.
TYPE_FASTER 9y ago
Really interesting write-up and explanation, thanks for posting.
tom_mellior 9y ago
The key part is the statement that "it cannot be valued". Saved you a click.
- Balgair 9y ago
  To expand on this, as it is mysterious to me: The reason it cannot be valued or invested-in is that it is a currency, and as such it only has a price. The difference is a bit murky to me (value v. price) but I think it's because as a currency it has a 'fiat' kinda representation.
shalmanese 9y ago
This is the same NYU professor that valued Uber at $6B because his comparables were taxi companies: https://fivethirtyeight.com/features/uber-isnt-worth-17-billion/ https://fivethirtyeight.com/features/uber-isnt-worth-17-bill...

by porter 9y ago

nickysielicki 9y ago

Flawed argument because he doesn't understand the tech. > The only exception that I can think off is that if it becomes a necessary component of smart contracts, it could take on the role of a commodity; that may be ethereum's saving grace, since it has been marketed less as a currency and more as a smart contracting lubricant. This applies to bitcoin too, but he doesn't seem to be aware of it. So when he later claims > You cannot value Bitcoin, you can only price it: This follows from the acceptance that Bitcoin is a currency, not an asset or a commodity. Any one who claims to value Bitcoin either has a very different definition of value than I do or is just making up stuff as he or she goes along. It's just not true. There is obviously some actual inherent value to being able to do escrow via multisig rather than via mutual complete trust in some third party. You can argue that the value is very low, but obviously there's some inherent value to the system.

jonwachob91 9y ago
>Flawed argument because he doesn't understand the tech. People don't buy technology, they buy the experiences technology creates. If the price remains this volatile I have no reason to sell it, or to use it as a currency to purchase goods and services. The real problem is that the technology wasn't designed to increase the value of the coin, it was designed to create a currency for use in purchasing goods and services. In other words, if I can't use the technology for what it was intended for (purchasing goods and services) than I can't experience what the technology creates.

thanatropism 9y ago

Without having read the post I can attest: Damodaran is the real MVP.

vog 9y ago
Do you care to elaborate? That statement (or joke?) does not make any sense to me.
- CamelCaseName 9y ago
  MVP probably refers to most valuable player here, not minimum viable product. He has a solid set of valuation videos on YouTube and offers a large library of finance teaching materials that most business students are sure to encounter during their studies.

TYPE_FASTER 9y ago

Really interesting write-up and explanation, thanks for posting.

tom_mellior 9y ago

The key part is the statement that "it cannot be valued". Saved you a click.

Balgair 9y ago
To expand on this, as it is mysterious to me: The reason it cannot be valued or invested-in is that it is a currency, and as such it only has a price. The difference is a bit murky to me (value v. price) but I think it's because as a currency it has a 'fiat' kinda representation.

shalmanese 9y ago

This is the same NYU professor that valued Uber at $6B because his comparables were taxi companies: https://fivethirtyeight.com/features/uber-isnt-worth-17-billion/ https://fivethirtyeight.com/features/uber-isnt-worth-17-bill...