HomeAnswerNotificationsCustomize Feeds
HOMEQUESTION
How do you decide what the real intrinsic value of a cryptocurrency is?
How can you decide what's the real value from a certain cryptocurrency is? On the stock market you can use fundamental analysis to decide if a company is over- or undervalued. With cryptocurrency you have no P/E or peg ratio's to measure. Then how exactly do you know if what you pay for your crypto is a fair price and that the future price will be higher?
$0.00
3 ANSWERS

It's a good question!

I think that first you have to come to a view on why (or if!) cryptocurrencies have any intrinsic value at all, or whether the whole market is based on pure speculation of unproductive assets.

For me, cryptocurrencies can be considered to have value through:

  • Utility: The main source of value in crypto comes from utility, i.e. what use holding the coin provides.
  • Revenue streams: Some crypto like Steem, NEO or Binancecoin can provide an income stream that can be valued in a similar way to traditional stocks. Although there is generally the added complication that the income is in crypto so it is a little bit of a circular argument.

There are then other factors that are a consideration on the value, such as scarcity, but these are adjustments rather than determinants of whether there is underlying value.  

From the earliest days of Bitcoin there have been many ways that it was considered to have utility, although many of them are no longer valid or have been taken over by other coins:

  • As a payment system for activities that you want to remain anonymous.
  • As a method to transfer money out of China.
  • As a store of value in some countries against falling currency rates and hyperinflation.
  • As a potential method to store and trade assets (coloured coins).
  • Soon to be a payment system for everyday purchases (lightning network).

On top of this is a whole layer of speculation which has a very substantial impact on the price.

Even with the above considerations it's very hard to put an actual value on the utility and thus on the price. For me, for many crypto the intrinsic value is zero, since there is no utility or nothing that cannot be provided by better coins.

As such I think many traders in crypto are simply speculating, buying low and selling high, or playing trading strategies without consideration for the underlying asset.

But looking at the utility of a coin at least gives you an idea of what kind of value it brings and you can start to make some assumptions about its possible value.

Not financial advice, please do your own research.

https://i.imgur.com/fcS8JH2.jpg

$4.61
Reply

What is the best definition of intrinsic value?

In the financial world, intrinsic value us defined as an estimation of an organization, stock, money or item decided through essential investigation without reference to its marketvalue. It is likewise every now and again called crucial value. —

In cryptocurrencies the intrinsic value can be characterized as the genuine estimation of the digital money in view of a basic impression of its actual value which incorporates all parts of the business; both unmistakable and impalpable variables.

This would incorporate such factors as market interest for the item or administration, the faith in the official group and their capacity to execute the thought, the confidence in the engineers and quality code and in addition network size and support including checking the estimation of industry bolster that happens through associations and different subsidizing instruments.

Given that numerous cryptographic forms of money, particularly ICO's (initial Coin Contributions) are just a thought and ability to transform that thought into a reality,determining intrinsic value is profoundly abstract.

The computation of "genuine" intrinsic value might just be a close outlandish figuring without considering all the relevant elements.

How about we investigate a couple of the elements…

Determinants of Intrinsic value

The piece of intrinsic value is comprised of various variables and four noteworthy territories each financial specialist ought to make critical inquiries include:

Market/Utilize Case

Is there a real market or utilize case for this item? How enormous is the market potential? How does the income show function?

Network

How substantial, dynamic and devoted is the network? Is the network developing in estimate? Is it accurate to say that they are steady and qualities lined up with the task? Is there plummet or groups inside the network?

Group Sythesis

Are the engineers achieved enough to code the undertaking. Is the official group sufficiently experienced to effectively lead the undertaking. How compelling is the advertising group?

Financing

How is this venture financed? On the off chance that ICO, is there enough cash to help improvement for the time span given? Is there a component set up to produce financing inside. What is the income show once live — will it produce enough to help the future improvement of the undertaking?

It's a Rabbit Opening of Examination…

Investigation loss of motion… There is no deficiency of information to filter and gather to decide intrinsic value and the staggering measure of data and information can make numerous financial specialists dismiss the primary objective — to contribute beneficially. Not to be overpowered in inquire about.

On the off chance that this were insufficient, there is another real inclination of impact (particularly inside the digital money markets) which are the silly/passionate components influencing everything.

FUD and FOMO

We've all heard it before — Dread, Vulnerability and Uncertainty (FUD) and also the Dread Of Passing up a major opportunity (FOMO).

It's been said that the digital money showcase is +90% theoretical in nature. Which implies individuals purchase not for the estimation of the organization they trust they are putting resources into, rather for the chance to make a benefit.

This kind of mindset prompts wide market swings in cost and unpredictability. Particularly when coordinated with talk which runs wild in this space.

Consolidate this with a huge piece of the members thought to be uneducated financial specialists (not acquainted with contributing) and you're in for a passionate crazy ride of a ride of high points and low points.

Obviously, in spite of the fact that deciding natural esteem and looking at that against current intrinsic value is a vital metric, it seems hard to be sure to figure without a multitude of investigators available to you.

$3.40
Reply

Based the valuation and acceptance of a community that is built over time.  This includes people that are educated on the utility of money, how it is created, how it is distributed, how it can affect markets, how it can affect behavior on the micro and macro levels.  When more people are educated on the concepts that cryptos bring to their lives with full scale disclosure of swaps and supply they will overwhelmingly turn to its use in stunning fashion.  The only way that does not happen is if knowledge on the concept is stifled through centralized coercion/intimidation, centralized legislation, or outright apathy of a given population base that will feel the sting of not adopting in a fairly quick manner when done in a decentralized setting.  Also the intentional false reporting or smear campaigns that perpetuate with the gullibility of the public to follow the canned soundbite mentality of those that have the most to lose from it...central planners that have overwhelming control of markets and continually seek more.  The implosion of the totality of lust of power in the centralized international/global trade policies implemented prior are what eventual terminate the Medieval economic system developed that toppled the British Empire(s) (and other Euro Empires 500 years ago) as the global superpower economically and militarily across all the continents of the world.  The best way to unseat all the negative mentioned above in the past several centuries is to return more to the will of an educated and candid people seeking virtue in their existence daily and in their society as a whole.  That is the cycle of the massive leviathan that is centralized planning on all levels.

$0.47
Reply