{"id":3709,"date":"2018-04-19T10:00:08","date_gmt":"2018-04-19T10:00:08","guid":{"rendered":"http:\/\/joapen.com\/blog\/?p=3709"},"modified":"2018-04-19T10:00:11","modified_gmt":"2018-04-19T10:00:11","slug":"cryptoasset-valuations","status":"publish","type":"post","link":"https:\/\/joapen.com\/blog\/2018\/04\/19\/cryptoasset-valuations\/","title":{"rendered":"Cryptoasset Valuations"},"content":{"rendered":"<h1>Background<\/h1>\n<p>I have had some conversations about the maturity of the cryptocurrencies market related to the maturity of the companies and how I miss to have the fundamental indicators as you can have for a public company (Revenue, Costs, P\/E, balance sheets&#8230;).<\/p>\n<p>The companies publishing cyptocurrencies are private companies and they do not have\u00a0 obligation to share this information, but there should be in the future a general consensus about how to valuate their assets, the coins they put in the market.<\/p>\n<p>As everybody can easily figure out, I always has stated that there will be a moment where so many cryptocurrencies will disappear as they do not make sense, and others will survive as they make sense and provide value.<\/p>\n<p>Well, I would like to understand how to valuate them (better before they disappear).<\/p>\n<p>Value&#8230; where? on the transaction.<\/p>\n<h1>The basis<\/h1>\n<p>The basic value of a cryptoasset is the value provided to a given transaction. If you perform a transaction via the traditional or existing channel this has a cost, a speed of execution and a given security.<\/p>\n<p>If you execute that transaction through a crytocurrency, is it cheaper? faster? more secure?&#8230;<\/p>\n<p>On top of that, the volume of transaction:<\/p>\n<ul>\n<li>how many of these transactions are happening in the market?<\/li>\n<li>how many of these transactions are managed through this blockchain environment?<\/li>\n<li>What are the efforts of the company to attract more transactions to their ecosystem?<\/li>\n<\/ul>\n<p><a href=\"http:\/\/joapen.com\/blog\/2018\/04\/19\/cryptoasset-valuations\/transactions\/\" rel=\"attachment wp-att-3710\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-3710\" src=\"http:\/\/joapen.com\/blog\/wp-content\/uploads\/2018\/04\/transactions.jpg\" alt=\"\" width=\"694\" height=\"251\" srcset=\"https:\/\/joapen.com\/blog\/wp-content\/uploads\/2018\/04\/transactions.jpg 694w, https:\/\/joapen.com\/blog\/wp-content\/uploads\/2018\/04\/transactions-300x109.jpg 300w, https:\/\/joapen.com\/blog\/wp-content\/uploads\/2018\/04\/transactions-500x181.jpg 500w\" sizes=\"auto, (max-width: 694px) 100vw, 694px\" \/><\/a><\/p>\n<h1>Cryptoasset Valuations<\/h1>\n<p>I&#8217;m a beginner on blockchain and on asset valuations, so I have look for the experts. I found this <a href=\"https:\/\/medium.com\/@cburniske\/cryptoasset-valuations-ac83479ffca7\">article<\/a> written by\u00a0\u00a0<a class=\"ds-link ds-link--styleSubtle ui-captionStrong u-inlineBlock link link--darken link--darker is-touched\" dir=\"auto\" href=\"https:\/\/medium.com\/@cburniske?source=post_header_lockup\" data-action=\"show-user-card\" data-action-source=\"post_header_lockup\" data-action-value=\"2a8f9285c9aa\" data-action-type=\"hover\" data-user-id=\"2a8f9285c9aa\">Chris Burniske<\/a>, where he explains how to do the valuation (he attaches a nice excel that helps a lot to understand the details).<\/p>\n<p><em>Each cryptoasset serves as a currency in the protocol economy it supports. Since the equation of exchange is used to understand the flow of money needed to support an economy, it becomes a cornerstone to cryptoasset valuations.<\/em><\/p>\n<p><em>The equation of exchange is MV = PQ, and when applied to crypto my interpretation is: <\/em><\/p>\n<ul>\n<li><em>M = size of the asset base.<\/em><\/li>\n<li><em>V = velocity of the asset (shows the number of times an asset changes hands in a given time period).<\/em><\/li>\n<li><em>P = price of the digital resource being provisioned (price of the cryptocurrency or crytoasset).<\/em><\/li>\n<li><em>Q = quantity of the digital resource being provisioned<\/em><\/li>\n<\/ul>\n<p><em>A cryptoasset valuation is largely comprised of solving for M, where M = PQ \/ V. M is the size of the monetary base necessary to support a cryptoeconomy of size PQ, at velocity V.<\/em><\/p>\n<h1>Next steps<\/h1>\n<ul>\n<li>I need to understand better the calculation of the market value.<\/li>\n<li>Go deep on a real ICO and perform a valuation.<\/li>\n<li>Understand how to do a token utility calculation.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Background I have had some conversations about the maturity of the cryptocurrencies market related to the maturity of the companies and how I miss to have the fundamental indicators as you can have for a public company (Revenue, Costs, P\/E, balance sheets&#8230;). The companies publishing cyptocurrencies are private companies and they do not have\u00a0 obligation &#8230; <a title=\"Cryptoasset Valuations\" class=\"read-more\" href=\"https:\/\/joapen.com\/blog\/2018\/04\/19\/cryptoasset-valuations\/\" aria-label=\"Read more about Cryptoasset Valuations\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[103,157],"tags":[],"class_list":["post-3709","post","type-post","status-publish","format-standard","hentry","category-blockchain","category-cryptocurrency"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Cryptoasset Valuations -<\/title>\n<meta name=\"description\" content=\"Background I have had some conversations about the maturity of the cryptocurrencies market related to the maturity of the companies and how I miss to have - 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