A legit discussion on valuation of crypto vs stocks vs non cash flowing assets


As a crypto holder you are betting on the demand of the coin rising, but there is no calculable value.

As a owner of a stock, you have a legal right to the cash flows which then gives those calculable value. If you believe a company will never grow and pay a dividend of $2 forever and you want to earn 10%, it is intrinsically worth $20. Now things can go wrong with that forecast or improve and get a higher or lower return, but the return estimate is based in verifiable math

Back to crypto, if you want to be inflammatory call it greater fool theory. If you want to be fair, you are betting on someone buying it from a higher price. But there is no intrinsic reason as to why someone would pay more. You don’t get a pro-rated share of the earnings of crypto (there are none), or a percentage of users or an adoption dividend or anything. You just own a coin. No different than a sports card.

The best example I can think that is similar to crypto but shows the difference in value with a stock is Visa. Visa processes $14 trillion in payments annually, if you own the company the get a small percentage of that as they process more transactions, all else equal it will be worth more.

With bitcoin or any coin, if bitcoin increases it’s volume you have no reason for the coin to gain value because you don’t get anything logically by transactions going up. Your back to hoping someone will pay more than you did. This is the main difference between stocks and crypto values.

Historically assets that don’t produce cash flows like gold or homes (not rented) grow at 3%, the same as fiat printing/inflation. Lumber was basically flat over the past 25 years excluding Covid. Copper was nearly 4% over the past 30 years.

Why should crypto be any different than other non cash flowing assets?