The chairman of the advisory board of CoinDesk, Michael Casey, opened up to Cheddar, a new upcoming media outlet, on a number of issues facing Bitcoin (BTC) and the overall Crypto market. Casey, who is also co-founder of the Network Effects, shares his insights and bring to the table unique ideas that could possibly help the Crypto market to stage a comeback.
Wrong Valuation Model
In conversation with Cheddar’s anchor, Casey pointed out the fundamental flaw on the valuation model which the investors use to value the digital currencies like BTC, Ethereum, or XRP. Passionately putting forward his viewpoint, the crypto-proponent faulted the models of crypto assets valuation and called them “backward” in nature. Building on his argument, Casey, who also contributes to CoinDesk regularly, said that the cryptocurrency and its related Technology are originally meant to decentralize and disintermediate the financial ecosystems existing in the traditional market. But unfortunately we have started evaluating the cryptocurrencies in the same manner we use to assess the traditional markets – a situation which hasn’t gone down well with die-hard crypto investors. He elaborated further by giving the example of BTC’s benchmark value which is compared against the fiat currency such as Dollar ($) rather than expressing it in “₿” terms. In other words, Casey rued the focus of the investors on BTC’s fiat value and the profits they can earn from the digital currency. The Casey remarks curry favor with the observation of Bitpay’s CEO that prices of BTC are largely based on the speculations and not decided through the legitimate use of the currency in the daily financial transactions.
Network Value and its role
Casey didn’t elaborate on how to value the cryptocurrencies though he gave enough cues highlighting the important role of networks in assessing the worth of crypto ecosystem. In fact, some researchers and analysts today are using network concepts to determine the value of various cryptocurrencies including BTC.
An interesting observation in this regard has recently come from Tom Lee, Fundstrat’s research head, who told company’s investors clients that the fair value of Bitcoin lies in the range of $13,800-$14,800. Lee based his observation on the BTC’s active user base, volume of transaction, and sovereign, borderless, and immutable characteristics of digital currency. This observation of Lee is in line with his previous prediction of optimistic year-end for the crypto market. Back then, many criticized the Lee for his overly optimistic outlook though remarks from the Anthony Pompliano, an authority on Crypto market, came as a relief for the Lee’s claims. Pompliano, aka Pomp who worked with Facebook and Snapchat previously, noted that despite falling prices, BTC’s backing network is on a high growth trajectory. Pomp declared that BTC boasts the world’s most secured transaction layers and its value will never cease to exist. Supplementing the observation, Morgan Creek Capital Management counts on Bitcoin’s growing transaction volume, nodes creation, decreasing transaction fees, and year-on-year growth to remain bullish on this digital asset.
Even the Joseph Lubin who founded ConsenSys and co-founded Ethereum, said in October that despite the ongoing bear phase for crypto, the fundamentals of the industry is rock-solid and growing. Lubin also noted that the Crypto market ecosystem is now at its strongest and in spite of the speculation of the decreasing investors’ interest; the true believers of digital currency haven’t given up on it.