How to Value a Cryptoasset, a Hash Power Single, w/ Chris Burniske – [Invest Like the Best, EP.62]

Presented By

This episode is a continuation of the Hash Power series. It is the first of what we will call a Hash Power single—a series of conversations each with a single guest on a specific topic. In this case my guest is Chris Burniske, and the topic is cryptoasset valuation. This conversation is loaded with information, I think you are going to love it.

Chris recently released book called Cryptoassets, which is a must read for those interested in this field. Chris was at one point the only traditional buy side analyst covering bitcoin, and is now a partner at a new crypto firm called Placeholder. Chris has developed new frameworks for evaluating and valuing cryptocurrencies, marrying techniques and ways of thinking for several different asset classes to assess the newest asset class. Chris prefers the term cryptoassets because as you’ll hear, several of these tokens aren’t really currencies at all. We discuss the differences between cryptocurrencies, cryptocommodities, and cryptotokens. We begin our conversation with a deep dive into the equation of exchange, which Chris has been using as a starting point for understanding utility value.

You can see all crypto related conversations at investorfieldguide.com/Hashpower. Please enjoy this conversation with Chris Burniske.

Hash Power is presented by Fidelity Investments

Books Referenced

Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond

Links Referenced

Hash Power Podcast Documentary

Nic Carter (twitter)

Cryptoasset Valuations (Medium)

Show Notes

4:58 – (First Question) – Chris’s overall method for evaluating cryptocurrencies

5:14– Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond

 

6:47 – The equation exchange

 

11:19 – Bonding

 

12:35 – How bonding may represent a more efficient way of representing consensus over proof of work

 

14:29 – Why the amount being bonded and held should be taken out of the float

 

16:58 – Using bitcoin as an example to figure out remittances in the PQ side

 

18:31 – Looking at the velocity of various crypto-assets

 

21:04 – Chris’s impression of the different way of categorizing various crypto assets

 

24:37 – Explaining Auger as an example of a cryptotoken

 

25:38 – How could these networks be impacted by not having any censorship

 

27:57 – Exploring the gap between expectation vs reality in the value of crypto currency

 

30:43 – Other ways of valuing these crypto assets

30:50 – Hash Power Podcast Documentary

 

33:32 – Explaining the idea of billion dollar a day onchain transactions

 

36:05 – How to measure the value of the underlying network

36:37 – Nic Carter (twitter)

 

37:13 – What are the variables that matter when investing in cryptocurrency on a long-term horizon

 

39:24 – Determining when it’s better for a network to be centralized vs decentralized

 

42:03 – Networks that Chris is most excited about

 

44:06 – Understanding the consumption side of the steam marketplace

 

46:01 – Deep dive into the Aragon network

 

47:27 – How does Chris evaluate existential risk of networks

 

51:09 – Could these assets really ever go to zero?

 

54:07 – Is there a scenario in which velocity gets so high that it negatively effects the price

 

56:10 – What are the unknowns of cryptocurrency that Chris is most interested in

56:24 – Cryptoasset Valuations (Medium)