Facebook and other traditional companies use discounted cash flow not just current net income. The difference is that discounted cash flow takes into consideration the value of future cash flow. For example, Walmart has 5x the revenue of Amazon but a smaller market cap (https://www.forbes.com/sites/gregpetro/2016/08/25/amazon-vs-walmart-clash-of-the-titans/#3ea163228844)
Crypto is hard to value because you could either say that it will replace currency or all financial products. If crypto only replaces currency, then the market cap is around ~10s of T. If it replaces all financial products, the value could be much much higher. Some estimates put the value of the derivatives market at 1.2 Quadrillion (https://www.investopedia.com/ask/answers/052715/how-big-derivatives-market.asp). Why are the sums of financial products greater than the sums of currency? The main reason is because people are making bets on bets on bets. For example, let's say I bet that the Golden State warriors will win the NBA Championship. A second person may make a bet that I win my bet and so on. This means the actual value of all bets is much higher than the original bet.
I feel bitcoin has a strong potential to displace significant amounts of traditional currency and various smart contract platforms could replace many financial products.
I'm in agreement that traditional model is based on current and future discounted cash flow, or in other words, future potential net income or earnings. Either way, it's difficult for anyone to wrap their mind around that fact that you are no longer evaluating earnings of a company, even though most of these companies do look like a regular "company" stock. In fact, what are we really buying on an ICO, if it's a currency and not a stock. I heard Dan Larimer of EOS says for legal reasons with SEC that he calls it "revenue". If it's indeed "revenue", what is the product we are receiving when we buy it. A handshake trust that he will give us some tokens of the network that EOS will operate in?
If it's indeed a currency and we are evaluating based on usage of the network, then as a conservative estimate, we need to consider the global money supply and not the derivatives. The source has the global narrow and board money supply at over $100T USD.
(http://money.visualcapitalist.com/worlds-money-markets-one-visualization-2017/)
With cryptocurrency being about $600B, I say we have quite a bit of room to grow!
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I agree. There's quite a bit of room to grow. It's hard for me to agree that blockchain is a currency though. It can do so much more. It can be real estate, it be derivatives, it can be debt and things we haven't thought of yet. I'd put currency usage as only the first widespread application.
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