Invest Like the Best with Patrick O'Shaughnessy Chris Burniske - How to Value a Cryptoasset - [Invest Like the Best, EP.62]
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 tradintional 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
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Books Referenced
Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond
Links Referenced
Hash Power Podcast Documentary
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)
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on twitter at @patrick_oshag