Valuation of Crypto Assets - Introduction
The world of crypto assets, with Bitcoin as its leader, is exploding both in terms of volumes and market capitalization. It’s also giving rise to numerous innovations with promising technology, gaining expertise in several industries. The new crypto initiatives are different and distinctive from what we are familiar with in nature, yet they appear familiar. We have become used to market/trade exchange, venture capitalism, crowdfunding, and other aspects of our everyday life that the markets for cryptocurrency have also absorbed.
We are noticing countless crypto projects looking for funding through the initial coin offering (hereinafter ICO), which essentially resembles an initial public offering (hereinafter IPO). Likewise, compared to an IPO, crypto projects issue coins or tokens, which can represent part ownership. However, they can also be used as currency to buy services and products, they can be utilized as a means of transaction or store of value, and they can even have no goal whatsoever. This leads to a comprehensive new area of business models for crypto projects. Since tokens are bought and sold publicly on crypto exchanges, they can be used by anyone for investment purposes, speculation, or just as a means for something that the token is intended for. Tokens represent the blockchain-derived equivalent of “value” in the crypto world and can take many different functional values. Therefore, the collective uses and values of tokens are categorized as crypto assets. In this blog, we demonstrate and discuss the various methodologies for the valuation of crypto assets.