cryptocurrency: basic valuation: determining the true value of tokens
The world of cryptocurrencies has been on wild ride from the very beginning in 2009. From Bitcoin to Ethereum, and from Altcoins to Stablecouins, the landscape is constantly developing when new players appear and the existing ones adapt to changing market conditions. However, among all emotions and speculation about these digital assets, the basic valuation remains a key aspect of investing in cryptocurrencies.
What is the basic valuation?
The basic valuation refers to the process of estimating the cryptocurrency value based on the basic economic principles, business basics and market analysis. Unlike technical analysis, which focuses on trends and patterns, the basic valuation takes into account all important factors that can affect the price of cryptocurrency.
Why is the basic valuation important?
1.
Identify investment capabilities : The basic valuation helps to identify underrated cryptocurrencies with strong growth potential, while warning against overcrowded, which may be due to the correction.
Protection against speculation
: Understanding the basic foundations, investors may make more conscious decisions and avoid investments based on speculation that can lead to significant losses.
key factors to consider
Business model : Cryptocurrency revenue streams, profitability and scalability are key factors in determining its value. For example, decentralized exchange (DEX), such as Uniswap, can be more valuable than a traditional centralized exchange.
Market capitalization : total market capitalization of cryptocurrency can ensure insight into its potential demand and supply. Large market capitalization may indicate high demand for a specific token.
Adoption indicators : Cryptocurrency adoption indicator in various industries, such as finance, games or healthcare, may affect its value, ensuring a clear case of use of assets.
Regulatory environment : Changes in regulatory environments can significantly affect the value of cryptocurrency, positively or negative.
Network effects : cryptocurrencies with strong network effects, in which users more often maintain and participate in the ecosystem, over time increase value.
Examples of a successful basic valuation
Bitcoin : Despite its volatility, bitcoin is often considered a stable value warehouse due to a limited supply (21 million), a common reception (over 50% of global transactions) and strong network effects.
Ethereum : As the largest intelligent contract platform, the basic valuation of Ethereum results from a growing ecosystem, improvement of scalability and growing reception in the DEFI space.
Cardano : With a strong emphasis on scalability, safety and acceptance of programmers, the basic valuation of Cardano is constantly growing over time.
Challenges in the basic valuation
Lack of transparency
: cryptocurrencies often do not have a transparent financial statement or accounting control, which makes it difficult to assess their value.
2.
speculative markets : The cryptocurrency market is known for its speculative character, in which prices can be directed by noise, not a basic analysis.
Application
The basic valuation is a key aspect of investing in cryptocurrencies, providing investors with a clear understanding of the basic economic principles and business basics that drive the value of specific assets.