Gold Silver Reports (GSR) – The only way to value the likes of Bitcoin correctly is to recognise that it’s a speculative investment and not a currency, said Damodaran who is known for his work on valuing companies and understanding stock investments. “If you put the currency in pocket and you forget about it for a year then at the end of the year if you put it out then it shouldn’t have lost half its value.”
Bitcoin – easily the most popular cryptocurrency – saw its peak in December 2017 when it crossed the $20,000 mark. Since then, it has fallen nearly 60 percent to $8102, making a number of analysts and experts question the euphoria around it. Ethereum, another cryptocurrency has also fallen more than 45 percent from its peak in February.
A currency has two two features – it’s a medium of exchange and a store of value. “This is where I found cryptocurrencies starting to break down. If I put 100 bitcoins in my pocket and leave my house with just that in my pocket, my guess is I will spend the day hungry and thirsty,” Damodaran explained. “Also it is not a great store of value because I am not sure that if I put a bitcoin in my pocket and later take it out, if anybody will take it.” – Neal Bhai Reports
