Too Long; Didn't Read
When meeting with sophisticated and institutional investors there are a few things I noticed keeping them on the sidelines. Their concerns range from a lack of clear regulation coming from Washington, to a shortage of SEC-regulated, secure, custody solutions. The good news is each of these issues are gradually being resolved. Crypto regulation is slowly becoming clear. Though cautious, US regulators are shaping their stance. Security storage solutions have improved vastly <a href="https://blog.digicor.io/how-to-keep-your-crypto-safe-in-the-wild-west-crypto-world/" target="_blank"><strong>helping to reduce the number of</strong></a><strong> </strong><a href="https://blog.digicor.io/how-to-keep-your-crypto-safe-in-the-wild-west-crypto-world/" target="_blank"><strong>hacks</strong></a>. At the same time, compliant custody solutions are coming online as qualified custodians are entering the space. However, there is one area where investors struggle to find clarity: <strong>How to assess the valuation of blockchain protocols?</strong> In other words, by buying right now, am I paying too little or too much for <a href="https://hackernoon.com/tagged/bitcoin" target="_blank">Bitcoin</a> or Ethereum? In traditional equities, there are multiple models for price valuation. Unfortunately, for <a href="https://hackernoon.com/tagged/blockchain" target="_blank">blockchain</a>, these models have not been developed yet. Additionally, given the blockchain networks fundamentally different features from the classic asset classes, traditional valuation frameworks do not necessarily apply. Some recent publications attempting to put forth a theoretical structure are worth exploring.