YouSaid · the spoken record

Chris Burniske

lines on the record: 57
first: 2017-11-07
most recent: 2017-11-07
sittings or episodes: 1
sources: podcast

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“So, after all of that, we have gotten to the size of the necessary monetary base. And I divide the size of that monetary base by the number of tokens in the float to get the current utility value of a token in any given year. Now, that brings me to another part of this model, which is looking at, well, how many tokens are in the float? And that is a function of the total amount that has been issued at that point in time, but I need to subtract out from what has been issued the percent that are purely being held as store value because those have a velocity of zero and aren't available to this economy. And I also need to subtract out the percent that are being bonded by the nodes supporting the network. And not every network has that feature, but some do.”
2017-11-07 · Invest Like the Best · Chris Burniske - How to Value a Cryptoasset - [Invest Like the Best, EP.62] · IDENTIFIED FROM THE TRANSCRIPT · source
“In that year, that is the GDP of Filecoin. Now I taken this equation, mv equals pq, if I want to solve for the size of the monetary base, m equals pq over v. So I have to take that economy and divide it by a velocity. And this is where things are going to start to get murkier, because we don't have a good basis or enough data to say, well, velocity of 5 makes sense or velocity of 10 or 20 or 100 makes sense. We have hypotheses about it, and we can base it on some of what we've seen with Bitcoin, but suffest to say it's a big assumption. And if we have an economy, say, a file coin that's turning over $100 billion a year, if that thing has a velocity of five, that means Filecoin itself needs to store a hundred billion divided by five or twenty billion in that year in order to function within or allow that economy. To function.”
2017-11-07 · Invest Like the Best · Chris Burniske - How to Value a Cryptoasset - [Invest Like the Best, EP.62] · IDENTIFIED FROM THE TRANSCRIPT · source
“Adoption curve. Exactly. And that adoption curve will tell me if I expect Filecoin to have this percent penetration, how many gigabytes will it have to be provisioning? And so at that point in any given year, I can multiply the dollar per gigabyte in that year by the number of gigabytes provisioned to get a dollar value. And that is the economy of Filecoin.”
2017-11-07 · Invest Like the Best · Chris Burniske - How to Value a Cryptoasset - [Invest Like the Best, EP.62] · IDENTIFIED FROM THE TRANSCRIPT · source
“Me, my dollar per gigabyte in 2018, 2019, so on and so forth. I then have to figure out the quantity, and that requires assessing the total addressable market of cloud storage. There's a lot of assumptions that go into that, but again, pulling together the information that's out there. And then the tricky part there is actually creating an S curve based on the time the network launches, the time it'll hit 10% of its total penetration, and then the takeover time, which goes, which is basically the inflection of the S-curve from 10% to 90%.”
2017-11-07 · Invest Like the Best · Chris Burniske - How to Value a Cryptoasset - [Invest Like the Best, EP.62] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yields a value of twenty trillion, which is about what the US GDP is. So that's how we set these things up. The question then becomes, okay, how does that make any sense within crypto assets? And this is where, as I said at the start, you can look at cryptoassets and the protocols within which they operate as these mini economies, mini economies that provision a good or two. And so in the case of something like Filecoin, that is provisioning cloud storage. That is the good of that network. And so I can set up a very similar model to a DCF, but using NV equals PQ. So I start off with my price per gigabyte, so dollar per gigabyte. I have to have a cost decline curve for that, which I base on historical cost decline curves of cloud storage or hard disk drives, whatever it may be.”
2017-11-07 · Invest Like the Best · Chris Burniske - How to Value a Cryptoasset - [Invest Like the Best, EP.62] · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, so within classical monetarism, MV equals PQ is used to look at the money flow of a fiat currency within an economy. And so M refers to the size of the monetary base. And so with the US dollar right now, it's around $4 trillion. V is the velocity. So how many times a dollar or a yen or a euro or whatever it may be turns over within a year? Right now the US dollar is in this five to six range. P refers to the average price of a basket of goods and Q to the quantity of that basket of goods. And so together, again, we have MV equals PQ. On the PQ side where we just ended, that multiplying together of the average price of basket goods by the number of these baskets yields the economy of a nation. And on the MV side, you have the size of the monetary base of four trillion times the velocity of roughly five.”
2017-11-07 · Invest Like the Best · Chris Burniske - How to Value a Cryptoasset - [Invest Like the Best, EP.62] · IDENTIFIED FROM THE TRANSCRIPT · source
“Great, thanks, Patrick. You know, since these are new assets, or we're dealing with a new asset class, we have to create new valuation methodologies. And the starting point within the equity space is discounted cash flow models. And the problem with protocols is they don't have business models. They don't have cash flows. They have incentive models that catalyze a community to pull together.”
2017-11-07 · Invest Like the Best · Chris Burniske - How to Value a Cryptoasset - [Invest Like the Best, EP.62] · IDENTIFIED FROM THE TRANSCRIPT · source