New York University’s ‘Dean of Valuation’ has accused Warren Buffet of painting cryptoassets with a broad brush and added that bitcoin can’t be valued. Damodaran said in an interview with CNBC that while bitcoin is going to end badly for some, it isn’t right to say that bitcoin will be a bad ending for all.
Damodaran said that cryptocurrencies can’t be written off altogether. He added that because bitcoin is marketed as a cryptocurrency, it is impossible to evaluate it. This is why, in the past, he has labeled bitcoin a “dangerous pricing game.”
According to Damodaran there is a need to differentiate cryptoassets and cryptocurrencies. Cryptoassets can be valued similar to traditional commodities, while initial coin offering (ICO) tokens could be analyzed similarly to companies. However, the current trend is that cryptoassets are being “priced” instead.
“I think every single cryptoasset is being priced right now, it’s not being valued. If you ask people why they’re paying what they are for any of these crypto-investments, you don’t get a logical answer,” he said, concluding that investors are just looking for a way to make money.
The debate on whether bitcoin can be valued or not continues to rage on. Many analysts believe that if bitcoin is a commodity, then it should be valued like gold — whose price tends to “fall back toward the marginal cost of production” over the long-term.
On the other hand there are those who believe that bitcoin should be valued similarly to a telecommunications network. If that’s the case then bitcoin price could “easily double” in 2018 due to the rapidly-increasing number of network-connected users.