By Dr. Vivek Gupta, Founder & CEO · November 2022
My experience in banking and payment industry always made me wonder on crypto valuations. I always questioned but could never find a logical framework to evaluate crypto and its value. A dollar physical bill remains a dollar in its digital form in a bank. It does not increase in value but rather diminish because of the transaction cost associated with the payment networks in enabling it. The same dollar when translated in crypto space, delinks itself from the original value and floats with a completely new valuation in cyber space.
When I asked this question to few young analysts who I met in my recent India trip, I received an answer that there is cost to mining the crypto # and hence it has a value. It for the first time made me understand Crypto in its simplistic form.
A thought triggered and now I reimagined Crypto as a real estate # Plot in metaverse. It is just an address which is in auction on a continuous basis, and different crypto chains are nothing but different builders selling this digital but uniquely identifiable space, an immutable address in the cyber space.
Everyone engaged in crypto purchase and sell is basically trading those addresses which may have some value in future. Real estate value is driven by multiple factors and its potential usage as a commercial or residential use. I need to understand if the crypto address in future will have a similar differential use attached to it.
What will be those factors in the crypto cyber space in future? Why owning the Hash-Plots (cryptos) from different builders like Bitcoin or Ethereum will have a unique and differential value. It is an open question for me, but at least this encounter has given me a framework to simplify Cryptos and compare it to the physical world valuation models.