9 lines
1.2 KiB
Markdown
9 lines
1.2 KiB
Markdown
# Crypto assets do not have a verifiable valuation model
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Crypto tokens have no reliable valuation method. It is not possible to develop a theoretical [value](../concepts/value.md) for a crypto token because there is no demand curve generated by a [use case](../concepts/use-value.md) or any [income-cashflows](../concepts/income-cashflows.md) associated with the [security](../concepts/security.md). Crypto tokens thus have a strictly zero [fundamental-value](../concepts/fundamental-value.md).
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Instead the price of a crypto asset swings about wildly depending on the whims of fluctuating demand and market mania of the [bubble](../concepts/bubble.md). Crypto assets are a manifestation of the [greater-fool-theory](../concepts/greater-fool-theory.md) and the price of a crypto asset is defined simply by what people believe the next "fool" will pay for it.
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Models such as "Stock To Flow" have shown no predictive power to explain the [price-formation](../concepts/price-formation.md) of assets like [bitcoin](../concepts/bitcoin.md) on long time scales. These models have no rigorous foundations based on any mainstream economics.
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Other products in [bubble](../concepts/bubble.md) such as tulips or beanie babies have exhibited similar economic structure to crypto tokens. |