I like that quote;
“price is what you pay, value is what you get” which is frequently attributed to Warren Buffet.
I think we traditionally think of value as getting something of value for a low price, something “on sale”. This leads us to buy things primarily based on the discount and is an extension of our thinking that expensive things are more valuable. Valuable things are more valuable. We need a better measurement of value then price.
Warren Buffett traditionally tells investors to look for companies whose business they understand and who have earnings and potential for growth. He is also quoted as saying that in bear markets you look for good companies when their market price is depressed in bear markets because their value increases disproportionately when the bull market returns.”
I think we need to develop more objective ways to value cryptocurrency projects because they are very different from other companies traded on the worlds stock exchanges. I read an article written for a company called Electric Capitol, which is a Silicon Valley firm, which helps its clients find cryptocurrency companies with high value but low price. This company invests in cryptocurrency projects with three characteristics: one is high utility, as in many potential or actually use cases, second is high levels of developer activity and documented technological superiority over other projects and third is low Coin Market Cap ranking. As I read this report I realized that Steem has high utility and developer activity, high usage with multiple highly utilized applications and technological superiority in its software; DPOS, fast transactions, large scale ability and low barriers to participation. I think Steem fits the description of a high value company, with a low price and good growth prospects.
When it comes to determining value in cryptocurrency projects, I think the value mantra has always been look for utility, users and evidence of active developers. Utility has always meant use cases. Active development is macroscopically measured by shear Github volume, but microscopically by analyzing the software to see if the developers were actually making something unique to cryptocurrency or something new to their blockchain that increased value through things like improved scalability, lower server costs, improved server storage while reducing storage costs, or reduced need for memory to save costs. These items bring value to the particular blockchain in particular and cryptocurrency in general. I think Steem processes all these characteristics.
Conclusion:
First, I believe that what we are seeing here is the use of accepted measurements of value for cryptocurrency project, along with a low ranking on CoinMarketCap to indicate “undervaluation”. I found that Electric Capitol’s data indicates that Steem is on the same map as many famous coins who fulfilled these criterion, and by these parameters Steem is undervalued. I think it is possible to measured Steem by objective parameters and conclude that it has large amounts of intrinsic value, but it’s price is very low during this bear market. Second, Steem is a relatively unknown coin. I think that one possible conclusion to draw is that as this type of value analysis becomes more common, and Steem pops up on more and more on these analyses, Steem’s day’s in obscurity will be gone, along with the low prices we have now. I think both will be just a memory.
Now that is my opinion, it’s not investment advice. What do you think?
✍🏼 Written by Shortsegments.
Credit
The Electric Capital quarterly development report. Source
They are located in Palo Alto, California.
Website: http://www.electriccapital.com
Twitter: @ElectricCapital
The article lead graphic was created using PicStitch and photos from ShutterStock, a source of royalty free photo.
References.
1.https://www.electriccapital.com/
2.https://static1.squarespace.com/static/5c745b19c2ff6174b1290e42/t/5c805a3ae4966b1ce3a2a937/1551915603922/The+Dev+Report.pdf
Stay thirsty for knowledge my friends!
✍️ written by Shortsegments
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