![]() It keeps a separate price unit between the value of a cryptocurrency and the actual computational cost, whereas the bitcoin block prize is subject to the whims of fluctuating price. This is subject to statistical variation, however, and in the case of Ethereum, depends on how much gas reward was added.Ī minor advantage of ethereum over bitcoin is the concept of gas, or cost of computational power set by miners. ![]() Comparisons as a currencyĮthereum as a currency can verify transactions in 10 seconds, as opposed to 10 minutes on bitcoin's network. If you are curious about how blockchains work, the best explanation on the internet is this 3B1B video, but it isn't mandatory to understand this article. In this article, I explain technical reasons why Ethereum is much more exciting to me than Bitcoin ( BTC-USD), even though both are revolutionary in their own respects. While there are a lot of ignorant speculators out there, I haven't been able to find someone who understands decentralized blockchains that's also bearish. Warren Buffett has compared the cryptocurrency hype to gold, saying it is a non-productive asset that one only hopes to part with later at a higher price. Similarly, Ethereum's ( ETH-USD) platform for smart contracts and dApps could disrupt multiple industries if executed well. In a perfect market, the corporate world will buy the product. For the cost of a dozen employees, if we assume Slack manages to improve communication and reduce costs by just 1% on average, that means millions of dollars saved. Increasing productivity means cutting costs and/or boosting production, whether that's through an optimized assembly process or in Slack's case, improved communication. Productivity is defined as output divided by input or GDP to hours worked how efficient a company's workforce or nation's economy is. ![]() Look at productivity as an indicator of value. With the Slack ( WORK) boom lately, I've been approaching valuation from different angle. Do this for all the lateral businesses of Tesla ( TSLA) and you come up with a much different number than looking at the income statement.īut you would have extreme difficulty predicting cash flows for certain growth stocks, even combining those two above strategies. For example, assuming the EV market is $160B and it grows at a CAGR 22.6% for the next 5 years, you can rationalize capturing 20% share is worth $88B. This works well for some "first-derivative" value stocks when you have a reasonable idea of top and bottom line trajectory.Īnother way you can calculate value is by looking at the total market size and predicting market share. Traditionally stocks are evaluated through discounted cash flows, or by comparing PE ratios from different sectors.
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