Why I don't own any crypto or NFT
And maybe why you should?
Not a single one
I don’t own a single crypto asset or non fungible token of any kind! But depending on what you are trying to do: invest, speculate, or gamble, maybe you should consider owning some.
For a long time I was just plain ignorant of the crypto space (still mostly am). Although recently, something has changed with how I think of the asset class. I’ve tried to wrap my head around how people think of the asset as an investment. I think I now appreciate, to some extent, the decentralized, limited supply and authenticity of ownership arguments as to why these things may be worth something.
The reason why I don’t own any crypto assets is not that I don’t think it has value; but rather I don’t have the slightest clue as to what that value might be. I also have my doubts as to anyone else’s ability to assess value either.
Value investing?
Let’s define “value” further - in a long term investing context, value is the asset’s intrinsic value and NOT what the market price indicates what that value is worth today (ie. according to the marginal buyer and seller).
Now, let’s define “investing” further - in my opinion, investing is always buying something now for less than its intrinsic value. How you go about assessing the intrinsic value is where the art of investing happens. Some assess intrinsic value based on future growth in cash flow, dividend yield, mean reverting deep value on near term cash flows, etc.
Speculation then would be paying now for some asset and thinking (or hoping) the market will pay more for it tomorrow (not based solely on paying less than intrinsic value).
Gambling would be playing games of chance where the expected outcome on average is negative over a period of time. These should (for obvious reasons) be for entertainment purposes only and only with money you can be okay with completely losing.
So for me, crypto is an asset but is not investable. And since I have little interest in speculation or gambling, I don’t own any. To be honest, there are plenty of assets that I don’t consider to be investable - complex equities I don’t understand, currencies, non-cash flowing real estate, fine wine or art are other examples of assets that surely have value but the intrinsic value would surely elude me if I were to try to determine it.
Why should you?
With this logic, why should you own crypto or NFT?
You want to use it to gamble
You have a system or theory to use it to speculate
You have some means of determining intrinsic value and think its price is less and wish to invest in it
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Great piece!