A traditional equity analyst might try to value Coinbase’s business by looking at their future cash flows and applying a discount rate based on current Fed guidance.
They would perform all the calculations in dollar terms, and might not even consider valuing the business as a fraction of BTC supply (or as a fraction of the entire crypto market cap).
I’d love to hear from stackers how you might approach the task of valuing Coinbase’s business (i picked them because they are the largest public exchange with lots of historical financial data) assuming the world is transitioning to a Bitcoin standard.
A few questions…
- How many Bitcoin do you think Coinbase’s business is worth today?
- Do you think traditional equity analysts are over-estimating or under-estimating Coinbase’s potential as a business?
- Can you come up with a general framework for thinking about how other Bitcoin businesses should be valued on a Bitcoin standard?
- What discount rate will we apply to cash flow/sats flow on a Bitcoin standard? Will we continue to use the Fed’s benchmark interest rates?