He will also be speaking at the Coins.ph’s event Bitcoin 1O2 on Wednesday, November 26th, 2014 in Manila, Philippines! The subject of Harrison’s presentations is, predictably right now, all about bitcoin’s value.
Coinspeaker’s editor writes on his personal blog HarrisonTalk:
To date, there has been no attempt made to value virtual currencies by anyone at all – even those trading bitcoin on a regular basis! When considered in the context of triple digit percentage point price rises in many of these assets over the past 24 months, this is a startling fact that borders on absurd.
If you have no formula – or even conceptual basis – for what an asset is intrinsically worth, how can you justify putting it in an investment portfolio? Worse still, how can you justify keeping it in any portfolio of investments after it has risen 100-fold in value, as bitcoin did between January 2012 and January 2014? On what basis do you realize any profits? On the basis of gut feeling? Even for the most adventurous venture capital investors, this is simply an absurd rationale by which to administer fund management.
Value: A Fundamental Question In A Dynamic Capital Market
The problem is not just academic: in 2014, venture capital funds invested more than $250 million in bitcoin-related start-ups, according to CoinDesk, the industry’s main source of news and data. Many of those investment funds were converted arbitrarily as they arrived into the company accounts into bitcoin at whatever value the price was at the time.
That means that not only are the start-ups in the bitcoin field assuming risk blindly, with no valuation guidance, financial services companies managed by so-called professional investors are in effect doing exactly the same thing.
Many of these investment funds take a standard management fee before performance is rewarded (assuming their performance). The standard fee is 2% or so. Two percent of $250 million is $5 million. The fact is that investors are likely paying seven figure sums before seeing any investment returns to managers who at best are relying on a hunch before throwing their investors’ hard-earned cash around.
In any context, that is simply unacceptable. In the world of asset management, it’s practically a criminal offense to do such a thing. Investment management is all about valuation. To not have any valuation model guiding your investment strategy is like saying you want to develop houses without an idea of where you want to put them first.
Hopefully, my talk will provide some substance or basis for those looking to invest in an ever-widening range of these investments.
Don’t worry if you cannot make the events in person, however! CoinSpeaker will be exclusively posting the slides and the video to the presentation on the site here – so be sure to keep coming and checking back in!