You can quote a Bitcoin price all you want, but without dividends, coupons or predictable cash flows, you can’t truly value it, only price it. Real asset classes (stocks, bonds, real estate) generate cash you can discount.
Bitcoin?
It’s driven by hype, momentum and mood swings, just like collectibles or niche currencies.
So let’s stop pretending it fits alongside equities or bonds in a long-term portfolio. Treat Bitcoin as a high-beta trading play: buy if you expect a short-term pop, sell if you don’t. It’s a speculative side bet, not a foundational asset class.
That's a strong argument, but it overlooks key aspects of Bitcoin's value proposition that extend beyond traditional discounted cash flow models. While you're right that Bitcoin doesn't generate dividends or coupons, its value isn't solely derived from predictable cash flows, just as gold's isn't. Bitcoin's scarcity, immutability, decentralization, and global accessibility provide a different kind of value – a store of value and a sovereign digital asset. Its "cash flow" comes from its network effect, the security provided by its mining power, and its utility as a censorship-resistant medium of exchange or a settlement layer, which increasingly underpins a growing digital economy. Comparing it solely to cash-generating assets misses its potential as a hedge against inflation or central bank overreach. To dismiss it as only a speculative side bet ignores its foundational properties and the long-term adoption trends among institutions and nations.
Meanwhile, more and more banks, countries, corporations and wealth funds are starting to adopt it. Over time, it is becoming less and less speculative.
“To dismiss it as only a speculative side bet ignores … long-term adoption trends among institutions and nations”
Long term adoption trends which near universally are, overtly if not expressly, speculative in nature
“utility as a censorship-resistant medium of exchange or a settlement layer”
Read: useful to transfer value for corrupt or illegal transactions, which remains the only domain in which it is used in any meaningful frequency as a mechanism for exchange or asset transfer
A lot of big words in this comment to identify things already addressed in the article, but presented as if they are something distinct
Thank you, great take, appreciate it! MicroStrategy will very likely tank seriously (given now also leveraged) when we get the next (usual) Bitcoin 60-80% drawdown:
If one were to value a currency in terms of (1) the jurisdictions in which it can be used to transact, and (2) its loss of value over any 5-10 year period in its history, then on those two bases bitcoin is doing pretty well relative to other currencies.
One way to think about the value of a currency is to consider the value of bonds denominated in that currency. What would the required interest rate be on a 10-year bitcoin-denominated bond and how would that differ from a 10-year dollar-denominated treasury note? I imagine the bitcoin-denominated bond would have a higher required return due to historical 1-year price volatility, plus uncertainty about its future viability. But perhaps the inflation component of the nominal return would be lower, maybe even negative, due to its lack of monetary inflation.
“PayPal and Coinbase, both of which hold large amounts of bitcoin, would fall into this carveout, since both companies have business that requires that holding.”
And how did Coinbase handle the North Korean hackers’ theft of millions of dollars worth of bitcoin from its clients’ wallets? It downplayed the amount stole, and it delayed accurate reporting of the thefts so as to prepare a defense against lawsuits.
Too many aspects of crypto currencies are false claims. Just three: 1) it’s not a currency, two cryptocurrencies are traceable, third blockchain is based on “trust” (see Coinbase above).
If any public company in which I’m invested states it plans to invest in Bitcoin or another cryptocurrency, I’ll sell my shares and run as fast as possible in the opposite direction.
“Only the paranoid survive” wasn’t just a business mantra—it was an evolutionary truth. Bitcoin may have been born out of paranoia, but every monetary evolution over 300 years—from gold to fiat to digital—was driven by distrust in the status quo. The debate on crypto’s merit risks becoming an echo chamber while the deeper shift—a decentralized rethinking of trust, ownership, and value—is already underway. Blockchain isn’t a speculative dream; it’s an architectural inevitability in a world where centralized systems are failing to scale human coordination. Most pretend to understand it, some genuinely don’t, and very few are trying to decode its essence. But history reminds us: revolutions never wait for consensus. And this one may be moving too fast for traditional frameworks to grasp.
I’ve been investing for 35 years, and I’ve watched every new trend try to reinvent the wheel. Bitcoin on corporate balance sheets is just the latest flavor — dressed up as strategic but driven by narrative and FOMO.
Damodaran nails the key problem: once you step outside your core competency, you’re not investing — you’re gambling with shareholder trust.
It’s one thing for an individual to chase volatility. It’s another for a CFO to do it with treasury cash. If your competitive edge is in cloud software or logistics or semiconductors, why pretend it’s crypto trading?
Appreciate the nuance here. Too many are trying to force Bitcoin into every corner of the market, even when the fit is destructive.
Thank you for the nuance on a subject shrouded in speculation and sinister motives behind the promoters. I wrote up my thoughts on Bitcoin treasuries here: https://oliversung.substack.com/p/bitcoin-treasuries
You can quote a Bitcoin price all you want, but without dividends, coupons or predictable cash flows, you can’t truly value it, only price it. Real asset classes (stocks, bonds, real estate) generate cash you can discount.
Bitcoin?
It’s driven by hype, momentum and mood swings, just like collectibles or niche currencies.
So let’s stop pretending it fits alongside equities or bonds in a long-term portfolio. Treat Bitcoin as a high-beta trading play: buy if you expect a short-term pop, sell if you don’t. It’s a speculative side bet, not a foundational asset class.
That's a strong argument, but it overlooks key aspects of Bitcoin's value proposition that extend beyond traditional discounted cash flow models. While you're right that Bitcoin doesn't generate dividends or coupons, its value isn't solely derived from predictable cash flows, just as gold's isn't. Bitcoin's scarcity, immutability, decentralization, and global accessibility provide a different kind of value – a store of value and a sovereign digital asset. Its "cash flow" comes from its network effect, the security provided by its mining power, and its utility as a censorship-resistant medium of exchange or a settlement layer, which increasingly underpins a growing digital economy. Comparing it solely to cash-generating assets misses its potential as a hedge against inflation or central bank overreach. To dismiss it as only a speculative side bet ignores its foundational properties and the long-term adoption trends among institutions and nations.
Meanwhile, more and more banks, countries, corporations and wealth funds are starting to adopt it. Over time, it is becoming less and less speculative.
“To dismiss it as only a speculative side bet ignores … long-term adoption trends among institutions and nations”
Long term adoption trends which near universally are, overtly if not expressly, speculative in nature
“utility as a censorship-resistant medium of exchange or a settlement layer”
Read: useful to transfer value for corrupt or illegal transactions, which remains the only domain in which it is used in any meaningful frequency as a mechanism for exchange or asset transfer
A lot of big words in this comment to identify things already addressed in the article, but presented as if they are something distinct
Pretty fitting metaphor for crypto
Thank you, great take, appreciate it! MicroStrategy will very likely tank seriously (given now also leveraged) when we get the next (usual) Bitcoin 60-80% drawdown:
https://x.com/Maverick_Equity/status/1868399701122572657
https://x.com/Maverick_Equity/status/1526170608823767041
If one were to value a currency in terms of (1) the jurisdictions in which it can be used to transact, and (2) its loss of value over any 5-10 year period in its history, then on those two bases bitcoin is doing pretty well relative to other currencies.
One way to think about the value of a currency is to consider the value of bonds denominated in that currency. What would the required interest rate be on a 10-year bitcoin-denominated bond and how would that differ from a 10-year dollar-denominated treasury note? I imagine the bitcoin-denominated bond would have a higher required return due to historical 1-year price volatility, plus uncertainty about its future viability. But perhaps the inflation component of the nominal return would be lower, maybe even negative, due to its lack of monetary inflation.
“PayPal and Coinbase, both of which hold large amounts of bitcoin, would fall into this carveout, since both companies have business that requires that holding.”
And how did Coinbase handle the North Korean hackers’ theft of millions of dollars worth of bitcoin from its clients’ wallets? It downplayed the amount stole, and it delayed accurate reporting of the thefts so as to prepare a defense against lawsuits.
Too many aspects of crypto currencies are false claims. Just three: 1) it’s not a currency, two cryptocurrencies are traceable, third blockchain is based on “trust” (see Coinbase above).
If any public company in which I’m invested states it plans to invest in Bitcoin or another cryptocurrency, I’ll sell my shares and run as fast as possible in the opposite direction.
I forgot: This was a very good post. Thank you for writing it.
I forgot: This was a very good post. Thank you for writing it.
“Only the paranoid survive” wasn’t just a business mantra—it was an evolutionary truth. Bitcoin may have been born out of paranoia, but every monetary evolution over 300 years—from gold to fiat to digital—was driven by distrust in the status quo. The debate on crypto’s merit risks becoming an echo chamber while the deeper shift—a decentralized rethinking of trust, ownership, and value—is already underway. Blockchain isn’t a speculative dream; it’s an architectural inevitability in a world where centralized systems are failing to scale human coordination. Most pretend to understand it, some genuinely don’t, and very few are trying to decode its essence. But history reminds us: revolutions never wait for consensus. And this one may be moving too fast for traditional frameworks to grasp.
Th answer is not to won bitcoin. It’s worth zero, beacuse it doesn’t produce moeny, simple as that….
I’ve been investing for 35 years, and I’ve watched every new trend try to reinvent the wheel. Bitcoin on corporate balance sheets is just the latest flavor — dressed up as strategic but driven by narrative and FOMO.
Damodaran nails the key problem: once you step outside your core competency, you’re not investing — you’re gambling with shareholder trust.
It’s one thing for an individual to chase volatility. It’s another for a CFO to do it with treasury cash. If your competitive edge is in cloud software or logistics or semiconductors, why pretend it’s crypto trading?
Appreciate the nuance here. Too many are trying to force Bitcoin into every corner of the market, even when the fit is destructive.
Thank you for the nuance on a subject shrouded in speculation and sinister motives behind the promoters. I wrote up my thoughts on Bitcoin treasuries here: https://oliversung.substack.com/p/bitcoin-treasuries