# Crypto-valuation methods

Recent adaptations of traditional models seem to give some clarity to crypto-valuations. We are persuaded by John Pfeffer’s conclusion that utility tokens (bitcoin being an exception as store of value) are overvalued applying “Monetary Theory”: “M=PQ/V where PQ is just the aggregate cost of the computing resources to run the chain (which may be thought of as the annual IT budget of an equivalent-volume incumbent payment system multiplied by some coefficient to adjust for the relative computing inefficiency of decentralised vs. centralised architectures) and V is some (probably high) velocity.” Johnny Antos counter-proposes an adapted Black-Scholes (pic): “to conceptualize the purchase of most utility tokens as a call option on the real economic value on both the currently envisioned use cases, and those that can only be conceived once these current uses [potentially of huge impact] eventuate. In this framework, token valuations may be considered semi-strong form efficient.” Dmitry Kalichkin introduces the “crypto-P/E ratio” as the Network Value/Transactions Ratio: the total value of transactions flowing through the network is a proxy for how much utility users derive from the chain. Get in touch for more of our own fundamental analysis of crypto-assets.