0 sats \ 4 replies \ @kr 22 May 2023 \ parent \ on: ∞/21M > $ × ∞ bitcoin
that’s not how valuations work.
if i start a company, and raise $1 million at a $10 million valuation, the company is valued at $10 million… even though I only received $1 million from investors.
That remaining $9 million is unrealised potential until you sell that company for $10 million.
I just got my house valued at $70k more than what I bought it 3 years ago. Do I possess that $70k plus original value now?
That $10 million company's valuation will likely drop if another company comes out which solves the problem better. Investors will lose money, if they sell their unrealised potential loss.
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the valuation is still $10 million… that is exactly how all assets are valued.
exhibit a, you just said your house was “valued” $70k higher.
nobody operates under the assumption that all their assets are worth zero until they magically become valuable when they are sold.
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You cannot simultaneously have a $10 million company AND the $10 million in liquid capital.
If I only have a dollar and purchase an apple at a market value of $1, I no longer have a dollar, I just have one apple.
My apple is valued at $1.
BUT... seasonal rains produce high yield, apple harvest reaches record high. There's an influx of apples on the market and due to this supply shock my apple is now valued at $0.25.
I have not yet lost 75% of what I paid for my apple. I still have an apple.
I can hold my apple, cold storage, and wait until the market price recovers and sell my apple, which is not a dollar, it is still an apple, for a dollar.
If that isn't straight forward enough I guess we just agree to disagree.
Appreciate the debate.✌️
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i never said i would have $10 million in liquid capital, i said the valuation is $10 million.
i just hope nobody on SN is under the illusion that one bitcoin will one day be equal to 1/21,000,000th of the world’s wealth.
that kind of math is off by 1-2 orders of magnitude.
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