Maarten Kiewiet de Jonge (Duplus Fund Management): More application value with more digital asset users

Maarten Kiewiet de Jonge (Duplus Fund Management): More application value with more digital asset users

January 27, 2025

Crypto
Maarten Kiewiet de Jonge (Foto archief Duplus Fund Management)

This text was originally written in Dutch

By Esther Waal

Many investors see confidence in Bitcoin boosted by Trump's re-election. But even before that, crypto's popularity increased. A major reason for this was the US Securities and Exchange Commission's (SEC) approval of the first Bitcoin ETF. BlackRock and Fidelity's crypto products in particular led to a surge in institutional investment in the crypto market. Is the time ripe for institutional investors to do more with crypto? Financial Investigator asked Maarten Kiewiet de Jonge, Director, Duplus Fund Management some pressing questions.

How is the intrinsic value of cryptocurrencies determined?

'Traditionally, intrinsic value is determined by cash flow, dividends or underlying assets. This almost never applies to digital assets. Digital assets can be valued through several methods, but in our view, the most meaningful method is to determine the application value. How do you determine it? In this respect, digital assets are very similar to social media. A crucial feature of both social media and digital assets is the network effect: the higher the number of users, the more application value is created. Several valuation techniques exist for quantification, such as the Metcalf model, for example.'

To what extent does investing in cryptocurrencies align with ESG objectives?

'In terms of the “E”, digital assets, like equities, cover the whole spectrum, from minimal energy consumption and low climate impact to sky-high energy consumption. In addition, some digital assets are specially designed to promote sustainability. On the ‘S’ front, digital assets actually promote inclusiveness. Think of developing countries where not everyone has access to a bank account, or the efficient sending of ‘remittances’ to the home front.

In terms of Governance, the philosophy of digital assets is to place control with the community as a counter-reaction to too much concentration of power. Most digital assets projects are decentralised. This means that control does not lie with a central entity. This contributes to a more democratic and fair governance structure.'

'The higher the number of users, the more application value is created.'

 

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