Forbes: "Here's What Investors Need To Know About Cryptocurrency"

Forbes Magazine featured Vellum Managing Partner Eric Kovalak in "Here's What Investors Need To Know About Cryptocurrency":

Eric Kovalak, a managing partner for Vellum Capital, a hedge fund management firm specializing in crypto assets, says, “People are trying to translate the value of cryptocurrencies into a traditional model where they’d use something like P/E.”

While there is a calculation called NVT Ratio (i.e., network value to transactions ratio) that mirrors a kind of P/E ratio for Bitcoin, its creator says it’s “not always” a valuation metric for other cryptocurrencies. According to Mr. Kovalak, putting a value on a cryptocurrency means evaluating the asset against a philosophy and technology. He says investors should ask themselves if the cryptocurrency’s fundamental structure provides a transparent, decentralized solution.

Mr. Kovalak says a digital coin should also solve a problem that aligns with the philosophy of a distributed currency solution. For example, digital coin XRP solved the technological problem of allowing Visa- and Mastercard-like volumes of transactions on the network, which has been a challenge for the current structure of Bitcoin. However, XRP is on its own private permission ledger, not a distributed blockchain, and per Mr. Kovalak’s view, not philosophically aligned to the distributed model advocated by many crypto experts.

For those seeking safety in numbers, Mr. Kovalak offers this novel idea for investing in a new and largely untested industry: Pick your top five crypto investments from among the largest cryptocurrencies measured by market capitalization and manage them like your own mini-crypto-fund.