Synopsis: Cryptoassets by Chris Burniske and Jack Tatar presents a coherent framework to valuing and investing in crypto, and features top-notch research and insights. This article is a comprehensive Cryptoassets book review, from bestselling author Nathan Rose.
***This review is part of a series. Click here for my full list of the world’s best cryptocurrency books.***
Cryptoassets Book Review
Cryptoassets is a book which came along at exactly the right time. The book’s publication date is listed on Amazon.com as October 20, 2017 – a time which was right in the middle of the speculative frenzy dominating the prices of virtually every crypto on the market. This date was also a mere two months before the well-publicized crash that followed.
Into this frothy environment came Chris Burniske and Jack Tatar with their book, and its sober, level-headed analysis over how to value crypto and how to properly place it into a portfolio.
The names who have provided a glowing Cryptoassets book review are long and illustrious – including:
- Harry Markowitz (winner of the Nobel Prize in Economics)
- Laura Shin (senior editor at Forbes and host of the Unchained Podcast)
- Alex Tapscott (co-author of the highly-regarded book Blockchain Revolution)
Treat Crypto As Part Of A Balanced Portfolio
Cryptoassets is the world’s first serious attempt to create a coherent framework for crypto investing. Other books usually dismiss crypto valuation with a casual wave of the hand, or claim ‘there are too many factors to consider’.
Trying to put a valuation on crypto tokens is indeed problematic, because there are few of the traditional markers that investors normally use to value assets. Equity valuation relies on figures like revenue growth, price-to-earnings ratio, and dividend yield. Fiat currencies have the economic data of the country they represent – GDP growth, employment rate, trade surplus and so on. Commodities like oil have production numbers and consumption rates. Many crypto tokens have no such anchor points. But in spite of the difficulties, Burniske and Tatar rolled up their sleeves to try to marry crypto investing with modern portfolio theory.
One of the most interesting pieces of analysis within Cryptoassets involves comparing Bitcoin to major US stock indices, as well as some of the high-growth tech stocks: Facebook, Amazon, Netflix and Google. The comparative analysis of Bitcoin’s price performance, compound annual return, volatility and Sharpe Ratio is something I had never before, and was very interesting.
Cryptoassets isn’t all quantitative data crunching though. It also features convincing big-picture arguments why crypto is not a Ponzi scheme (as some critics charge), as well as explaining why this asset class has value in the first place. Crypto-skeptics would do very well to read this book – they might even be convinced to change their minds.
Top Quotes From Cryptoassets
This Cryptoassets book review provides five of the book’s highlights below, to give the reader a flavor of what’s in store if they decide to buy it. If you are undecided about whether Cryptoassets is the right book for you, then the below snippets will help you to make up your mind.
“The growth and importance of cryptocurrency and cryptocomputing rivals the early growth of the commercial Internet and web, and the technical and economic revolution that will result is perhaps even more significant than the first phase of the Internet.”
“Crypto trading and the FinTech innovations unlocked by blockchains will do to Wall Street what personal Internet publishing and blogging did to media empires. This power shift is inevitable. Capital allocation no longer needs to be managed by powerful institutions which have proven to be corrupt and reckless.”
“…the venture capital business model is being turned on its head by crowdfunding efforts that include initial cryptoasset offerings, or ICOs. Cryptoassets are made of code, and because they easily track and convey ownership, they can be used as fund-raising tools for startups. In the last two years, there has been a wave of entrepreneurs that bypassed venture capitalists and instead chose to raise startup capital via these methods.”
“When cryptoassets are first launched, they have relatively thin order books because the investor base is typically smaller, trading is more infrequent, and orders may be small. This can create volatility in the price of the new asset. However, as news of the asset’s merit spreads, interest will increase along with trading volume. The order book will typically fatten and volatility will often decrease.”
“Just as the Internet and World Wide Web changed how we live our lives and interact with others, it also made millionaires out of the innovators who began companies based on these technologies—and the investors who invested in them.”
The Verdict: Cryptoassets Book Review
Cryptoassets is truly one of a kind. While there have been a multitude of books written about the history of crypto, and many technical guides dedicated to the programming aspects, none before had tackled the thorny issues around crypto valuation and investing. Cryptoassets is an especially indespensible guide for financial managers who are trying to navigate this brave new world.
If there is any criticism to be made in this otherwise-excellent book, it is that the genuinely unique insights of Cryptoassets can get diluted by the coverage of absolute beginner finance topics – the book rather needlessly explains low-level concepts such as how a limit order book works, and feels the need to point out the obvious fact that price per unit is less relevant than a network’s market capitalization.
Still, it is very worth reading the whole of this book to unearth the many golden nuggets within. If you are about to make a meaningful allocation of your portfolio to crypto, then Cryptoassets is hands-down the best book on the market.
If you enjoyed this Cryptoassets book review, then you would also enjoy my book – The Crypto Intro. My book is more of a hands-on how-to guide for getting started with crypto. Read Cryptoassets for the in-depth investment information, but read The Crypto Intro if you need help getting started with crypto in the first place!