Assets, commodities, and possessions in a business and financial setting have come a long way. From bartering crops and selling goods to stocks, bonds, and equities, the digitalizing of the globe has led to assets changing their face, and even their tangibility.
Now, companies and corporations are being valued on abstract concepts that fall under their intangible assets, and even determining that value through these intangible assets is starting to change. Company evaluations are shifting — they are no longer based just on pure equity but rather much more on their IPOs and publicly traded stock. This gives insight into a company that has a rich bank of intangible assets.
To this end, it is unsurprising that Blockchain assets for companies operating in this new space are starting to be viewed as a truer evaluation of the company. Cryptocurrencies can be viewed as an intangible asset, and as a new way of representing the value of a company. As these digital tokens grow in value and worth, they lend that growth and value to the overall stance of the business.
The way these intangible assets are shaping up and moving with the help of a new technological wave like Blockchain, it will eventually lead to a more distributed, transparent and thus truer and fairer reflection of a company's worth through these inclusive and attainable assets.
New intangible assets emerging
As a pure definition, an intangible asset is simply an asset which has no physical qualities to it. To be intangible means that one cannot touch, see, smell it, etc. But looking deeper into it, anything from goodwill, brand recognition and intellectual property — such as patents, trademarks, and copyrights — are all intangible assets.
However, even these assets are starting to be overtaken by another intangible asset that is emerging alongside a new technology. Blockchain companies are springing up, much like tech companies, with a solution to new problems, but these Blockchain companies come with their own assets.
Cryptocurrencies are the new intangible asset that is not only clearer and more transparent in terms of valuing their worth, but also generally better for the entire marketplace. The cryptocurrency worth of a Blockchain company can represent a much truer valuation than another company with traditional intangible assets.
In fact, the model of capitalism itself is in a state of flux. Tech companies have already tested its bounds in terms of equity and valuation, but as things move forward and more Blockchain companies spring up, the general idea of capital in a capital-free system will make valuations incredibly difficult and inaccurate. However, a cryptocurrency allows for market value to be attributed as a new form of intangible equity of a said company.
A change in valuation
Companies are starting to be valued on much more than simple Assets - Liabilities basis. With this change comes the difficulty in valuing intangible assets. Putting a figure against brand identity is really an estimation and prone to purposeful inflation or deflation.
Tangible assets are easy to value, and thus easy to use to determine the equity of a company, but then there are some companies like Microsoft and other Tech giants that really own very little in the way of tangible assets. Their wealth is in intangible assets.
As Microsoft's founder Bill Gates puts it: “Products you can’t touch have a very different set of dynamics in terms of competition and risk and how you value the companies that make them.”
A lot of intangible assets are valued on the basis of public sentiment, and the metric for this is derived from things like IPOs and publicly traded stock. But the difficulties in determining the public sentiment from the excitement around stocks is equally difficult and often purposefully inaccurate.
Issues with the new standard in valuation
With IPOs and the resulting publicly traded stocks, the level of distribution and sentiment is often not a fair reflection. The system leaves the door open to big company investors like VCs and fund companies as well as big and wealthy individual investors that can use their money to move the markets.
These types of players always influence how the publicly traded companies work and how much their intangible assets are worth. Investment groups and companies can help prop up and lift companies, thereby influencing their true worth through their intangible assets in a way which can bring a swell of false public hype and frenzy.
In many ways, this is a form of market manipulation, as big money has all the power to pick and choose its own desirable companies to inflate. But, if stocks are being cherry-picked to inflate in order to grow the intangible assets of a company and thus give it a higher evaluation, the same cannot be said for cryptocurrencies.
A Blockchain company’s desire is to distribute and include a vast and different arrangement for people to buy and invest in its cryptocurrency. Thus, if we take the same metric of a stock and use it against a cryptocurrency, the public sentiment is a far truer reflection because it is also on a market, but its price is heavily influenced by public sentiment.
And again, that public sentiment moves on an almost daily basis as this distributed group of ‘investors’ can easily buy and sell and trade their cryptocurrencies dependant on positive or negative news surrounding the blockchain company.
Inclusive, achievable intangible assets
Publicly traded stocks for traditional companies are technically open to all, but they are a lot harder to get one’s hands on as there is a level of exclusivity and exclusion that surrounds stock trading. Additionally, the model is not community oriented or decentralized, nor well distributed.
The more one looks at it, Blockchain assets are a much stronger and truer metric of company value. They are an intangible asset which is firstly easier to value as they operate on an open and transparent market, and secondly, they are a way to measure sentiment and growth in a company as they are far more distributed and liquid.
It allows these buyers of the token to be vested in the potential and possibility of the company; cryptocurrency assets often correlate strongly to the success of a company.
If a company is moving forward and hitting its targets on the way to its final goal, this is often predicated on the growing value of their token. It is also linked to an increase in interest and hype as more individuals buy the open and freely available token, which is then also well distributed.
So, if we consider these coins as intangible assets because they are not part of an asset which would determine equity, but they are a marker of success and sentiment in a company like a publicly traded stock, we can start to understand them a little more.
They do not have the difficulty of exclusivity, and thus are much more communal and therefore much truer as a metric by which to value a Blockchain company.
A decentralized community evaluation
People often call the cryptocurrency space a bubble since so many people are drawn to it and have bought into it, especially when it comes to ICOs and Blockchain companies. However, this is probably an unfair assessment of the space.
There is a creation of decentralized communities which are learning to accurately assess the intangible assets of companies. The shrewdness of a true distributed and decentralized collective is a determining metric that many mainstream tech companies cannot say they have as their basis for value.
Many tech companies may have had their value propped up by VCs and investment firms that helped kickstart them to success, but those in the Blockchain space have nowhere to hide. Their every move can be tracked and traced by the value of their tokens, which plays a part in their intangible asset worth and thus really in their total actual value as a business.