Fantastic extract by Peter Thiel which explains why business’ are valued on future earnings potential

‘A great business is defined by its ability to generate cash flows in the future’

‘Simply stated the value of a business today is the sum of all the money it will make in the future’

This sums up how a lot of crypto valuations work too. It’s all about what a project COULD potentially do in the future. We speculate on that through buying the token. The crypto AI sector is a perfect example of this where when it was hot the price appreciation was on speculation of future worth and not necessarily about what they were delivering now.

Now yes the difference is majority of crypto projects don’t generate cash flows and are totally useless but this extract helps to understand how the valuations work and why it’s not necessarily always about the now.