Step-by-Step Guide on How to Value GVT

I see all the time on Reddit and Telegram “How much could GVT be worth?”

I hope to answer this question in this write up, it is quite long but I wanted to make sure to cover all the bases I feel are important. This is intended for someone who is already familiar with the Genesis Vision project. If you are not familiar with Genesis Vision, I suggest you read the white paper and DYOR before reading any further.

White paper: https://genesis.vision/white-paper-eng.pdf

Descriptive Video by Cryptolark: https://www.youtube.com/watch?v=U9BjzsGcOu0

My goal in writing this is not to predict GVT price down to the dollar. My objective is to inform you of the drivers of GVT price. Once you conceptually understand these drivers, you will be able to make your own price predictions. Keep in mind, this is just a valuation framework I use. This is not perfect, this is not 100% accurate, but I do believe it is a good thought process to follow and it is directionally correct.

For a valuing GVT, I believe that the three most important things that drives price are:

Money Manager Performance & Rate of Return Execution Risk Social/Behavioral Factors

Legislative Risk is also a huge concern, but it is not something any of us or the Genesis Vision team can control. I will touch up on this topic later.

1. Money Manager Performance & Rate of Return

Because of what GVT intends to do, it is actually quite simple to put a value on GVT (much easier than trying value Doge Coin for example). In valuing stocks it is very common to use a Discounted Cash Flow Analysis (DCF). DCF aims to calculate the present value of all future cash flows — this will provide a ball-park estimate of the true value of an asset.

Since GVT is all about managed money, this analysis comes down to the rate of return of the Money Manager. Simply put, the higher the performance of the managers on GVT, the higher the value GVT will become. You may think “Duh, this is obvious!” and you’re right. But lets model out a few scenarios:

Assumptions:

Principal amount invested: $10,000

Assume current price of GVT: $28 USD

Investment period: 52 Weeks (1 year)

Profits are reinvested

Gain percentages represented are NET of Money Manager Commission

Portfolio Value is measured in USD, NOT GVT or BTC

1% gains per Week:

At the end of 52 weeks, your initial investment would be worth $16,776.89

3% gains per Week:

At the end of 52 weeks, your initial investment would be worth $46,508.86

7% gains per Week:

At the end of 52 weeks, your initial investment would be worth $337,253.48

15% gains per Week:

At the end of 52 weeks, your initial investment would be worth $14,331,369.66

Before I go any further, I have to say, a true DCF analysis takes in to account cash-flows from multiple future years and then adjusts those cash flows to present value based on the cost of capital. I am only projecting 1 year of gains, I will not be adjusting my year end values using the interest rate or Bitcoin growth rate. This analysis is purely in nominal dollars. This merely borrows on the concept and spirit of a DCF analysis. I want to keep this simple, so as many people as possible can follow along.

Now we know the project value of your $10,000 investment based on the different investment returns. To calculate the price of GVT from the returns of 52 weeks of gains, you simply divide the projected value by the quantity of GVT.

I will use the current price (2/19/2018) of $28 per GVT. With $10,000, you will own 357.14 Genesis Vision Tokens. Keep this number in mind, as we will use this to determine the estimated price based on future returns.

If GVT can provide 1% weekly net returns for 52 weeks, you take your 52 week total and divide it by 357.14 GVT to calculate the estimated value.

In the 1% weekly returns scenario: $16,776.89/357.14=$46.97 per GVT

Following this logic…

3% gains per Week: $46,508.86/357.14=$130.22 per GVT

7% gains per Week: $337,253.48/357.14 =$944.31 per GVT

15% gains per Week: $14,331,369.66/357.14=$40,128 per GVT

You may ask: How is this possible??? How can traders make returns this great for a whole year?

The answer is: you’re right. It is not possible to make constant 7% or 15% returns for an entire year (unless a manager uses funds to buy a ton of masternodes, but hey what do I know?). These are simply assumptions for the sake of creating a projection. There will be some months where your GVT Trader’s portfolio may go up 25%, and in other months it may go down -15%.

But I don’t think 7% gains per Week is outlandish.

https://tournament.genesis.vision/index.html#

7% a week is the performance of the 92nd place performer in the trading competition (as of 2/19/2018).

15% a week is the performance of the 78th place performer in the trading competition.

50th place: 46% profit

25th place: 113% profit

10th Place: 302% Profit

1st Place: 609% Profit

I chose to use more conservative numbers in my calculations because these traders were not trading with real money, and may have taken greater risks than they normally would.

2. Execution Risk

So you may be thinking “Great! GVT has managers that can generate great returns, why isn't GVT worth as much as you are projecting???”

The answer to that question is risk. And one of the biggest risks is execution risk.

Basically execution risk is the question:

Can the team deliver?

The greater degree of certainty this question can be answered, the lower the execution risk.

Consider the following scenario: Lets say you have a contract with a party that will buy an unlimited quantity bitcoins from you at $15,000 at the end of the month. You know that this contract will be 100% enforceable. Therefore, it would be wise of you to purchase Bitcoin up to the price of $14,999. As you will know with 100% certainty that the contract is enforceable.

This is an example of a RISK FREE ENGAGEMENT.

Crypto is NOT RISK FREE, GVT is no exception.

Lets say you have a drawing and there are 5 tickets. Lets assume 1 ticket wins $100, and the rest of the 4 tickets give you nothing. How much should 1 ticket cost? In this scenario, the value of the ticket should be $20. 80% of the times you will not receive $100

How does this factor in for GVT?

Remember those nice high values we calculated earlier? The value of those figures were RISKLESS.

THE VALUES OF THOSE PROJECTIONS WE CALCULATED EARLIER WERE RISKLESS.

We need to apply your perceived risk to GVT to have a more accurate price:

Lets just use 7% weekly return as an example. Lets say you think there is only a 80% chance that Genesis Vision Team deliver.

7% : ($944.31)x(.80)=$755.48

You see where this is going…

No one knows the exact risk factor as no one can predict the future. But I hope this serves as a useful way to think about how GVT and many other cryptos are valued. Bear in mind this is not an exact science, but an illustrative example of how risk affects price.

This is why cryptos increase dramatically in price when project milestones are hit, for example: main net goes live, alpha or beta is launch, new partners are announced.

These miles stones REDUCE THE RISK, it is like going from 80% of success to 90%. The less risky, the more valuable.

So ask yourself this: How much do you believe in Genesis Vision team to execute? DYOR

3. Social/Behavioral Factors

Of course this won’t be crypto without drama. There are a lot of things that influence price outside of the fundamentals like I described above. In fact some coins have skyrocketed so far from just marketing hype alone, that they have passed the moon and gone just as far as the Sun.

The Genesis Vision team is being very mature and strategic in their marketing and promotion. Being “under the radar” may certainly have a negative short term impact on price, but this just means that true believers in the project will be rewarded even more handsomely if everything works out.

And yes, I still do believe GVT is still “under the radar”

Genesis Vision also offers a lot of unique opportunities to consider. For example, it integrates the FOREX and stock markets in the platform. In a crypto bear market, this means that GVT is the crypto gateway to gains that can be delivered through alternative channels. When the entire crypto market is bleeding red, GVT could be the crypto safe house people buy into to have positive returns in FOREX and stock. Meaning, GVT could see an increase in demand driven by a crypto bear market.

Legislative

Legislation and Bitcoin strengh are also huge factors to consider. No one knows how to accurately predict what governments will do, so think of this as an unknown and incalculable risk factor.

Tools:

http://www.calculator.net/investment-calculator.html

You can double check my math using this investment calculator or play around on your own.

Starting amount: $10,000

Years: 52 (years is actually periods, so we can just put 52 and it will represent weeks)

Rate of return: Whatever % you think managers will make based on the time period you use (so if you use 52, a weekly rate of return should be used)

Additional contribution: $0

There are other ways and more advanced calculations, such as withdrawing 50% of gains, and reinvesting 50%. Or measuring incremental gain against bitcoin. Feel free to explore these on your own, I decided to keep this as simple as possible.

Additionally, since I am only calculating 1 years of returns, this significantly reduces the present value projection. By factoring in multiple years the projected value would increase substantially.