Matt Levine: evaluation

Transcript context

…Isn’t CryptoKitty a derivative on Ether? [laughs] Is there a fact of the matter? Yeah, sure. In the naive sense of did it come from Ether? Sure. All those markets are so immature. I think of derivatives markets as being a mark of maturity and of the ability to understand what exposures exist in some instrument or in some economic reality. Then say, “We’re going to pick of these exposures and hedge them out, and we’re going to pick these exposures and magnify them. We’re going to have the ability to fine-tune all of our exposures because we’ve been doing this for a long time. We’ve been trading currencies or equities or whatever for a long time.” There’s the beginning of a thing that you could call a derivatives market in cryptocurrency, but it’s not that. It’s the opposite of that. No one knows what Ether is, in a sense. The idea that you’re fine-tuning your exposures to it is just not . . . CryptoKitties are the opposite of that. They’re like making your exposures weirder and more complicated. We have a good idea of how to price most futures and options. But when it comes to pricing, say, Bitcoin or other cryptoassets, what do you think is the best model we have — however bad they may all be — for thinking about what that value should be?…

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