Warren Buffett emphasized that the value of any financial asset is determined by its future cash flows, a principle underlying the discounted cash flow (DCF) method of valuation, first articulated by John Burr in 1938. Despite its theoretical strength, the DCF model often doesn’t align with market realities, where asset prices can fluctuate wildly for reasons unrelated to cash flows. This discrepancy dissuades many investors from using DCF, particularly for stocks, which require speculative inputs about future performance. However, the essence of value remains tied to future cash flows. In discussing cryptocurrency, the distinction arises as many advocate for valuing tokens like Ethereum based on potential future on-chain assets rather than cash flows. Tom Dunleavy argues that revenue metrics may not be the best approach to evaluate layer-1 tokens. Nevertheless, any asset generating fees is inherently tied to future cash flows, challenging the notion that crypto can escape classical valuation methods. Investors may need to adopt a DCF mindset to navigate these shifting valuations strategically.

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