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How does one judge the "performance" of a cryptocurrency? In the abstract, I'd say what marks a currency's "performance" is its ability to be exchanged for good

How does one judge the "performance" of a cryptocurrency? In the abstract, I'd say what marks a currency's "performance" is its ability to be exchanged for goods and services; in that sense there really aren't any performing cryptocurrencies. They seem to mean "which has the biggest increase in spot price this year?", which is a kind of weird thing to judge a currency on.

linsomniac 9y ago
I've been judging cryptocurrencies based on what you can DO with them, which is why I think Ethereum is going places: Bitcoin with smart contracts. Monero is Bitcoin with better privacy. That sort of thing.
mbrock 9y ago
"Performance" in the sense of the "performance" of a stock is pretty well established terminology, but yeah, that just highlights how these currencies are highly speculative assets. It's definitely possible to exchange cryptocurrencies for goods and services. I paid for a plane ticket with BTC just the other day (AirBaltic) and it was more convenient than using my debit card (because my bank requires a particular proprietary 2FA scheme that I don't always carry). There are many people who charge for their programming services in cryptocurrency... there are huge dark markets... several cafés accept cryptocurrency (Paralelni Polis in Prague just switched to Litecoin from Bitcoin)... etc etc. The top cryptocurrencies are valuable, liquid, and offer many benefits over other payment methods, so it's obvious that you can use them for exchange.
dwaltrip 9y ago
USD is often judged by its performance against the currencies of other nations, in terms of the exchange rate differences over time.
saosebastiao 9y ago
Liquidity by itself has an objective and quantifiable value. Bitcoin, and possibly a few other cryptocurrencies, have some unique properties that have intrinsic value, like algorithmic fairness, low transaction costs, logistical simplicity, and lack of centralized control over money supply. BTC has a distinct possibility of becoming the future default Exchange Currency in international currency markets, which basically means that the transaction costs of trading A -> BTC -> B are cheaper than trading A -> B directly. I'd argue that if it were possible to isolate effects from hoarding and speculation, that the spot price would represent the intrinsic value of its liquidity and other intrinsic benefits. And thus, to the degree that prices are not influenced by speculation, the price reflects performance. But since we know that prices are heavily influenced by speculation, I'd argue that the better metric for performance should be daily trading volume. Because that is a more direct measure of liquidity. It might be meaningless by itself (the trading volume doesn't "represent" anything more than the total value that exchanges hands everyday), but contextually it is important. The 24 hour bitcoin trading volume is currently $1.6B. The currency trading volume across all worldwide currencies is $5T [1]. So BTC can roughly be considered to have 3-ish orders of magnitude of difference in liquidity over the worldwide currency market. As someone who has no involvement in BTC whatsoever, I find that pretty impressive. [0] https://coinmarketcap.com/currencies/bitcoin/ https://coinmarketcap.com/currencies/bitcoin/ [1] http://www.reuters.com/article/global-markets-currency-volumes-idUSL5N18E3K3 http://www.reuters.com/article/global-markets-currency-volum...
- vikiomega9 9y ago
  > lack of centralized control over money supply This might be clear to someone with more experience in the field, but it's not apparent how the benefits of such a constraint is quantified. For example, the fed raising interest rates is not translated to a deterministic response from the stock market and so using bitcoin might have sound fundamental advantages but equivalent pragmatic limitations?
tanduri 9y ago
Should the potential of a cryptocurrency be based on wide aspect like developer, social, search popularity? https://www.coingecko.com/en https://www.coingecko.com/en In way tells you what lies behind a price

linsomniac 9y ago

I've been judging cryptocurrencies based on what you can DO with them, which is why I think Ethereum is going places: Bitcoin with smart contracts. Monero is Bitcoin with better privacy. That sort of thing.

mbrock 9y ago

"Performance" in the sense of the "performance" of a stock is pretty well established terminology, but yeah, that just highlights how these currencies are highly speculative assets. It's definitely possible to exchange cryptocurrencies for goods and services. I paid for a plane ticket with BTC just the other day (AirBaltic) and it was more convenient than using my debit card (because my bank requires a particular proprietary 2FA scheme that I don't always carry). There are many people who charge for their programming services in cryptocurrency... there are huge dark markets... several cafés accept cryptocurrency (Paralelni Polis in Prague just switched to Litecoin from Bitcoin)... etc etc. The top cryptocurrencies are valuable, liquid, and offer many benefits over other payment methods, so it's obvious that you can use them for exchange.

dwaltrip 9y ago

USD is often judged by its performance against the currencies of other nations, in terms of the exchange rate differences over time.

saosebastiao 9y ago

Liquidity by itself has an objective and quantifiable value. Bitcoin, and possibly a few other cryptocurrencies, have some unique properties that have intrinsic value, like algorithmic fairness, low transaction costs, logistical simplicity, and lack of centralized control over money supply. BTC has a distinct possibility of becoming the future default Exchange Currency in international currency markets, which basically means that the transaction costs of trading A -> BTC -> B are cheaper than trading A -> B directly. I'd argue that if it were possible to isolate effects from hoarding and speculation, that the spot price would represent the intrinsic value of its liquidity and other intrinsic benefits. And thus, to the degree that prices are not influenced by speculation, the price reflects performance. But since we know that prices are heavily influenced by speculation, I'd argue that the better metric for performance should be daily trading volume. Because that is a more direct measure of liquidity. It might be meaningless by itself (the trading volume doesn't "represent" anything more than the total value that exchanges hands everyday), but contextually it is important. The 24 hour bitcoin trading volume is currently $1.6B. The currency trading volume across all worldwide currencies is $5T [1]. So BTC can roughly be considered to have 3-ish orders of magnitude of difference in liquidity over the worldwide currency market. As someone who has no involvement in BTC whatsoever, I find that pretty impressive. [0] https://coinmarketcap.com/currencies/bitcoin/ https://coinmarketcap.com/currencies/bitcoin/ [1] http://www.reuters.com/article/global-markets-currency-volumes-idUSL5N18E3K3 http://www.reuters.com/article/global-markets-currency-volum...

vikiomega9 9y ago
> lack of centralized control over money supply This might be clear to someone with more experience in the field, but it's not apparent how the benefits of such a constraint is quantified. For example, the fed raising interest rates is not translated to a deterministic response from the stock market and so using bitcoin might have sound fundamental advantages but equivalent pragmatic limitations?

tanduri 9y ago

Should the potential of a cryptocurrency be based on wide aspect like developer, social, search popularity? https://www.coingecko.com/en https://www.coingecko.com/en In way tells you what lies behind a price