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I'm so, so skeptical of the current cryptocurrency valuations. $200 mil for a browser with no users. $1.5 billion for a coin that was twice renamed to hide th

by hedgew 9y ago

I'm so, so skeptical of the current cryptocurrency valuations. $200 mil for a browser with no users. $1.5 billion for a coin that was twice renamed to hide that it was premined. $500 million for a Reddit with less than 1/10000 of Reddit's users. $30 million for PotCoin. $350 million for DogeCoin. The list goes on and on. If BAT was a normal company, would someone buy them for $200 million? Would someone pay $500 million for Steemit? These valuations sound insane, but that is what people are paying.

auganov 9y ago
Not disagreeing. But as far as Brave/BAT goes, given that the founder is Brendan Eich, I imagine somebody might.
LMYahooTFY 9y ago
I'm slightly confused. Can you compare a currency market cap in USD to a company valuation?? Who is "buying" a cryptocurrency....?
- andruby 9y ago
  You could compare it with _funding_ valuations, which is different from _buying_ a company at a certain valuation. Eg: If a company has 200M shares, and someone pays $1/share during an investment round, the company (and the press) will mention that the funding was done at a $200M valuation. The same logic is done to calculate crypto currency market cap. If there are 200M coins, and someone somewhere pays $1/coin, the market cap is reported at $200M. This is, however, the total value of all coins of that currency. Often, the person(s) or company that created a coin won't own most coins (unlike with company shares).
  - LMYahooTFY 9y ago
    I see the similarities there. However, isn't there a fundamental difference in stock valuation and a currency? The currency can't "go out of business", as it's entire existence is a speculation. Anyone using a given currency speculates that it will be accepted tomorrow.
    - andruby 9y ago
      Good point. That is indeed a fundamental difference. It probably also points to a large difference between a new blockchain _Currency_ and a token _Asset_. The latter often being a proxy for company shares in an ICO.
      - LMYahooTFY 9y ago
        Was this the idea underlying the DAO? I haven't read much into it, but my impression was that it was essentially mandating signatories to a contract in order to make desired changes. Using this crypto-tech would make it impossible to circumvent and screw another party.
- hedgew 9y ago
  I am confused too. You can compare the market caps in a sense. A company with 1000 shares worth $10 each has the same market cap as a cryptocurrency with 1000 tokens worth $10 each. The $10 price is the highest price people are willing to buy the share/token at. In economic terms, they're quite equivalent? That's where the similarities end. A token does not mean ownership. It doesn't mean a share of profits. Tokens do not necessarily have any rules about how many there will be. More practically, a single person owning 100% of a cryptocurrency would likely reduce the value to zero. Owning 100% of a company, you can at least sell its assets.
wslh 9y ago
I am extremely cautious but no skeptical because real projects can jump there too and find an edge. There will be crashes and a lot of scams but some few projects will find their way and we will learn how to better recognize those. Also, when I don't understand when open source projects ask for contributions via PayPal or credit cards.
mtgx 9y ago
I think the main issue is there is no "multi-round" crowdsale or investment cycle right now for crypto companies. So there's no "seed valuation" where a startup may be priced much more accurately based on what it's worth right then. In the ICO/crowdsale pretty much the peak potential valuation is included in the price. Kind of like if Facebook was doing its first round of investment (when it was still a site for colleges-only) and it would raise $100 billion from that first round. This model seems very flawed, because it's very hard to price a company 10-15 years into the future accurately.
throwawaynnn 9y ago
I think you are right. Cryptos are extremely overvalued. But who cares? I'm a Software Engineer, but I decided to play with cryptos. I invested $4,000. So far, I've made $108,000. Yes, I'm speculating. But everybody does. Speculation is how all the businesses work. You buy low, sell high. What's more interesting is that I have $100k to invest into my pet project. At that point, overvaluations create other businesses, which is generally a good thing.
- andruby 9y ago
  Be sure to exchange (part) of that $108K into fiat currency if you want to invest it in your pet project. I've done the same as you, but only got in seriously a while later. I've exchanged my initial investment for fiat and might lock-in some of the unrealised gains too.
loceng 9y ago
You have to remember it's not really $ or currency - and only a tiny fraction of people believe it has value; most of them seem to be speculators and investors, or perhaps people being paid in the blockchain token who can liquidate as fast as they need USD or plan to hold onto it until the value goes up. That they put '$' in front of amounts and include 'currency' in the word cryptocurrency is essentially a trick because society is habituated to the word currency and the $ sign as a signal of a currency - something as value in their mind; this misuse is similar to why you can't call yourself a chiropractor if you haven't gone through the training, people trust that title by default. The fact they've adopted the $ sign and 'currency' is perhaps even fraud; they have monetary gain to look forward to from the result they're hoping/speculating for. And so far they seem to be successful in overlaying the concept of the dollar with these tokens and gaining traction with it. The "$200 mil for a browser with no users" value is based solely on what the last people bought the tokens at - however it's not quickly liquid and I believe most of these popular blockchain token platforms have taken VC money - real USD - to give themselves a runway to survive. Essentially it's a trick to consumers for exactly where your confusion comes from; people in the ecosystem try to justify it by equating it to being like buying stock in a company but this is much more in reality, even if you can overlay that concept too. If the finance people and media keep considering this real currency - they will continue to trick people until the point people actually believe it, and then there will be an unfair and unreasonable buying power shifted towards early adopters of Bitcoin or Ethereum's Ether et al; it acts very similar to a Ponzi scheme, where the first people in get their promised '20%' and it is the last people in the scheme that lose out, except with this blockchain token scheme it is much more subtle because of it being global, distributed/decentralized. This is another play by Big Finance to transfer a huge amount of wealth without the general population being able to realize it, and the only 'work' they're generally doing is pulling levers to get this ecosystem more and more adopted; because you found a way to transfer a lot of wealth (perhaps 40%+ of global wealth would shift to early adopters, I haven't seen projections - the earlier you adopt, the bigger piece of the pie you'd get which is in part why people want to start their own token) by creating a new global currency, and that reward isn't just IMHO. From my current understanding it's a Ponzi-like scheme that's different in that it is global, decentralized, and mostly anonymous - which makes it much more dangerous. There are so many people in this global network that the value can drop, and there can be no return for a long period and it will survive because no one's knocking on your door - or there's no SEC to then investigate a like a Ponzi-scheme artist - especially because the issuer is the blockchain token itself, however everyone in the global ecosystem is working together to make others adopt it - so it's not as easy for the SEC as focusing on one individual. The goal now with these blockchain tokens is for the holders to increase the use/adoption with the general public, wanting them to believe they have any value at all. They seem to be doing this by giving starting their own token, and giving away a bunch of it. In the case of Kik, they're giving away 10% which they equated to 1 trillion parts in what they're calling Kin - leaving them with 9 trillion more to play with - distribute for free or sell. I do believe in the positive aspects of blockchain, however the current algorithms for distribution . Through some mechanism the value of a legitimate cryptocurrency ; not the mechanism that once enough people have adopted it that it will stabilize, at that point the wealth has already transferred to the early adopters - all because they stayed in the game to create a new currency and got other people to start playing. I am still hoping to find projections of how much wealth is and would actually be transferred depending on when a person adopted.

by hedgew 9y ago

auganov 9y ago

Not disagreeing. But as far as Brave/BAT goes, given that the founder is Brendan Eich, I imagine somebody might.

LMYahooTFY 9y ago

I'm slightly confused. Can you compare a currency market cap in USD to a company valuation?? Who is "buying" a cryptocurrency....?

andruby 9y ago
You could compare it with _funding_ valuations, which is different from _buying_ a company at a certain valuation. Eg: If a company has 200M shares, and someone pays $1/share during an investment round, the company (and the press) will mention that the funding was done at a $200M valuation. The same logic is done to calculate crypto currency market cap. If there are 200M coins, and someone somewhere pays $1/coin, the market cap is reported at $200M. This is, however, the total value of all coins of that currency. Often, the person(s) or company that created a coin won't own most coins (unlike with company shares).
- LMYahooTFY 9y ago
  I see the similarities there. However, isn't there a fundamental difference in stock valuation and a currency? The currency can't "go out of business", as it's entire existence is a speculation. Anyone using a given currency speculates that it will be accepted tomorrow.
  - andruby 9y ago
    Good point. That is indeed a fundamental difference. It probably also points to a large difference between a new blockchain _Currency_ and a token _Asset_. The latter often being a proxy for company shares in an ICO.
    - LMYahooTFY 9y ago
      Was this the idea underlying the DAO? I haven't read much into it, but my impression was that it was essentially mandating signatories to a contract in order to make desired changes. Using this crypto-tech would make it impossible to circumvent and screw another party.
hedgew 9y ago
I am confused too. You can compare the market caps in a sense. A company with 1000 shares worth $10 each has the same market cap as a cryptocurrency with 1000 tokens worth $10 each. The $10 price is the highest price people are willing to buy the share/token at. In economic terms, they're quite equivalent? That's where the similarities end. A token does not mean ownership. It doesn't mean a share of profits. Tokens do not necessarily have any rules about how many there will be. More practically, a single person owning 100% of a cryptocurrency would likely reduce the value to zero. Owning 100% of a company, you can at least sell its assets.

wslh 9y ago

I am extremely cautious but no skeptical because real projects can jump there too and find an edge. There will be crashes and a lot of scams but some few projects will find their way and we will learn how to better recognize those. Also, when I don't understand when open source projects ask for contributions via PayPal or credit cards.

mtgx 9y ago

I think the main issue is there is no "multi-round" crowdsale or investment cycle right now for crypto companies. So there's no "seed valuation" where a startup may be priced much more accurately based on what it's worth right then. In the ICO/crowdsale pretty much the peak potential valuation is included in the price. Kind of like if Facebook was doing its first round of investment (when it was still a site for colleges-only) and it would raise $100 billion from that first round. This model seems very flawed, because it's very hard to price a company 10-15 years into the future accurately.

throwawaynnn 9y ago

I think you are right. Cryptos are extremely overvalued. But who cares? I'm a Software Engineer, but I decided to play with cryptos. I invested $4,000. So far, I've made $108,000. Yes, I'm speculating. But everybody does. Speculation is how all the businesses work. You buy low, sell high. What's more interesting is that I have $100k to invest into my pet project. At that point, overvaluations create other businesses, which is generally a good thing.

andruby 9y ago
Be sure to exchange (part) of that $108K into fiat currency if you want to invest it in your pet project. I've done the same as you, but only got in seriously a while later. I've exchanged my initial investment for fiat and might lock-in some of the unrealised gains too.

loceng 9y ago

You have to remember it's not really $ or currency - and only a tiny fraction of people believe it has value; most of them seem to be speculators and investors, or perhaps people being paid in the blockchain token who can liquidate as fast as they need USD or plan to hold onto it until the value goes up. That they put '$' in front of amounts and include 'currency' in the word cryptocurrency is essentially a trick because society is habituated to the word currency and the $ sign as a signal of a currency - something as value in their mind; this misuse is similar to why you can't call yourself a chiropractor if you haven't gone through the training, people trust that title by default. The fact they've adopted the $ sign and 'currency' is perhaps even fraud; they have monetary gain to look forward to from the result they're hoping/speculating for. And so far they seem to be successful in overlaying the concept of the dollar with these tokens and gaining traction with it. The "$200 mil for a browser with no users" value is based solely on what the last people bought the tokens at - however it's not quickly liquid and I believe most of these popular blockchain token platforms have taken VC money - real USD - to give themselves a runway to survive. Essentially it's a trick to consumers for exactly where your confusion comes from; people in the ecosystem try to justify it by equating it to being like buying stock in a company but this is much more in reality, even if you can overlay that concept too. If the finance people and media keep considering this real currency - they will continue to trick people until the point people actually believe it, and then there will be an unfair and unreasonable buying power shifted towards early adopters of Bitcoin or Ethereum's Ether et al; it acts very similar to a Ponzi scheme, where the first people in get their promised '20%' and it is the last people in the scheme that lose out, except with this blockchain token scheme it is much more subtle because of it being global, distributed/decentralized. This is another play by Big Finance to transfer a huge amount of wealth without the general population being able to realize it, and the only 'work' they're generally doing is pulling levers to get this ecosystem more and more adopted; because you found a way to transfer a lot of wealth (perhaps 40%+ of global wealth would shift to early adopters, I haven't seen projections - the earlier you adopt, the bigger piece of the pie you'd get which is in part why people want to start their own token) by creating a new global currency, and that reward isn't just IMHO. From my current understanding it's a Ponzi-like scheme that's different in that it is global, decentralized, and mostly anonymous - which makes it much more dangerous. There are so many people in this global network that the value can drop, and there can be no return for a long period and it will survive because no one's knocking on your door - or there's no SEC to then investigate a like a Ponzi-scheme artist - especially because the issuer is the blockchain token itself, however everyone in the global ecosystem is working together to make others adopt it - so it's not as easy for the SEC as focusing on one individual. The goal now with these blockchain tokens is for the holders to increase the use/adoption with the general public, wanting them to believe they have any value at all. They seem to be doing this by giving starting their own token, and giving away a bunch of it. In the case of Kik, they're giving away 10% which they equated to 1 trillion parts in what they're calling Kin - leaving them with 9 trillion more to play with - distribute for free or sell. I do believe in the positive aspects of blockchain, however the current algorithms for distribution . Through some mechanism the value of a legitimate cryptocurrency ; not the mechanism that once enough people have adopted it that it will stabilize, at that point the wealth has already transferred to the early adopters - all because they stayed in the game to create a new currency and got other people to start playing. I am still hoping to find projections of how much wealth is and would actually be transferred depending on when a person adopted.