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Because I can create a cryptocoin with 2B tokens, sell one coin to friend for $100 and have a $200B market cap. It's got nothing to do with reality. Anyone (li
by sgk284 9y ago
Because I can create a cryptocoin with 2B tokens, sell one coin to friend for $100 and have a $200B market cap. It's got nothing to do with reality. Anyone (literally) can create a $200B market cap coin by forking a github repo.
- pedrocr 9y agoThat's just how market caps work in general. The same argument has been made for startup valuations. It's not a problem with the metric at all and doesn't hold for the case being discussed as actual market based transactions in enough volume are happening. It's not just a made up number. Here's an argument that Facebook was not worth 33B$ in 2010 because only 3% of its value had ever been transacted: https://signalvnoise.com/posts/2585-facebook-is-not-worth-33000000000 https://signalvnoise.com/posts/2585-facebook-is-not-worth-33... It's worth almost 17 times more than that now. Market cap is not a perfect metric because it doesn't capture the depth of the market willing to buy but coins don't make that any different.
- mitchellberry 9y agoNo one measures the marketcap of gold or soybeans. When was the last time someone mentioned the marketcap of the USD? It's an absurd metric made worse by the fact that more coins are issued every 5 mins. If price remains the same virtually all coins will go up in marketcap regardless. What company issues new shares every single day?