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I wish people would stop using market cap as if it was meaningful for cryptocurrencies. A lot of these coins are traded at low volumes on unregulated exchanges
by empath75 9y ago
I wish people would stop using market cap as if it was meaningful for cryptocurrencies. A lot of these coins are traded at low volumes on unregulated exchanges that allow wash trading and other means of manipulating prices.
Even were that not the case and they had meaningful price discovery mechanisms 'market cap' would be a meaningless metric because if someone were to buy all the coins, they'd have destroyed the value of them because they've ruined the network value of the currency. This isn't the case for stocks in an actual company, because if you buy all the shares of a company with a 10 billion dollar market cap, you now own a company worth approximately 10 billion dollars.
- xwvvvvwx 9y agowhat would be a better measure?
- soVeryTired 9y agoYield? Oh wait.
- powvans 9y agoExactly. You could buy assets that produce things people need or you could buy a random string of numbers and letters. Obviously we are in a post scarcity world and therefore producing something of value is really a net negative. All hail the inert string of chars! It’s better than something because it does nothing.
- twblalock 9y agoI would consider how many people use them for transactions, if they are supposed to be currencies. Most people look at the price and the market cap because they can tell that the primary use of crypto-currencies is for speculation.
- ChrisClark 9y agoYeah, maybe we should look at the average daily transaction count and average fee per transaction.
- hectorr1 9y agoThere needs to be some way of determining the relative size and scale of these projects. Market cap is useful, but it needs to be normalized given the various different distribution models. So something like fully diluted market cap, or market cap using today's prices and the 2025 supply.
- ucaetano 9y agoI recently created my own cryptocurrency, UCaetanoCoin (UCC), with a supply of 100 trillion and one coins, all owned by me. I sold one to a friend of mine for $0.01 yesterday, which made me not only the richest person in the world, but also the first trillionaire, as the coins I own are valued in $1T USD. And my UCC has a market cap of $1T USD (and one cent). Then I exchanged a single coin with myself for $0.01. As my coin has zero transaction cost and instant transactions, I traded it back and forth with myself 100 quadrillion times. This generated a total traded value UCC-USD of 1 Quadrillion Dollars yesterday. Anyone wants to invest on my UCC?
- hathym 9y agoShow me your white paper :D
- ucaetano 9y agoAs requested, my white paper: https://cdn.shopify.com/s/files/1/0858/9696/products/122_1024x1024.jpg?v=1509557568 https://cdn.shopify.com/s/files/1/0858/9696/products/122_102...
- jonnydubowsky 9y agoYou win hacker news today for this double hitter of comments. I love your mental model regarding market cap and implied valuation. Your white paper is more honest then most!
- ucaetano 9y ago> You win hacker news today Oh, thanks, although winning hacker news is quite irrelevant when you're a trillionaire. Now if you excuse me, I'll retire to my orbiting chateau, it's tea time at my geostationary orbital slot.