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I actually think this calculation methodology for "market cap" is flawed. The whole notion of market capitalization comes from the equity markets. It's calc

I actually think this calculation methodology for "market cap" is flawed. The whole notion of market capitalization comes from the equity markets. It's calculated based on the total number of shares issued by the corporate treasury -- not the public float of an equity. (Public float means the number of shares that are released into public markets). When a public company does a secondary offering and releases more shares, that clearly doesn't result in an increased market cap. The market already knew that those shares existed, even if they weren't publicly traded yet, and things are priced accordingly. The convention for BTC and cryptocurrency in general seems to be to calculate market cap based on the total number of BTC that have been mined so far (~13mm). That's like the float. I'd argue that we should be using 21mm to calculate BTC market cap, since that's effectively what the "bitcoin treasury" has authorized. (To follow the anology, I think of BTC as doing a small secondary offering every 10 minutes.... but the market already knows this information and prices things accordingly. It should not result in an increasing market cap every time a new block is mined). Accordingly, I'd argue that this is a more accurate representation of market cap (view by total supply): http://coinmarketcap.com/currencies/views/market-cap-by-total-supply/ http://coinmarketcap.com/currencies/views/market-cap-by-tota... You can find a lot of stocks in the market with a very low float. For example, Pandora and LinkedIn only IPO'ed ~9% of the total shares.[1] i.e. The float is ~9% but the market cap is calculated based on the full 100% shares that are authorized by the treasury, even if they are held by the company and not publicly traded. The market still knows that those shares exist and can be released to the market at a future date. [1] http://online.wsj.com/news/articles/SB10001424052702303936704576399821664370538 http://online.wsj.com/news/articles/SB1000142405270230393670... disclaimer: i work on the ripple project

goodside 12y ago
And what about altcoins that issue an unlimited number of coins at a fixed annual inflation rate? If we price them as you describe, their value is infinite. The correct strategy is somewhere in the middle. Shares with pre-programmed future distribution (as happens in traditional mining-based coins) should contribute less to the calculated market cap as they recede further into the future, using some discount function that produces a finite, reasonable present value for coins with unlimited exponential growth of the coin supply. For coins with a central authority issuing distribution, the function has to be weighted by the credibility of the authority's plans. If some coin authors convince you that some portion of their coin will never enter circulation (e.g., if they publicly destroy them by sending to a vanity address so improbable that they could not possibly have a corresponding private key), you should drop those coins from your calculation of the cap entirely. If they merely promise to only release the coins slowly over many years, as with Ripple, your estimate of the market cap varies substantially based on how much you trust Ripple.
- philrapo 12y ago
  >And what about altcoins that issue an unlimited number of coins at a fixed annual inflation rate? good point. A company also can always issue more shares to dilute existing holders. But no company (to my knowledge) has ever promised to do so at a fixed annual rate.
danielleheong 12y ago
Have you seen https://www.coingecko.com/en https://www.coingecko.com/en? Bitshares-X is ranking #12 there now. Imperfect at first sight, but a broad overview of the coins.
vbuterin 12y ago
> Accordingly, I'd argue that this is a more accurate representation of market cap (view by total supply): http://coinmarketcap.com/currencies/views/market-cap-by-total-supply/ http://coinmarketcap.com/currencies/views/market-cap-by-tota... That one is going to be fun if we (Ethereum) decide to premine 2^200 ether into a few standard-library contracts (eg. ecrecover, bloom filters, data structures) to compensate people a few microcents per call for the mismatch between their gas cost in a naive EVM implementation and their actual execution cost... Edit: although I suppose you could argue that currency units which are existent, but which cannot be accessed for 1000000000000000000000000000000 years because they are locked up in a contract that no one can open up at anything more than a trickle rate, actually inexistent. Will get complicated in any case.

goodside 12y ago

And what about altcoins that issue an unlimited number of coins at a fixed annual inflation rate? If we price them as you describe, their value is infinite. The correct strategy is somewhere in the middle. Shares with pre-programmed future distribution (as happens in traditional mining-based coins) should contribute less to the calculated market cap as they recede further into the future, using some discount function that produces a finite, reasonable present value for coins with unlimited exponential growth of the coin supply. For coins with a central authority issuing distribution, the function has to be weighted by the credibility of the authority's plans. If some coin authors convince you that some portion of their coin will never enter circulation (e.g., if they publicly destroy them by sending to a vanity address so improbable that they could not possibly have a corresponding private key), you should drop those coins from your calculation of the cap entirely. If they merely promise to only release the coins slowly over many years, as with Ripple, your estimate of the market cap varies substantially based on how much you trust Ripple.

philrapo 12y ago
>And what about altcoins that issue an unlimited number of coins at a fixed annual inflation rate? good point. A company also can always issue more shares to dilute existing holders. But no company (to my knowledge) has ever promised to do so at a fixed annual rate.

danielleheong 12y ago

Have you seen https://www.coingecko.com/en https://www.coingecko.com/en? Bitshares-X is ranking #12 there now. Imperfect at first sight, but a broad overview of the coins.

vbuterin 12y ago

> Accordingly, I'd argue that this is a more accurate representation of market cap (view by total supply): http://coinmarketcap.com/currencies/views/market-cap-by-total-supply/ http://coinmarketcap.com/currencies/views/market-cap-by-tota... That one is going to be fun if we (Ethereum) decide to premine 2^200 ether into a few standard-library contracts (eg. ecrecover, bloom filters, data structures) to compensate people a few microcents per call for the mismatch between their gas cost in a naive EVM implementation and their actual execution cost... Edit: although I suppose you could argue that currency units which are existent, but which cannot be accessed for 1000000000000000000000000000000 years because they are locked up in a contract that no one can open up at anything more than a trickle rate, actually inexistent. Will get complicated in any case.