The question "reserved is by whom" ? Not by the blockchain which is what matters in a decentralised market.

Somebody filled a wallet with 100 million new tokens on a blockchain. Then they published a plan for creating an 'ecosystem' which would support the value of those coins. Then they started selling parts of their wallet - some to participants in the early investor sale, some to banks, some to sovereigns.

The full 'supply' of that wallet is 100 million tokens and there is no categorical "in circulation" not "in circulation" supply boundary. Tokens continue to be traded and they continue to be supplied from that same 100 Million bag.

Not only that, the "unreported" part of the supply is being valued and priced (albeit at a hefty discount I would imagine) based on what you call the 'circulating' supply so it's only right that it be included in the marketcap.

Reggie Middleton is not an equity issuer. He created a bunch of tokens on a blockchain and published some plans as to how he intended to support their value. But we're not purchasing equity in that new ecosystem. We're purchasing a holding of currently industrially worthless tokens and hoping that they play a significant enough role in that new market to gain a viable and sustainable real value. As such RM is simply a 'member of the public' holding a bigger bag than everyone else but promising a bigger input to that 'ecosystem' than everyone else.

Decentralised marketcap reporting should reflect that fact in order that investors can make appropriate comparisons between one asset and another.

Indeed. And in VERI, the "circulating supply" by the best accounts that can be gleaned from this thread is the 98 Million, not the 2 Million. You're still making the false allusion to "circulating" and "non circulating" of exchange traded and OTC supplies respectively.

Would that all the premined wallet holders of the last few years could have gotten away with "hey my coins are not circulating so shouldn't be counted towards marketcap".

Whatever the letter of CMC reporting policy, it's being gamed to the extreme here.

With the recent rise, I'm into this asset well into 5 figures now. I have no conflict of interest in making my case, in fact I'd be more conflicted by not making it. But I invested based on fundamentals, not some stock market 'trick' that came and infected the decentralised world of freely traded digital assets.

Here's the deal why the blockchain-supply is under-reported and why Veritasium's short term viability at least depends on it:

1. Traders make valuations based on marketcap, not coin-exchange rate

2. As such VERI's low marketcap looks extremely good value for new buyers because it's still below such benign offerings as Bytecoin etc al, even with the recent doubling of the last 24 hours

3. However, the small "reported supply" is not the real supply since new OTC trades are supplied from Reggie's 'wallet', not from the coinmarketcap.com reported quantity

4. If the full (blockchain issued) supply were to be correctly reported, what would happen ? You'd see a ranking like the one I posted earlier and an associated market correction since it would be unlikely to give a single token offering a higher valuation than the entire Ethereum blockchain coin supply

What Reggie is doing is making tactical use of marketcap reporting in order to price the non-ICO token supply based on the tiny ICO portion. Ok, it's one marketing strategy (and is working so far) but it should be transparent and not hidden behind some "we don't understand institutional markets" nonsense.

Just for clarification, an appropriate description of "circulating bs" would be something along the lines of:

 • exchange traded token supply counts towards advertised marketcap
 • OTC traded supply doesn't

That's what you appear to be promoting, not me.

Be advised that all of these digital assets are traded OTC for large amounts. That doesn't mean they get away with underreporting the blockchain-issued supply.

What's that got to do with anything ? All I'm saying is report the full marketcap according to convention in these markets or don't report it at all. Reggie can still do all the OTC selling he wants from his own wallet of 98 Million tokens.

This isn't an "institutional market". It's an unregulated, decentralised one.

As such it is 'policed' by holders, buyers, and anyone else with an interest in seeing open and free markets work efficiently. In an "institutionalised market" you might get away with the strategy of justifying a high unit price to the market based on low supply volume because you have a whole pile of regulations governing the release of that supply.

But in decentralised markets we only have marketcap to go by in doing comparative valuations. That's why it's important that all valuations are treated & reported consistently, using the blockchain-isssued supply as its basis. Satoshi has 1 Million Bitcoin in a wallet that "are not circulating" and apparently are even less likely to than the 98 Million under-reported VERI. They still get included in the marketcap valuation.

Although I don't make any judgment over the ICO policy in general, ngin-x is at least correct in one principle.

These are not stocks - where some trusted entity "issues" the new stock. They are decentralised assets and the issuer is the blockchain. In that respect, Reggie Middleton is no different in status from any other wallet holder - he just happens to hold the largest wallet. Further, the conventional definition of "circulating supply" for decentralised assets is what the blockchain has issued, not what the largest holder manages to sell out of their particular wallet.

Even if we were to stretch the definition of "marketcap" just to suit this one asset and redefine "circulating supply" as that which is being made available to markets, the ~1.9 Million ICO tokens are probably less qualified than the 98 Million in RM's wallet since that's the part of the supply being actively marketed to OTC customers such as banks and sovereigns while the proportion of traded volume involving the minority reported supply is miniscule.

The correctly calculated marketcap for Veritasium is therefore currently as shown below:




based on...

Hi

I'm questioning the reporting policy of coin supply for some of the new token ICOs who's supply appears to be grossly underreported. Surely the "circulating supply" is that which is in the hands of any potential trader.

For example, my bitcoin is in my wallet and will be staying there. It is not "circulating" in the sense that I will not be making it available for sale, and yet it still reported as part of the bitcoin coin supply.

Meanwhile, here is an example of an asset where the tokens are in existence and are being made available for sale but are not reported as part of the circulating coin supply. I would argue that the block-explorer quantity should be faithfully represented unless there are some kind of exceptional situations (e.g. liquidity is blockchain restricted). Put another way, if any potential trader has access to the full supply - for the purpose of OTC trades of otherwise - then the full supply should be reported.

In summary:

How come Etherscan says this...



And coinmarket.com says this...



When we know that the full supply is accessible, liquid and for sale...



My point is this isn't the stock market. In decentralised cryptocurrency, the "circulating supply" is what the blockchain issues, not what portion the "biggest holder" decides to sell of their holding.

coinmarketcap.com is a comparison site so it's important that all assets are reported consistently in that respect.

Off chain scaling is where the transactions are handled by a proxy network and then aggregated into a single 'dump' into the blockchain. If you've ever used an exchange like Poloniex or Coinbase - that's an example of the approach that off-chain scaling would take.

When you're on the exchange you can trade away all day without making any blockchain transactions. Thousands of trades can occur until you end up with a final aggregate balance. Then at some point you notionally withdraw that balance into the blockchain. So the exchange has helped the bitcoin economy scale because it kept all that traffic off the blockchain and only aggregated it into one withdrawal.

Another example is the Lightning network in bitcoin. This plans to work like the exchange - where 'accounts' are kept of aggregate transaction balances between transacting parties and dumped into the blockchain at discrete intervals like the exchange deposit/withdrawal system. The only difference between the Lightning Network and the exchange is that Lightning will be decentralised and notionally trustless.

On-chain scaling on the other hand is about increasing the capacity of the core blockchain protocol and infrastructure so that the traffic doesn't have to be buffered by a secondary network. All interactions are made directly with the blockchain and cleared in realtime.


2 reasons:

1. It's what users want and expect. Cryptocurrency is based on a cash monetary archetype. Cash is a realtime settlement medium
2. Whatever approach you take, you need on-chain scaling anyway because the more off-chain networks you have generating economic activity, the more demand there will be at the clearing layer

Consider the lightning network for example. It doesn't actually scale the bitcoin at all. It just generates even more traffic for it to process by capturing new markets such as movie watching charged by the second and so on. So you still need to somehow scale the core capacity of the blockchain to process throughput.

It's more a question of finding an adequate approach to estimating current valuations.


True, but that's always been the case because even regular cryptocurrency monetary assets are traded OTC for large quantities. The difference is that the reported marketcap includes that supply. In Veritasium it doesn't so if you use marketcap as a reference to valuation you'll effectively undervalue the current trading price by probably an order of magnitude because - unlike the classic  cryptos - new sales come out of new supply, not existing.

I'm not saying there's anything wrong with it (and you have been totally transparent about how the offering works with your many Youtube explanations & AMA's etc) but we're now in an era of offerings that are more complex than the traditional monetary assets that have been traded on blockchains in the early years. This sounds more like a share offering where more shares are issued in response to demand (up to a cap of 50 times the current circulation).

Who doesn't care about "centralization again" ?



Just as well iCEBREAKER's well hedged in Dash

LoL.

4 signatures  

Very informative explanation.

Thanks for taking the time to elucidate. Much appreciated.

There is no difference between a "full" and "circulating" supply.

If there is a potential seller of 98 million coins over the net 18 months or so, then that represents part of the 'circulating supply' at least for the purposes of marketcap calculation.


No. I hold some Veritasium and I am sitting here with dry powder on Ether Delta ready to fire some more into it, but I do my due diligence and I don't like buying grossly overvalued stuff however high it's expected to go. As such, it doesn't really matter whether coinmarketcap calculates the marketcap based on a supply of 100 million or 2 million since investors are free to value it as they see fit and if there are 98 million "new tokens" available for new institutional investors then that makes the supply 100 million from my point of view, not 2.

The reason this is important is because if I calculate it to be overvalued according to comparable assets then so too will some interesting contenders who like the idea making a few bucks out of this market, for example the Goldman Sachs, JP Morgan & Barcleys and they won't have 2 "analysts" programming their automated investment vehicles, they'll have 300.

For the monetary stocks, the circulating supply IS the full supply (minus future mining supply which is a known and slow annual emission rate). So that convention is reasonable. It also means that future investors - be they institutional or retail - require to acquire their holdings from the same supply that's reported in the marketcap calculation.

The speculative aspect of the valuation is based on future investment in that common asset - i.e. they require to purchase from the current holders.

With Veritasium, that's not the case. 98% of the potential supply is reserved for institutional investors. Therefore, what I'm saying is that for that fact to reflect adequately on the valuation of the current "circulating supply" it should be reported as such.


As I'm aware, all the assets have their full supply reported as "circulating supply", save for perhaps Ripple. I may be wrong on that - feel free to correct.

All the same I think it's reasonable to call the valuation into question when it's so many times over what I'd call "book value" when compared to similar assets that are years further down the line and actually have demonstrated commercial and technical viability under their belt.

No. But he can't prevent the market from acting in an "irresponsible manner".

Lets think about this for a moment. That effective supply puts Veritasium's "real" marketcap at around 3.7 Million BTC. (Ripple is 4.1 Million). i.e. nearly a quarter of bitcoin's entire coin supply. So it would be the third or fourth largest asset in ranking on coinmarketcap.com.

Not saying that's necessarily unreasonable in terms of future potential (i.e. speculative) but for such a large valuation to have some genuine basis it must make the monetary cryptos massively undervalued (since they are going to form much of the lower capitalisation tiers of the coming synthetic 'vehicles' that will be traded on the VERI platform) - which in turn makes the current VERI/Ether or BTC price massively overvalued does it not ?

What should happen now is that VERI moves up a few notches in marketcap ranking - but with the full coin supply reported. So lets say it went to where Bitshares is (an equivalent type of asset but a mature platform so being kind to Veritasium by letting it get that far in only 30 days after launch instead of taking 3 years and needing to actually deliver some functioning software that's hosting trades like Bitshares has done).

That would put the VERI marketcap at around quarter of a million BTC. Coin exchange rate with Ether would therefore be around 0.02. i.e. 50 Veri per Ether.

Current price: 0.32.

16 times overvalued ?

Ah. So Reggie is using the trick of driving the price up on a tiny supply while holding the reported marketcap down (which I think he admitted was the strategy).

Then selling the corporate.sovereign cut at hugely inflated value prior to the entire supply being introduced into the marketcap reporting ? (At which point the per-coin price will tank as the market corrects).

Can anybody fill me in on the coin supply story with Veritasium ?

I've heard 100 Million and I've heard 2 Million (on coinmarketcap.com).

GMaxwell is only "beside himself" because the market doesn't value his toxic encrypted obuscation approach as much as it does Dash's transparent anonymity approach.

There are good monetary reasons why it shouldn't but no doubt they'll continue to pass him by.

Volume off the charts.