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Author Topic: Market Cap, newb question  (Read 1079 times)
Vishnu.Reang
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June 09, 2017, 09:27:56 AM
 #21

There is a major flaw in the current methodology for market capitalization calculation for the crypto-currencies. The issue is that the lost coins are not excluded while doing the calculation. As a result, the market cap is artificially inflated. According to some estimates, there are at least 1 million BTCs, which are "lost" for ever. By lost coins, I mean coins for which the private keys are not available with anyone.

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June 09, 2017, 10:03:18 AM
 #22

There is a major flaw in the current methodology for market capitalization calculation for the crypto-currencies. The issue is that the lost coins are not excluded while doing the calculation. As a result, the market cap is artificially inflated. According to some estimates, there are at least 1 million BTCs, which are "lost" for ever. By lost coins, I mean coins for which the private keys are not available with anyone

This is certainly not a major flaw

A genuine major flaw of market cap is that it tricks users into thinking that all coins are traded or circulated (i.e. used for real trade as in buying things with Bitcoin) while the price of Bitcoin (or any other cryprocurrency) is in fact determined only by the actual supply of coins to the market. It means that coins that are stashed away are as inconsequential as coins lost for good (i.e. all stashed coins should be excluded from consideration). Strictly speaking, this is not quite so but if they make a successful "comeback" that would evidently drive the price (and thus market cap) down

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June 09, 2017, 06:48:51 PM
 #23

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?
It does matter because there is no way to measure how many people are in any coin, you cannot use the number of wallets or anything for that matter to determine that number, so the best we have is the market cap, a coin with an higher market cap will have more people using the coin than one with a lower market cap, so the market cap is an indirect way to see the adoption of a coin.



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June 09, 2017, 07:13:10 PM
 #24

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?
It does matter because there is no way to measure how many people are in any coin, you cannot use the number of wallets or anything for that matter to determine that umber, so the best we have is the market cap, a coin with an higher market cap will have more people using the coin than one with a lower market cap, so the market cap is an indirect way to see the adoption of a coin

As to me, that's sheer nonsense

Just because we don't have a reliable metric (apart from price itself), market cap doesn't become any better in and of itself. As told many times already, it is not just unreliable, it is outright deceiving and tricking people into making false conclusions like Bitcoin losing competition to altcoins since its market share is purportedly diminishing. It can in fact be expanding in terms of how much money actually gets poured into it (the real metric), but just because some tiny share of some altcoin rises a few times in value (which doesn't require huge amount of fiat), it looks as if Bitcoin market share were shrinking. I repeat it again, market cap is not just unreliable, it is openly deceptive and misleading

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June 10, 2017, 12:46:50 PM
 #25

To find the value and progress of a coin,people use the website coinmarketcap.A crypto coin's market is calculated by multiplying the total number of coins available with the current market price of that coin.Well this method mostly misleads us instead of giving us the correct detail.The problem arises when most of coins mentioned are not at all available for trade.It occurs mainly in premined coins.We could take the example of Aurora coin.It was said that its market cap was over $1 billion.But the actual number of coins available was counted and it was found that its marketcap was found to be only $10 million.Other examples are Ripple and Steem.So its not an efficient way to find the progress of a coin.
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June 10, 2017, 01:30:46 PM
 #26

To find the value and progress of a coin,people use the website coinmarketcap.A crypto coin's market is calculated by multiplying the total number of coins available with the current market price of that coin.Well this method mostly misleads us instead of giving us the correct detail.The problem arises when most of coins mentioned are not at all available for trade.It occurs mainly in premined coins.We could take the example of Aurora coin.It was said that its market cap was over $1 billion.But the actual number of coins available was counted and it was found that its marketcap was found to be only $10 million.Other examples are Ripple and Steem.So its not an efficient way to find the progress of a coin

That's why all claims that Bitcoin market share is declining are either misconceptions and delusions at best or outright lies (fear, uncertainty, doubt) at worst. If Bitcoin rose 50%, say, from 2,000 dollars to 3,000 dollars per coin and the amount of coins traded is 1 million, this growth would require (3000-2000)x1000000 = 1 billion dollars invested in it. On the other hand, if some other coin rose 500%, say, from 1 dollar to 6 dollars, with the same amount of coins traded (i.e. 1 million coins), this growth could be achieved with just (6-1)x1000000 = 5 million dollars, which is 200 times less for 500% increase than for 50% growth in Bitcoin

This simple example shows that it is the amount of fiat invested in a certain coin which is what actually counts

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June 10, 2017, 05:46:04 PM
 #27

Well I guess it matter to a lot of investors and traders alike as they know where the money goes. In the world of the stock market the price where the biggest volume and market cap is where the action goes, what I mean about that is the bigger the volume the bigger the chance you can have a play for you to profit on it. Market Cap is simply saying to us that here is what other people buy and sell and others must come along with it. It shows to us that the larger the market cap is the larger the market share of that cryptocurrency is in terms of investment.

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June 11, 2017, 04:55:28 AM
 #28

There is a major flaw in the current methodology for market capitalization calculation for the crypto-currencies. The issue is that the lost coins are not excluded while doing the calculation. As a result, the market cap is artificially inflated. According to some estimates, there are at least 1 million BTCs, which are "lost" for ever. By lost coins, I mean coins for which the private keys are not available with anyone.
How on earth would you calculate the lost coins and do you think you will take the market cap with all the available coins ,if that is the case it really not possible to calculate things like that,it is known that bitcoin has a limited amount of coins and if you think that one million coins are lost,does it mean that the market cap now is low or high,just want to hear what your thoughts are on that. Tongue

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June 11, 2017, 05:14:28 AM
 #29

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?
Marketcap i think for me i not that important when it comes to development of each coin and not important for rising of each coin,coinmarketcap is just for monitoring the stats and ranks of each cryptocurrency out now.

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June 11, 2017, 05:59:56 AM
 #30

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?

Market capitalization is a better comparison than price alone because some altcoins can issue more tokens than others. For example, dogecoins/bytecoin versus Byteball. Byteball is worth $600 a pop right now whilst dogecoins/bytecoins are a few cents each. Now you can't just say that byteball has achieved higher height sthan dogecoins or bytecoins simply because it's worth more. Thta doesn't work.

Market cap basically represents all the liquidity available in a market. However it's not always accurate. Coins can get pumped quickly and market cap fluctuates quickly and trades are magnified infinitely by pumps/dumps. Therefore, i believe that community and the technology that backs up the coin itself is most important.



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deisik
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June 11, 2017, 08:22:42 AM
 #31

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?

Market capitalization is a better comparison than price alone because some altcoins can issue more tokens than others. For example, dogecoins/bytecoin versus Byteball. Byteball is worth $600 a pop right now whilst dogecoins/bytecoins are a few cents each. Now you can't just say that byteball has achieved higher height sthan dogecoins or bytecoins simply because it's worth more. Thta doesn't work

What you say won't work either

For the reasons said and repeated numerous times already. You don't know how many dogecoins, bytecoins, byteballs, or whatever are actually circulating (traded). In this way, a coin which may have higher price with greater supply simply because more coins can be stashed and thus the effective number of coins in circulation is less in comparison with some other coin which might have have lower price with lower supply but higher circulation numbers. Or just because one coin can be a real deal while the other real trash

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