I don't think using the free float method is a good way of calculating market cap, but I also acknowledge that it's very hard to get the methodology right because the cryptocurrency space isn't standardised and due to the differences between one coin and another
doctor-s, I read your steem article (which I hadn't seen before) and it was very interesting.
I'd say that free-float methodology has absolutely no place in a decentralised asset sector, principally because the off-book capital is not shared (with investors) in blockchain assets, while in equity markets it is.
Furthermore, in the latter (equity) case investor's capital is still backed by the shares they purchase. In other words, they still retain ownership of their invested capital via their received shareholding and this is reflected in the bottom half of the corporate balance sheet by virtue of all the corporate asset holdings being owed back to shareholders. Yet another distinction is that a corporation is a legal entity in its own right and it's that legal entity that receives and owns the capital invested, not the directors (they may of course do so in another capacity, as shareholders themselves). Even if a tranch of that legal entity's capitalisation is 'off-books' for market reporting, its assets are all under communal ownership as far as the wider shareholding community is concerned.
In cryptocurrency however the entire landscape is completely different. There is no equity issuer. The blockchain issues tokens and those tokens do not represent shares in the individuals/corporations who invoked their creation and who may be developing the associated market. ALL wallet holders are therefore independent and equal in status. There are large holders, small holders, some with a propensity to sell, others not.
The "free-float" method of calculating the total value held in a blockchain is therefore meaningless and arbitrary in this context.
For example, one of the largest and most active 'wallets' in the Veritasium meta coin chain is excluded from the reported marketcap. Its contents are ostensibly owned by a corporate entity (we do not know categorically) but investors in the token do not receive any share in that entity even though they are indirectly capitalising it to the tune of 100's of millions of dollars on paper by pricing the tiny quantity who's marketcap CMC erroneously promotes with a
factor of 50 distortion.
Meanwhile, back on the bitcoin chain, a wallet containing 1 million BTC that has not been touched for 8 years and who's contents are clearly not "circulating" in any meaningful sense is included in the supply that counts towards marketcap. This is clearly a reporting convention that is ripe for gaming by aggressive ICO issuers who 'release' tiny amounts ('release' is the wrong word by the way since the blockchain is the only source of the tokens', "Sell" is the correct word) to the market and then use that tiny quantity to price the rest of their holdings at astronomically overvalued levels. All courtesy of the compliance of a corrupted accounting convention deployed by the worlds most accessed reference site for cryptocurrency market capitalisations.
IMHO it's nothing short of an appalling reporting practice that does not protect investors interests and who's failure of consistency is paving the way for nefarious and predatory offerings which would be outlawed in any formally regulated environment.
