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Author Topic: How do you calculate the "real" worth of a cryptocoin  (Read 2116 times)
Chellger
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February 02, 2014, 01:19:20 AM
 #1

My first post - I registered here just for this question, so I'd love a good answer.

How do you guys calculate the "real" objective Worth of a cryptocoin?

For Example Dogecoin is worth 175 satoshi at the moment. Now what do you do? Do you compare it to the hashrate? To the difficulty? To the block-reward? Is there a way to say: "175 satoshi is too high/ too low/ the perfect worth for the coin at this point"?

I'm asking because some user over at the USDE-Forum had the following to say:
"How many times did i said : 1000kh/s = $8, do the calculation, and then you would know that 500 was a crazy number. Just do it and you will find the right value, miners are mining it,and dumping all the coins, as long as you can earn more then $8 per 1000kh/s this coin will move lower. I've been mining and press the sell button, nice coin to mine, earn big money by just dumping it Cheesy"

I have no idea what he is talking about. What are your methods to see, what a coin is worth?

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bitcerto
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February 02, 2014, 06:52:10 AM
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I put more importance into how the coin is being used. If people are just mining and collecting, there's no real commerce holding it up. BTC is obviously the best example. It's being used. People are accepting it for goods and service.

That's what I look at when considering a coin. If you're evaluating one earlier before actual use would be realistic, I would imagine seeing if it brings anything new to the table that might attract future commerce (faster transactions or something).

I know this isn't the technical answer you were hoping for. My apologies. It is, however, how I evaluate the real worth of a currency.
hilariousandco
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February 02, 2014, 11:46:51 AM
 #3

I have no idea what he is talking about. What are your methods to see, what a coin is worth?

You're not the only one. A coin is worth what people are paying for it. Just check the exchanges etc. http://coinmarketcap.com/mineable.html

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February 03, 2014, 06:59:57 AM
 #4

I agree.  The value is in the eyes of the beholder.

What would convince you to go buy Rubbles from Russia, compared to Euros in Europe, or Canadian Dollars?  Like any currency, you have to look at the added-value of each currency - the culture, the economics, etc.  

In the crypto world, if you like dogs, Dogecoin maybe good for you - a lot of people are trading it for that reason.  Same goes with Cats, Firefly, etc... If you are a libertarian, go with RonPaulCoin.  A porn addict?  Go with Sexcoin - lots of Porn sites accepts SXC now.  You feel that there is a "miner" in you? Go with Diamonds or Emeralds.

If you are an economically inclined guy and want a currency which is backed with BTC, LTC go with Globe.  With Globe, a 10% reserve is built with each coin to support the currency in the future, a bit like Fort Knox used to do for the US dollars. But instead of gold and silver, Globe is using BTC and LTC.  Even if the Globe currency crashes on the market, it will always have a minimum value based on BTC and LTC it holds in its reserve.  If all crypto currencies crashes, included BTC and LTC, well... there will always be good whiskey around to forget about the whole experience.

Have a look at it - www.globecrypto.com or https://bitcointalk.org/index.php?topic=360255.0

And don't forget that a good whiskey bottle should always be purchased with any mining rig!

Globe looks interesting! I like that it's backed by BTC, LTC and Fiat. That's definitely unique. What makes it a 'citizen of the world' crypto? Couldn't they all claim that?
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February 03, 2014, 04:20:31 PM
 #5

The real value of anything is always what people are willing to pay for it at that moment.
Thus if you see DOGEs are worth 175 satoshi then that is it's REAL value.
There is no such thing as an unreal value.

There is future value and that is something that economists and MBAs have been struggling with for centuries.
You can probably use an NPV calculation to give something reasonably close though, but NPV requires some amount of stability.  It can't be fluctuating 20% per day.

Donate @ 1LE4D5ERPZ4tumNoYe5GMeB5p9CZ1xKb4V
Chellger
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February 04, 2014, 09:00:01 AM
 #6

The real value of anything is always what people are willing to pay for it at that moment.
Thus if you see DOGEs are worth 175 satoshi then that is it's REAL value.
There is no such thing as an unreal value.

I totally disagree on that. Example: If I have information that for some reason a coin will devalue, but the coin is still traded for ,say, 150, than I would not say, that the real value of the coin is 150, but lower. The value of that coin only is at 150, because the people trading it, don't know that information yet.

But if you don't want to agree on that, maybe lets not call it "Real value" but "reasonable value". If i look in ALL the Details of a coin and compare it to other coins, am i able to see through the hype of a coin and see its "reasonable" value? With Doge that is hard, because the hype is pretty much the only thing that carries the Coin.... well maybe i have my answer there.
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February 05, 2014, 06:43:18 AM
Last edit: February 05, 2014, 06:58:38 AM by drakoin
 #7

Oh yes.  I do calculate a "mining price". Two ways:


1) "empirical" mining price =  I need to participate in the mining

measure 3 to 6 or 12 ( or 7 or 23, it doesn't matter) hours of mining, and then extrapolate it. Easy.

Above 10 euros per day per megahash-per-second is worth considering to switch a mining rig to it.

So you can now calculate a mining-minimum-price out of those 10 euros.

And of course, note down the difficulty during your mining experiment, then later you can scale your results with that.



2) "theoretical" mining price = I need a block explorer, or someone needs to tell me the current diff.

Code:
coinsPerDayPerMHs = (average)blockreward / (scrypt-factor * difficulty * 2^32 / 10^6 / 60*60*24)

p_threshold  = 10 euro / EuroPerBTC / coinsPerDayPerMHs

scrypt-factor is e.g. 1.25 for UTC if you tune your GPUs perfectly, or
scrypt-factor is e.g. 2.0 for VTC approx, with its "Adaptive N-factor Scrypt"
scrypt-factor is 1.0 of course for a pure scrypt coin, like the beautiful DGB Digibyte.

blockreward average = 500000 for example for dogecoin which has a random reward between 0 and 1 mio


Example:
Let's say we look at my good UTC moment in that posting:

Code:
coinsPerDayPerMHs = 50 / (1.25 * 5.55 * 2^32 / 10^6 / 60*60*24) = 144.984 ~ 3 blocks per day

p_threshold  = 10 euro / 617 euro / 144.984 = 0.00011178 BTC = 11178 Satoshi
As the best BUY price advertised in that moment for 1 UTC was 0.0093 LTC = 0.00024645 BTC = 24645 Satoshi,
I suggested that coin to my friends there, because 24645/11178  *10 euro = 22 euro is pretty good for scrypt-1MH/s hardware.


That moment, however, was over much quicker than expected - within a few blocks, the difficulty retargeting had adjusted the difficulty back to 9.533, which means 9.533/5.55 = 1.7 times less profit, or only 13 euros per day per MH/s. Boring if there are better coins, or quite charming if there is nothing else around which can give us more.


How do you like that?  I guess that's a full answer, isn't it?



IMPORTANT:
If you understood these facts through me now, please consider paying me, in these currencies:
(DGB DOGE EAC LTC NOBL PRT QRK SOC VTC 42 BTC) or let your rig run a bit for me. Thanks!

Or - even better - give me a little bit of coindust now, but also put a bookmark on this posting #9,
and come back later, when you have made some real money using that formula. Thank you very much.


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drakoin
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April 06, 2014, 11:36:21 PM
Last edit: April 08, 2014, 12:37:39 PM by drakoin
 #8

I wrote a another looooong explanation how to calculate a base price for a coin.

Have a look here: LOVEcoin posting #348 mining price

And this time, I came up with a really cool and short rule-of-thumb
to know if a (scrypt) coin costs you money or brings you money:

difficulty / blockreward / 2012 = coin price



Before asking, please read that posting #348 first. Thx ;-)

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TwinWinNerD
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April 07, 2014, 12:12:15 AM
 #9

There are several factors:

  • Network Effekt
  • Efficency
  • Technological Advancements
  • Saving Potential
  • Image

tskweres
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April 07, 2014, 07:03:23 AM
 #10

There are several factors:

  • Network Effekt
  • Efficency
  • Technological Advancements
  • Saving Potential
  • Image

The dev team behind it that's hopefully dedicated and working full-time on making those advancements is key as well.

Travis Skweres
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https://www.coinmkt.com/
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