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Author Topic: Cheap and Expensive cryptocurrencies  (Read 87 times)
mightwalker
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August 23, 2018, 04:50:13 PM
Merited by OgNasty (1), BitMaxz (1), hase0278 (1), mjglqw (1)
 #1

As I can see most people can not distinguish which is a cheap or expensive crypto. So, let me explain that:

People always see the price to decide the value of a crypto. For example, cryptocurrencies above 1$ are expensive, below 1$ are cheap.

This understanding is so wrong, when you want to know which is cheap or expensive crypto, simply look at their market cap, the market cap of a crypto is decided by crypto price multiple its circulation supply. The higher supply, the lower price per coin/token, so the price doesn’t matter now, we have to consider the market cap. Tron has 1.3 billions of market cap with its price is 0.02$, it’s expensive for me. Aragon has 28 millions of the total cap with its price is 1$, so Aragon is 46 times cheaper than Tron, Aragon is much more cheaper than Tron.

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August 23, 2018, 07:43:22 PM
 #2

As I can see most people can not distinguish which is a cheap or expensive crypto. So, let me explain that:

People always see the price to decide the value of a crypto. For example, cryptocurrencies above 1$ are expensive, below 1$ are cheap.

This understanding is so wrong, when you want to know which is cheap or expensive crypto, simply look at their market cap, the market cap of a crypto is decided by crypto price multiple its circulation supply. The higher supply, the lower price per coin/token, so the price doesn’t matter now, we have to consider the market cap. Tron has 1.3 billions of market cap with its price is 0.02$, it’s expensive for me. Aragon has 28 millions of the total cap with its price is 1$, so Aragon is 46 times cheaper than Tron, Aragon is much more cheaper than Tron.

This is a good point that too many newbie investors don't understand.  Another thing to consider is total supply vs circulation supply.  I would argue that Market Cap should include all coins that will ever exist, and not just what currently exists.  This is because investments are made based on future estimates.  For example, Ravencoin has a current market cap of $28 million due to only 8% of the coins being mined, but it would be painful to invest based on that number.  In reality, the expectation is that the market cap will be over $220 million as coins continue to be mined.  It is important to view things in this light to get a more accurate expectation of the future valuation of a coin.  Also important to note that pre-mined currencies like Ripple can't be considered accurately valued in this way, as their market is manipulated by the issuers determining the supply of the coin making any market valuation nothing more than a measure of the success of their manipulation.  Interestingly, sites like coinmarketcap get this point exactly wrong, which leads to an overvaluation of centralized currencies like Ripple and an undervaluation of decentralized currencies like Ravencoin.

My example of a cheap cryptocurrency would be Namecoin, with a total valuation of all coins at less than 15 million.  
I would also use your example of TRON as an expensive cryptocurrency, with a total valuation of over a billion dollars.

TRON's price per coin of $0.02 makes it ~65 times more expensive than Namecoin at $0.70 per coin.

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August 23, 2018, 08:24:04 PM
 #3

Just to add to what previous poster said, usually(hopefully) XRP for example has set up any pre-mined coins to be released according to schedule. this link for example, mentions that 1 billion XRP will be released each month. so it's very important to know the plan for any investment, as in, who holds large funds? hopefully they're in escrow(as in, it's impossible for the "founders" to withdraw it)!

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August 23, 2018, 09:20:03 PM
 #4

People always see the price to decide the value of a crypto. For example, cryptocurrencies above 1$ are expensive, below 1$ are cheap.

This understanding is so wrong, when you want to know which is cheap or expensive crypto, simply look at their market cap, t
Im not sure if market cap is related to coin issuance amount.
For example 21 000 000 bitcoins is final amount that will ever exist compared to altcoins with 210 000 000 000 coins that will ever exist. Price will be always lower because of that and you should be aware of that. More on this even, if creators of altocoins not saying its all coins that will ever exist, they can "print" anytime more coins like goverments do making inflation and in simple terms making your coins less valuable on a whim.

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August 23, 2018, 10:34:37 PM
 #5

This is a good point that too many newbie investors don't understand.  Another thing to consider is total supply vs circulation supply.  I would argue that Market Cap should include all coins that will ever exist, and not just what currently exists.  
Another thing to consider is its past price movements. You cannot say that a coin is cheap when it is sitting on a cheaper price yesterday than what it is priced today. Luckily, coinmarketcap also shows a chart to know just that.
Im not sure if market cap is related to coin issuance amount.
Market cap and coin issuance amount is closely related to each other since a coin's market cap is determined by multiplying current price to the current circulating supply a coin has got.

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August 23, 2018, 11:15:00 PM
 #6

I think your points are very valid, I never really viewed it from this angle, now this will go a long way in helping me make better decisions.
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August 24, 2018, 03:09:34 AM
 #7

Unit bias needs to be addressed as well. Multiple times I've read that people buy a cheap coin like XRP instead of BTC because XRP is like less than half a dollar and BTC is a couple of thousand. They think that cheap coins like XRP could double easier because of the cheap price, even knowing that they could buy fractions of a bitcoin. A slightly common misunderstanding with people new in the space.

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August 24, 2018, 03:37:48 AM
 #8

This understanding is so wrong, when you want to know which is cheap or expensive crypto, simply look at their market cap, the market cap of a crypto is decided by crypto price multiple its circulation supply. The higher supply, the lower price per coin/token,

i disagree.
first of all let us clarify why we even talk about "cheap and expensive". these attributes are meant to be used when trading/investing in some altcoin. and we do that when we see a rise coming. being cheap or expensive, market cap, circulating supply, being scam or not, even having a blockchain and producing blocks,... none of it has anything to do with the price. for instance XRP is one of the worst coins in existence. it is 100% premined, it has a fake market cap and it is always going to be expensive. but last year it had about 10000% rise and the profit was insane.
as you can see market cap doesn't even come to play. XRP ($12 billion) with 100 billion premined coin and 40 billion circulating or ETH ($28 billion) with 101 million circulating, no cap and 72 million premine are expensive with your definition but they got big pumps and had good returns as short term investments.

now lets look at the other side of this. a coin with low supply, low price and low market cap. ByteBall for instance. it has 662k coins in circulation with $52 million market cap and price of $78. it is one of the good coins with an interesting technology and a decent team. now based on your definition this coin is super cheap. but is it really?

you mentioned TRON as expensive, i call it a shitcoin. but it had 8000% pump last year.
so yeah, you can use your definition and call them cheap/expensive for philosophical reasons but not for investment reasons. that doesn't show you anything.

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August 24, 2018, 04:17:30 AM
 #9

This understanding is so wrong, when you want to know which is cheap or expensive crypto, simply look at their market cap, the market cap of a crypto is decided by crypto price multiple its circulation supply. The higher supply, the lower price per coin/token,

i disagree.
first of all let us clarify why we even talk about "cheap and expensive". these attributes are meant to be used when trading/investing in some altcoin. and we do that when we see a rise coming. being cheap or expensive, market cap, circulating supply, being scam or not, even having a blockchain and producing blocks,... none of it has anything to do with the price. for instance XRP is one of the worst coins in existence. it is 100% premined, it has a fake market cap and it is always going to be expensive. but last year it had about 10000% rise and the profit was insane.
as you can see market cap doesn't even come to play. XRP ($12 billion) with 100 billion premined coin and 40 billion circulating or ETH ($28 billion) with 101 million circulating, no cap and 72 million premine are expensive with your definition but they got big pumps and had good returns as short term investments.

now lets look at the other side of this. a coin with low supply, low price and low market cap. ByteBall for instance. it has 662k coins in circulation with $52 million market cap and price of $78. it is one of the good coins with an interesting technology and a decent team. now based on your definition this coin is super cheap. but is it really?

you mentioned TRON as expensive, i call it a shitcoin. but it had 8000% pump last year.
so yeah, you can use your definition and call them cheap/expensive for philosophical reasons but not for investment reasons. that doesn't show you anything.

Hi, I do not mention some other elements like their technology, or their team, have they pre-mined? etc, to review their project. About this, we should spend time to learn and investigate deeply. I think it's useful in some situation such as I want to find a potential project below 10 million market cap. The possibility to increase our asset with a low market cap crypto is absolutely higher than a crypto with very high market cap. After finding an ideal project, I will review this based on your opinion above and decide should I invest or not. Thanks

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August 24, 2018, 07:56:55 AM
 #10

You made a valid assumption. Many people failed to knowthis especially the newbies.
Total supply and circulating supply is very important when determining either the price of a coin is expensive or not.

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