Original Topic: Bitcoin vs. Altcoins – projected MarketcapAuthor:1miau
From the point wey I dey reason this matter, e go dey necessary make we understand how to review market capitalisations of cryptocurrencies. Because current market capitalisations go only fit reflect partially if cryptocurrency dey suitable as good store of value for long term.
Current market capitalisations go dey very misleading, particularly for Shitcoins - caution!
Current market capitalization vs. projected market capitalization When market capitalisations dey consider, then between current market capitalisation and projected market capitalisation go come separate.
Current market capitalisation E only dey among the coin wey never entered the circulating supply. Potential inflation by additionally issued coins is not taken into consideration here.
Things wey dey very serious to know:
- Circulating supply:
Current circulating supply (also dey among coin wey dey no fit reach, some of them dey from private keys wey don lost, etc.). - Total supply:
Na the number of coin wey dey currently in existing, coin developers don blocked coin wey dey among the current existing ones (e.g. at XRP) or coin wey dey never mined yet. Coin wey dey don durn no dey part of it, at such the coin no dey for exist (anymore). - Max(imum) supply:
Na the limit (coded) of maximum number of coins wey go ever exist. For some coins, total supply and maximum supply dey the same. - Infinite supply:
Na some coins wey no get caped supply at all and dey go dey issued plenty coins constantly.
For such coins, we go need to dey look up properly make we know how many of them go dey for circulation for some point of time because such coins too dey at risk for MASSIVE INFLATION.
Make we keep am for our minds say when circulating market capitalisation is given because e go dey misleading, as e go only dey represent a temporary state of coins wey dey for circulation and possibly plenty of new coin go later come to existence too.
E do dey more reliable to dey consider an
adjusted market capitalisation, where we go dey always choose time in the future and look Watin go explain circulating supply and resulting market capitalisation go look like.
= >
Adjusted market capitalization = choosing time for future (for example 2050) and
make we comparing how the projected circulating supply and the resulting market capitalisation go look like between two or more coins.
Example Bitcoin: For example, e dey known say Bitcoin go have approximately 20,980,000 Bitcoin go dey circulation in 2050, wey at current prices of $20,000 go result in an adjusted market capitalisation of
approximately $420,000,000,000. Wey we dey compared to current situation of a market capitalisation of
approx. 382,800,000,000 USD (at 19,140,000 BTC), e will only be a difference of
just under 10 percent.
The way wey the number dey dey close to 0, no so e go dey store value. Practically, all other bitcoin competitors get higher significant numbers here.
Example Polkadot: Na Polkadot be the highly inflationary altcoin wey nPoS considered (which is practically dPoS). According to current sources, Polkadot's inflation dey amounts to about 10% annually, wey dey depends on how much Polkadot is staked. But normally e dey around 10% annually.
In addition, excess Polkadot from inflation go circulate back to Polkadot founders even with different amount of staked Polkadot, as well as confiscated Polkadot, wey can be used or burned by Polkadot developers.
However, na the only small sources about Polkadot's inflation, since Polkadot's statements of most official sources dey limited to the first year or Polkadot go even completely deleted most previously available sources, like here:
https://w3f-research.readthedocs.io/en/latest/polkadot/economics/1-token-economics.html#inflation-model.
E no dey available anymore.
Which is definitely a very big red flag!!!!
Plenty information only dey available on third-party sites anymore which dey analyzed Polkaot’s documents when dey still up, such as here:
https://www.coinbase.com/de/cloud/discover/solutions/polkadot-token-economics.
Currently, Polkadot get a circulating supply of
approximately 1,150,000,000 Polkadot at price of $7.36 per Polkadot, which dey results in a current market capitalisation of
approximately $8,464,000,000.
Assuming say na 10% annual inflation, the amount of Polkadot go increase to an amount of
about 16,500,000,000 Polkadot by 2050, wey be 12 times plenty compared to now.
At current prices of $7.36 per Polkadot, e will mean an adjusted market capitalisation of
approximately $120,000,000,000, which go be worrisome
1400 percent above today's market capitalisation.
Make this one be a reminder: Bitcoin na only just under 10 percent here.
Anyone wey knows about markets go only conclude say the price per Polkadot go reduce well well by 2050. Considering the same market capitalisation in 2022 vs. 2050, the price per Polkadot go have to reduce from
$7.36 today to
$0.51 (!) in 2050.
Conclusion: Polkadot na em be inflationary Shitcoin with large quantities of Polkadot Coins wey coming into circulation in the future will go to rich stakers...
The price per Polkadot Coin go come down well well when looking at Polkadot's
adjusted market capitalisation (for example 2050).
Summary Finally, e can be said for solid coins, such as Bitcoin, current market capitalisation and adjusted market capitalisation dey very close. For inflationary Shitcoins, current market capitalisation and adjusted market capitalisation dey far apart.
Predictability of projected market capitalisations Predictability of the adjusted market capitalisation means E fit dey possible for us make we know the amount for a certain cryptocurrency wey dey in circulation go be known in the future. We go need the number of coins wey dey in order to be able to classify a certain market capitalisation in the future.
If no body fit talk am, how many coins dey for circulation for up to 20 years, then that cryptocurrency dey dangerous, this one alone fit make people run away from this cryptocurrency. Because Altcoin developers don't already know why dey no talk am such important information.
If predictability of the projected market capitalisation no dey, therefore you dey buy the cat in a bag.
My article lesson : analyzing the long-term assessment of a cryptocurrency as a store of value – by evaluating market capitalisation – and if the Altcoin fit match market leader Bitcoin.
