Cardano and market caps in general


#1

I was wondering about the 9.8 billion Cardano market cap and the unit price of .38. The product delivery is far off and in all honesty 9.8 billion is a lot of money based on people and knowledge.

I mean, Ethreum with its traction is at 80 billion and Stellar which is ahead in development at 7 billion.

So is it one of the below or something else entirely?

  1. Blockchain / Cryptocurrency market will grow further, so without a baseline, this level of investment might be the right valuation?
  2. Cardano approach (blockchain, cryptocurrency and smart contract platform) + talent are that much superior to all platforms that this investment is logical?
  3. Senseless investment and valuation across the board

#2

The below demonstration with Bob and apples in the first link shows why market cap is an irrelevant & misleading indicator, and NOT a valuation. However, no one has come up with a better economic measure so far in the crypto space.

AND


#3

As above from CosmosX - First of all mcap of something that is both a currency and something else (smart contracts so a currency operator with as of now not a cleary defined area of implementation and with many potential uses) is not really a fitting model. I would say it is mostly an expression of the currency valuation and an expression of transaction demand vs supply more so than an accurate estimate of the valuation of the technology/company behind it.

For your 1-2-3 i would say it could easily be any of the said options. How you approach that fact would depend on your investment goals and strategies. I am not going to give you advice on that but I can give you my own view. I treat ADA as a growth investment because I think there is a chance demand for cardano could be much larger than the potential supply (45 billion) if it is used as say a better currency system (global/or local in some governments) or to drive AI economy (automatic transactions) So in such a perspective for me I value having a small amount compared to my net worth as the closest I can compare it to in my own theoretical knowledge of investments is with growth stocks (Albeit without the chance of new stock issues as we already know the max limit) yet it also has some form of “dividends” (locked from 31 to 45 billion growth in supply and not technically dividends as it is reward for POS but it has many similarities with dividends) in any case that means I have learned from history that most of these growth valued stocks fail, yet the few that do suceed has outsized gains (think for example amazon) and for them to sucseed they simply need to have a better model than precious models had for its market, be allowed legally and adopted by the population. In this case I do believe ADA is a better model for humankind when it comes to transactions than what we have had previously. And I am happy to both contribute to something positive and hopefully earn some money on it as well. (I freely admit I would love to earn on it as well.)

Oh and if you ask me as a value investor I would be mad to invest into ADA at current valuation vs actual values created by the system. This clearly is a case of buying potential growth (with all the risks involved in buying something not yet even created.)


#4

Thanks for sharing those two links, now I am thinking how did I miss something so simple. Bitfinex might also come clean on Tethers with that: :slight_smile:

On the scary side, anyone who has an abundant supply from pre-sale can crash the market at any time.


#5

I am trying to think why would any decent size economy not merely digitise their currency rather than adopt an ADA/XLM/XRP? What are your thoughts on that?

From all that I have gathered so far, I believe this to be the case as well. Only time will tell how the market at large would adapt.


#6

The Japanese hold most of the ADAs from the pre-sale BUT:

Plus they would have to all sell at the same time to crash the market.


#7

Yes it is a good questions. What are the barriers to entry? I think trust and governance. If nationalized you risk new currency issues in the future. Ofcourse one might argue the national currencies are definitivily not going to stand by idle on this. I think it will in reality be a combination of the two. The national currencies will transform as well, but there will also be a large demand for more global currency systems. (By the people.) I think sidechains is a potential use for national currencies if some nations would want to try out ADA but I definitivily agree the barriers to entry are almost none existant. However when it comes to the need for more global systems the national currencies are actually at a disadvantage and it even goes against some of the goals national systems have. (For example the ability to print more money if needed for war/crisis etc.) Hopefully ADA will be so effective it drives up also national demand to it as well. (And not only the people around the world but national demand from governments.) I like how ADA technology allows for both approaches. ADA itself can be very global and hands off, but you can create local sandbox with its own rules (so fitting also for national currencies.) I think there is a need for both currently.


#8

Because if a government would digitise their currency they would have done this for a reason, most likely their FIAT based currency would have experienced a massive year over year inflation (think Venezuela, who is in this exact situation and are creating their own crypto)

You as a citizen would not trust a government who already failed at producing a decent monetary policy to create a national cryptocurrency. Not after the hardship and emotional distress that emerges after your money, real estate and everything you own became worthless, you will never forget or forgive policymakers for this.

These sort of cryptocurrencies are always centralised and under government control, you would opt for a decentralised currency. It is the only way one could trust the new paradigm.


#9

Theoretically, I am assuming a much lower quantity would affect the market for months if not years to come.

Total Volume Traded (24 hours): 238 Million Dollars or 88 Million Units (Let’s assume the trades were cyclical buy/sell so actual units traded could even be 25% or 50% of the above).

We have over 26 Billion units in circulation, I am guessing even if 240/300 Million Units are dumped the market would crash as there would be no demand.


#10

Makes sense - let’s hope this happens sooner than later.

Singapore government is already exploring blockchain deployment, and it might even be looking at central bank / IBM hyperledger / stellar based rollout in the next 2-3 years.


#11

In the case of Venezuela and their oil backed petro-token, part of the value of the token is derived from the team and strategic thinking behind it. I am not sure how they will avoid inflation with the token and counter volatility in oil.

I doubt government in large economies would allow decentralised currency. So even if end users would like to use decentralised or other global currencies, the local regulation would come in place to prohibit everyday use.


#12

I agree, they probably would not allow it, but would you comply with their regulations knowing that more than likely you will be facing the same situation again. The beauty of decentralised currency is that it’s very hard to prohibit its use. I think it would be hard for a government to ban all other crypto but allow their own, it wouldn’t make sense economically. This is how underground economies thrive even more, it’s a double edged sword.

When you are investing in a decentralised blockchain you are in a sense hedging against the possibility of your local currency experiencing massive inflation.


#13

First off Charles Hoskinson was the real man behind Ethereum , and he assembled a team of world wide superstars on his present project. He wanted to make eth a better product before it was released but others involved wanted the product released. Kind of hard to rebuild an engine while its running. You can be sure while they are ahead of their schedule and promises, this platform will be superior from the get go. You could wait for the release and invest then. I got in at 2 cents realizing that it is a very long term project and hold. If you are a trader of course you would do better with something else, but I wouldn’t want to miss out by some unexpected spike in the price. I think at 3x the current price it still would be a great bargain for a long term hold. The people who know how to trade and can accept the risk associated with that kind of fast money are admittedly a lot younger and smarter than I am But few projects offer the possibilities that this and it’s associated projects can. Charles if anything understates things, that many projects would hype so huge so early. You won’t see any hype, that’s why the price of this coin is not 5 dollars right now ! ! But when the finished product rolls out it will quite probably have a spike never before seen in the crypto world…