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davec88

898 Posts.

18/02/18

09:19

Post #: 31135228
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Originally posted by HAC30 ↑

Even if its divisible, a total coin is 'valued' at $5,000 in your example. Just like $1 is divisible into 100 cents. The total market cap is infact what the market and the world values a total project/supply at.

Circulating supply is not a useless metric, neither is total supply. The more scarse something is, the more likely it is to be valued higher. You bring on more supply, even with static demand it is going to be worth less in totality and market cap. You seem smart enough to understand that. Everyone seems to love bitcoin and its 'finite' supply, its the reason the price is so high.

You're argument is like saying the AUD doesn't fluctuate against USD (or any other currency) based on economic activity and other variables, one including whether or not there has been a heap more of it printed via quantitive easing. The more of something there is, the lower the price although that doesn't effect the clearest indicator being market cap.

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"Circulating supply is not a useless metric, neither is total supply."

OK, So I create a coin with a total number 10,000,000,000,000,000,000 (10 quintillion units). I'll call this "Quintillion Coin". I premine 9,999,999,999,999,000,000 units for myself. The market starts buying these at $US0.01c each. Therefore "Market cap" is $US0.01c * 10,000,000,000,000,000,000 = 100 Quadrillion US Dollars. My coin now has a market cap 5,300 TIMES BIGGER than the GDP of the United States.

Market cap is therefore a useless metric in every respect for cryptocurrencies.

"You're argument is like saying the AUD doesn't fluctuate against USD (or any other currency) based on economic activity and other variables,"

My argument is not this at all. My argument is that your assuming all data is economic activity, which is an assumption. As per the above example I've provided, it's an assumption which can also be gamed.
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