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galgitron

The Myth of Market Cap

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On 10/6/2017 at 11:48 AM, bm32533476 said:

... the rest of this is sci-fi :)

Oh yeah? Well, in the future when we can tele-transport ourselves to different countries we'll need to use XRP as our bridge currency every day LOL :lol:

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28 minutes ago, Hodlezerper said:

I have to say, much of this is riddled with risky assumptions and little recognition of your own logic. At best its frustrating, at worst its nefarious and mis-leading. 

Lol..  here we go..

28 minutes ago, Hodlezerper said:

 You are also correct about attempting to form a relationship between important aspects of the asset including available units, hoarded units, locked up units, etc...Ironically, you don't actually apply any meaningful utility of those aspects in your example of pricing the unit. For instance, you use the word "market penetration", which could conceivably change based on escrow rules, contract law, decision to no longer "hodl".

All good points, and all blatantly obviously implicit in my example.  Itemizing all factors that contribute to market penetratio is an exercise in futility and is redundant.

28 minutes ago, Hodlezerper said:

Any combination of these potential realities must play into the price or "future market cap" of the asset. Again, please note when many people say "market cap" they're simply referring to the current theoretical value of the asset as a whole. Not a cap, or limit. 

Agreed, and neither are meaningful so your point is moot despite that the definition I utilized was asset as a whole, with my point  being that it's bastardized as a limit 

28 minutes ago, Hodlezerper said:

So, to come up with a sound analyzation for the "market cap" or "price", one must factor in all of these potentialities to the best of his or her knowledge. Much of this is based on risky and safe assumptions. For instance, it is a safe to assume that once the 55 billion XRP go into lockup, we will only ever have a maximum influx of XRP hitting the market to be numbered at 1 Billion per month. It would be a risky assumption to think that @JoelKatz will dump all of his XRP next year due to previous personal debts. We have no idea what his financial situation is and so can't assume what he's going to do with his held asset. Furthermore we don't know what outstanding contracts he may be involved in that limit his ability to sell the asset (Sorry @JoelKatz, just using you as an example here). Even farther down the rabbit hole, we don't even know how or when Ripple might sell the 1 Billion XRP they have access to. Could it be on a market? Could it be a private sale? Who knows? Nobody... So, we can't reliably price in things we can't possibly know.

I clearly encapsulate all of this if you understood my calculation.  Locked coins, destroyed coins, utilized coins, etc. Are all moving targets.  Your concrete examples are a few of an infinite list of possibilities, so quite obviously it makes more sense to categorically account for them like I did than pretend to have identified them all.  My formula applies equally to everything you said.

28 minutes ago, Hodlezerper said:

We actually continue to value the asset at current market price multiplied by outstanding units. Ripple even does so on their own website. Their market cap is market price multiplied by 100 billion. That is the only reasonable assumption.

Ripples utilization of Market Cap doesn't add one iota of credibility.  They're in no position to rock that boat.

28 minutes ago, Hodlezerper said:

Continuing further down the path of irony, you make the totally and admittedly arbitrary number of 1 Billion as market penetration based on how much value is being sent through it again and again. The reason this is ironic is that this is the exact metric many people are using to try to find out a "market cap" or, "value" of the asset based upon its actual use case. In this case, cross border currency bridging. There are much more advanced articles written on this topic and I won't even attempt to approach that here. 

I have absolutely no idea what your point was here.

28 minutes ago, Hodlezerper said:

Furthermore there are not "infinite" use cases. That is preposterous. You are either ignorant or lying because you don't seem stupid. Just because we can't conceive of exactly how the future will go does not mean that the use cases for XRP are infinite. That is wholly irresponsible and mis-leading. If there are people out there who are a little cautious about that part, you should be. It's insane.

Dude, listen, if would be quite easy to reciprocate with hilarious scathing personal attacks that would embarrass both of us, but I'm an adult, and I only have time for information exchange.  I have read many of your quality posts So I'm not going to immediately block you as I would normally do, so if you think you can address me ad hominem, we can continue an intellectual mutually-respectful conversation.  

Infinite was an obvious metaphor for countless.  I doubt anyone can enumerate even a tiny fraction of the number of ways money is used today, effectively countless.  

28 minutes ago, Hodlezerper said:

And what does "old fashioned money couldn't support new ideas" even mean? Sure, new businesses will likely start due to technology breaking down financial barriers

Did you really just answer your own critical question in the very next sentence??  Again, really struggling to follow your point here, particularly since that's how I would've answered your question.

28 minutes ago, Hodlezerper said:

Look, we live in a world of limits, laws, regulations, and politics. We can't get around that. A digital asset won't break those barriers down. We have to do that as people living within a system created by our own fears and limitations. You aren't considering anything here based on what laws currently exist or how central banks and governments' monetary policy may affect the use of an asset like XRP. 

Look, this is entirely and obviously encapsulated in the "market penetration"

Going to skip some of your diatribe, apologies.  Its reiterative content only further demonstrates your lack of understanding how Market Penetration is the consequence of every single factor of the infinite number of factors

28 minutes ago, Hodlezerper said:

The list goes on and on and on and on. 

Yes...on and on and on...  which I collectively refer to as market penetration. All your points affect market penetration, so by definition, I accommodate all your points, plus the infinite other factors you also missed.

28 minutes ago, Hodlezerper said:

But it will most absolutely be limited to its use-case when it comes to value. Can that value fluctuate a bit. Of course it can. But it will not be worth more than the value it adds to the global market place. 

As I pointed out in my post, leverage and margin is the process where XRP value can far exceed global wealth value.  But getting to your point, what' do.you think the absolute maximum potential future value of the global market place is?..  Exactly, it will climb indefinitely, and so will the value of the diminishing supply of XRP

28 minutes ago, Hodlezerper said:

For reference, here is the only sound analysis I've ever read based on XRP prices based on current understood realities. This article written is about a floor value. Meaning, the lowest this person thinks it could be, given his assumptions prove to be correct. 

http://cryptoizzy.blogspot.com/2017/05/xrp-valuation.html

How is this relevant?   I'm not doing analysis based on the current market.  Honestly, I think you missed the point of my post, it was to dismiss Market Cap, not predict a price.  Even my sample calculation shows the current price!  You're attempting to dismiss the future potential realities for no apparent reason,  but it's these potentialities that offer XRP the next parabolic opportunity.  I never once said these other potentials are going to happen, but you won't be able to deny that they could happen, nor the subsequent effects upon XRP.  Again, this post was to show that there's limitless potential to XRP, no matter what the market cap is.

If you reply, short, to the point, and no character attacks, or I'll just ignore you

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26 minutes ago, Sebastian said:

I agree people should not invest more than they can lose.

The only other thing I would add is the markets are not entirely priced on actual utility but a combination of actual and potential utility. 

For example, presumably the reason Tesla's market cap is larger than Ford's and 10% less than GM's is because investors see great potential in Tesla.

  • GE Market Cap: 65.47B
  • Tesla Market Cap: 59.56B
  • Ford Market Cap: 48.89B

Absolutely agree. But nobody is saying Tesla’s potential market cap is infinite.

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23 minutes ago, galgitron said:

Lol..  here we go..

All good points, and all blatantly obviously implicit in my example.  Itemizing all factors that contribute to market penetratio is an exercise in futility and is redundant.

Agreed, and neither are meaningful so your point is moot despite that the definition I utilized was asset as a whole, with my point  being that it's bastardized as a limit 

I clearly encapsulate all of this if you understood my calculation.  Locked coins, destroyed coins, utilized coins, etc. Are all moving targets.  Your concrete examples are a few of an infinite list of possibilities, so quite obviously it makes more sense to categorically account for them like I did than pretend to have identified them all.  My formula applies equally to everything you said.

Ripples utilization of Market Cap doesn't add one iota of credibility.  They're in no position to rock that boat.

I have absolutely no idea what your point was here.

Dude, listen, if would be quite easy to reciprocate with hilarious scathing personal attacks that would embarrass both of us, but I'm an adult, and I only have time for information exchange.  I have read many of your quality posts So I'm not going to immediately block you as I would normally do, so if you think you can address me ad hominem, we can continue an intellectual mutually-respectful conversation.  

Infinite was an obvious metaphor for countless.  I doubt anyone can enumerate even a tiny fraction of the number of ways money is used today, effectively countless.  

Did you really just answer your own critical question in the very next sentence??  Again, really struggling to follow your point here, particularly since that's how I would've answered your question.

Look, this is entirely and obviously encapsulated in the "market penetration"

Going to skip some of your diatribe, apologies.  Its reiterative content only further demonstrates your lack of understanding how Market Penetration is the consequence of every single factor of the infinite number of factors

Yes...on and on and on...  which I collectively refer to as market penetration. All your points affect market penetration, so by definition, I accommodate all your points, plus the infinite other factors you also missed.

As I pointed out in my post, leverage and margin is the process where XRP value can far exceed global wealth value.  But getting to your point, what' do.you think the absolute maximum potential future value of the global market place is?..  Exactly, it will climb indefinitely, and so will the value of the diminishing supply of XRP

How is this relevant?   I'm not doing analysis based on the current market.  Honestly, I think you missed the point of my post, it was to dismiss Market Cap, not predict a price.  Even my sample calculation shows the current price!  You're attempting to dismiss the future potential realities for no apparent reason,  but it's these potentialities that offer XRP the next parabolic opportunity.  I never once said these other potentials are going to happen, but you won't be able to deny that they could happen, nor the subsequent effects upon XRP.  Again, this post was to show that there's limitless potential to XRP, no matter what the market cap is.

If you reply, short, to the point, and no character attacks, or I'll just ignore you

I won’t address most of what’s above there because that clearly stirred up a little too much useful emotion. For the I offer my apologies.

 

The value of XRP is not infinite or limitless. Please be more specific with your verbiage as there are people here making real decisions with real money affecting real lives. Use your intelligence to be more responsible.

 

Most of the use cases you stated are unlikely to ever be used within the ecosystem for settlement.

 

We’re on the verge of distributed ledger and Blockchain being implemented for many many usecases and whatever assets or tokens end up being implemented will very likely represent the value of their use case.

I suspect we agree on the vast majority of points here so I won’t argue for the sake of arguing. 

My purpose here is to jar the conversation and to separate from the fervor of “limitless” or “infinite” value.

 

Take care.

 

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On 10/6/2017 at 1:47 PM, galgitron said:

...

Disclaimer: As always, all of this is my opinion, so if you take issue with any of my statements, find the data to refute me, but don't expect me to 'jump' to your commands of 'prove it'.

...

RETAIL: Who wouldn't want to aim their smartphone camera at an on-screen QR code at the cash register, and then be done.  No more credit cards, no more remembering dozens of PINs and passwords, no more trying to re-activate your credit card from suspected fraudulent activity because the banks are knee-jerking at your irregular purchase of a smoothie.  To hell with banks.  Click, done.  Gazillions of dollars.  This is a much larger market than SWIFT in my opinion, solely based on the frequency of transactions that will require much more overall XRP to be in flight at any given moment.  VISA, the writing is on the wall buddy...

ADOPTION: Imagine when people, businesses, governments even, stop always converting back to fiat and just staying in XRP.  This becomes the 'currency flight' turning point, and valuation will go into the hundreds to billions (DIVIDED by the number of utilized coins).  Multiple dollars per coin.

LENDING: Here's where solid figures go out the door.  With solid reserve lending laws already in place, and if adoption is widespread, more and more XRP will be needed, and that need magnified by the banks tendency to lend wealth they don't actually have (mortgages?  CDOs anyone?).  

INVESTING:  If you think lending is big, how about the huge margin investing that we've seen in investment firms.  It get's maniacal

EMERGING COMMERCE:  Micropayments, robotic payments, and completely unknown revenue streams that couldn't exist without XRP, much like Uber couldn't exist without smartphones.

SPECULATION:  Riding on top of it all, there are people that understand the above, and will be in early, and accordingly the price will ride the speculative bubble before these ideas are set in stone, so theoretically, the price of XRP will perpetually be artificially inflated in anticipation of its eventual justification as the new markets embrace it.

Suffice it to say, that the demand for XRP can easily eek into the trillions, even quadrillions, which DIVIDED by 5 billion, is many thousands of dollars per XRP.  

However dreamy and seemingly impossible these figures appear, that my friends is the potential market for XRP, beyond comprehension.  So take your market cap and toss it in the garbage where it belongs.  Will it hit any of these values?  Who knows.. but what's important to recognize is that XRP doesn't answer to stupidity like: A TIMES B EQUALS Maximum, nor does it answer to Bitcoin, or SWIFT, or even the entire wealth of the world; it makes its own value.
 

Yes, I meant 'rabid'

 

Really good post representing your thought process. in terms of market areas of utility, i happen to agree with many you have listed.

Especially looking out for

> XRP to make big entry providing a much efficient liquidity ( the one that does not lock reserves ).
> "enable" micro-payments globally - for the first time - because many have talked about it, but no one ever had the infra and low fees to make this possible globally. 
> Adoption and membership growing on Ripplenet + growing use-cases.

these shoudl be much more of concern then over-hyped whimsical entity like a coin market cap, based on non-circulating coins. 

cheers and look forward to your other meaningful posts !

Kindly,
R8

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On 6.10.2017 at 9:58 PM, jdimstrnate said:

The researchers used a precisely timed sequence of sound waves from an array of tiny loudspeakers to create a region of low pressure that effectively counteracts gravity, levitating tiny balls of polystyrene in midair.

Wohohooo w...wait a sec. This is getting interesting. Shamans and Tibetian monks supposedly doing leviation is suddenly not that much of a campfire story then. Very interesting...

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1 hour ago, Hodlezerper said:

The value of XRP is not infinite or limitless. Please be more specific with your verbiage as there are people here making real decisions with real money affecting real lives. Use your intelligence to be more responsible.

On this forum we should all express our own opinions. You've found the Submit Reply button, what a great feature, isn't it? I agree with OP that value and usecases of XRP are virtually limitless. I even go one step further and recommend buying as much XRP as your greedy hands can hold. That's just my opinion. I only know one person that bases his decisions on just my opinion: myself.

Keep those posts coming, @galgitron!

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10 minutes ago, lucky said:

I even go one step further and recommend buying as much XRP as your greedy hands can hold. That's just my opinion. I only know one person that bases his decisions on just my opinion: myself.

Now that is one very Healthy and True advice.

I bow and bend my knees in front of U.
So all you newbies, wannabies or whatever.
Read and Learn.

Music Maestro?
Lucky - Only 1 song pops up in my mind.
This one . . .

 

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On 06/10/2017 at 11:02 PM, zenkert said:

One Ponders.

Mainstream Media always refer to crypto as either Bitcoin or Ethereum.
Just pick any magazine, on-line or not.
Just read a Forbes article online.
Crypto = Bitcoin or it´s Litttle Brother - Ethereum.

Naturally of course, since they are for the moment the most valuable cryptos vs FIAT-currencys.

 

No, this has more to do with the fact that their target audience is well uneducated about other cryptos, and names like BTC and ETH draw crowds and clicks :)

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1 minute ago, Insoniac said:

No, this has more to do with the fact that their target audience is well uneducated about other cryptos, and names like BTC and ETH draw crowds and clicks :)

Is that not in other words, more or less what I said....

To take it further Bitcoin is the movement of the uneducated, trying to Create, what will finally end up in disaster.
A good read in that topic is "Animal Farm" by George Orwell.

A good Read Indead!

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34 minutes ago, Insoniac said:

No, this has more to do with the fact that their target audience is well uneducated about other cryptos, and names like BTC and ETH draw crowds and clicks :)

I take that idea a step further and question the knowledge of the very writers whom our touting the pricing and progressive of bitcoin. What do they themselves know of the other coins? 

 

I think alt coins, any coin not btc, are largely unknown. 

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@galgitron

 

Quote

That's it.  This simple formula, probably because of its simplicity, has lead to a rabid adoption by the general masses as some form of meaningful indicator.  No serious investor acknowledges this sensationalist figure for technical analysis purposes, with perhaps the exception of its psychological effects on inexperienced traders.  

I thought your post was interesting, a good read, and it got me thinking about my own endeavors. It truly was thought provoking for me and I appreciate it. 

 

The only part i might argue against is the value of market cap. In a traditional sense, market cap is everything. When valuing a company if the market cap is $1billion but it's revenues are $10 million and you want to buy said company for $25 million, it's simply not going to happen. 

 

In traditional investment vehicles, the market cap is the very definition of the value of said entity. If wall street drives the share price up to $170 and the overall market cap of your Corp up to $480 billion than like it or not that is the price of your company and for layman's sake, the cost it will cost for a takeover (hostile or otherwise). Of course there are extenuating circumstances, but market cap is a very important number. 

 

But some here argue with you that the crypto market cap may not achieve such mountainous levels. 

 

To them I'd say look at the market cap increase in the past month from $160bil to today's $230+bil.

Crypto has grown nearly 50% in the last month. Somewhat quietly, really. It just keeps trucking along. 

Much much more money is going to pour into this project. We've only just begun. 

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