Jump to content
Sign in to follow this  
GoodTimesRoll

It’s about the Valuation, stupid!!!

Recommended Posts

Gold has a market cap of $7 trillion. 

Do we compare it to Apple?

No, and comparing digital assets to companies on the stock market is apples to oranges. 

If you want a closer valuation model look at gold or silver. 

Share this post


Link to post
Share on other sites

XRP will have less and less to do with Ripple the company, so comparing it to company valuations is not useful. 

Moreover this is a completely new asset class with massive amounts of potential, you could more easily underestimate than overestimate the future.

Share this post


Link to post
Share on other sites
Posted (edited)
11 hours ago, GoodTimesRoll said:

So let’s examine reality.

XRP has 100 Billion units outstanding ( circulating + escrowed note: just because units r not circulating does not mean they do not count)

Let's examine reality:

- XRP is deflationary

- Wallet reserve (20 xrp) cannot be spent

- XRP can be sent to an incorrect address, or locked in a wallet forever inaccessible because of lost keys...

No one truly knows how many "units" are outstanding or available to buy/sell/trade...

Let the good times roll!

Edited by zerocool

Share this post


Link to post
Share on other sites
Posted (edited)

OP come on, XRP already hit $3+ in a couple of weeks run up proving you wrong.   Market Cap reflects value per XRP * circulating supply, nothing more or less. 

100 billion = total supply

41.8 billion = official (according to CoinMarketCap.com) circulating supply

2 to 3 billion = my estimation of ACTUAL circulating supply - when you take away all the XRP held in wallets

Anywhere betwen 500M to 2 billion = XRP traded daily, of which a sizeable chunk will be (sadly) exchanges wash trading to make their figures look good

Anywhere between 300M to 1 billion = my estimation of XRP not wash traded + smattering of small utility trades on exchanges with xRapid in "production mode"

Suddenly your $36 billion market cap is looking a little deflated. 

You know how XRP can shoot from 25 cents to 380 cents in a couple of weeks? I'll let you into a secret: because the market doesn't give a sh!t about market cap.  The market is made up of individuals who care about what XRP's price is now, and what they think it will be in the future.  Th-th-th-th-th-th-th-that's all folks. 

Edited by 2ndtimearound

Share this post


Link to post
Share on other sites
19 hours ago, GoodTimesRoll said:

So let’s examine reality.

"Posted January 4, 2018

As a former student of finance at undergrad and grad levels, this whole argument drives me NUTS!  This may have been posted here before (I apologize if so) but it is one of the best explanations as to why comparing coin market caps to real company equity market caps is so ridiculous.  Even more ridiculous is to compare a coin cap to a country's GDP or some fraction of another currency (like US notes in circulation v. US denominated assets).

I know not everyone can always read WSJ articles so I am summarizing my own interpretation in my own words below (quoted when necessary).

https://www.wsj.com/articles/stop-talking-about-bitcoins-market-cap-1513015626

 

First, the underlying conclusion here is that a coins value is a lot more like the ASSET value of a global financial institution...not the value of it's owners equity position.  If you were to look at the books of Ripple, Inc...I am quite sure the company's XRP holdings would be in the ASSET section of the balance sheet.

This is actually something I have been considering writing. It is sooooo spot-on when it comes to the market cap debate. Funny thing is, the article is attacking BTC folks that brag about market cap...it covers all the basis - apples and oranges to compare to a real profit-producing company's market cap.

BTC (or any coin itself) is not a profit producing company. So what if BTC market cap is bigger than Citigroup's - a better comparison would be to compare to Citigroup's ASSETS...which is $1.8 trillion. For VISA, don't compare market cap, compare daily transactions (337k vs. 468 million) at a minimum.

Then comparing a coin market cap to national GDP figures (often done when folks argue a price cant go there) is "like comparing two random numbers".

When comparing bitcoin market cap to any established global financial institutions correctly, BTC is still a "small fry".

So, onward and upward XRP Market Cap!!!! The comparison to currency is also flawed because it often only considers physical notes in circulation - probably should consider total US denominated assets....$220 Trillion.

Some other TOTAL ASSET valuations of well known financial institutions:

JP Chase:  2.56Trillion

BofA: 2.28 Trillion

Wells Fargo $1.9 Trillion

 

Food for thought....meegwell"

 A great explanation I think courtesy @meegwell

 

 

Share this post


Link to post
Share on other sites
Sign in to follow this  

×
×
  • Create New...