Crypto Market Cap

By Nomics

Market capitalization is the single metric that dominates any discussion of the value of cryptocurrencies. In this eBook, we go in-depth to breakdown the crypto community’s reliance on market capitalization and explore ways this key cryptocurrency metric can be improved. Nathaniel Whittemore and Clay Collins provide years of experience in cryptocurrency, venture capital and market strategy and have developed this well-researched, easy-to-use guide to the cryptocurrency market capitalization metric.
In this guide, the reader will learn about:
• The origins of market cap
• How market cap is calculated
• The 4 major critiques of market cap
• Market cap alternatives
• Market cap/value assessment alternatives
The conversation about market cap is more than a question about metrics. It is a question about value – and specifically, how to understand the overall value of crypto asset networks. By continuing to improve the metrics by which we measure network value, we don’t just make it easier for traders to compare coins but make it easy for teams and communities to benchmark their work to make their networks valuable. Better metrics mean better networks.

• Language: English
• Publisher: Nomics
• Release date: May 31, 2019
• ISBN: 9780463048054

Book preview

Crypto_Market_Cap_Title

By Nathaniel Whittemore & Clay Collins

Overview

This piece is a guide to the metric that dominates discussions of value in cryptocurrencies: market capitalization. In this piece, we review:

1. Why Metrics Matter

2. The Non-Crypto Origins of Market Cap

3. 4 Major Critiques of Market Cap:

1. Tokens /= Stocks

2. Inflation Schedules

3. Circulating Supply

4. Redemption Impact

4. A Review Of Market Cap Alternatives:

5. Market Cap Improvements:

1. ~Fully Diluted Market Cap

2. Realized Capital

3. Market-Value-to-Realized-Value-Ratio

6. Value Assessment Alternatives:

1. Liquidity/Volume

2. Security

3. Community/Network Health

The goal of this piece isn’t to argue for or against market cap, or present any one alternative as the answer. Instead, it is to present the idea that communally agreed-upon metrics create their own incentives. As a crypto community, the better the metrics we use, the better the work we’ll do.

Table of Contents

Overview

Introduction

The Origins of Market Cap

How Market Cap Is Calculated

The 4 Major Critiques of Market Cap

1. Tokens /= Stocks

2. Inflation Schedules

3. The Challenge of Circulating Supply

4. Redemption Impact

Market Cap Alternatives

Improvement #1: ~Fully Diluted Market Cap

Improvement #2: Realized Capital

Improvement #3: Market Value-to-Realized Value Ratio

Market Cap/Value Assessment Alternatives

Alternative #1: Volume & Liquidity

Alternative #2: Security

Alternative #3: Community/Network Health

Conclusion

Introduction

How we measure success shapes the actions we take to achieve it.

This truism is felt daily by students around the world forced to push any intrinsic joy of discovery to the side in favor of accumulating the knowledge that will allow them to perform on whichever standardized test they next face. It is felt in the creative war rooms of advertising agencies shilling