Re: Trading Tip `The Wall´ – Did Ripple Almost Dethrone Bitcoin | 코인긱스

Re: Trading Tip `The Wall´ – Did Ripple Almost Dethrone Bitcoin


2017 was the year cryptocurrency speculation went mainstream, which is something many bitcoiners have been yearning to happen for years. But going mainstream means that the market is no longer dominated by cryptocurrency enthusiasts, and until Wall Street steps in, we’re simply going to have to accept that mainstream speculators with little knowledge of cryptocurrencies are in charge of the market.

Also read: Absurd Profits from Zclassic a.k.a. Bitcoin Private

A Wall Between Investor and the Unimaginably Stupid
If you’re a cryptocurrency old-timer, things that annoy you will become popular for reasons that seem unimaginably stupid. If you were a musician in 2012 and competing for the #1 spot on YouTube, it didn’t matter if you were the best singer in the world if your competition was “Oppa Gangnam Style”. In the same way, it won’t matter if your cryptocurrency is the most sophisticated and decentralized in the world, if the market doesn’t value those characteristics.

Trading Tip Column, `The Wall´ – Did Ripple Almost Dethrone Bitcoin “Using This One Simple Trick”?

The “Gangnam Style” Era of Crypto
To explain what I mean, I’ve analyzed the percentage gains of each of the top 27 coins by market cap since 2017. One thing that is clear to me is that the cryptocurrency characteristic the market favored more than anything else in 2017 was not so much decentralization, technological soundness or real world usage, but rather the dollar digit bracket the coin belonged to; in this case, sub-cent unit prices.

Trading Tip Column, `The Wall´ – Did Ripple Really Dethrone Bitcoin “Using This One Simple Trick”?

Of course, the unit price of a coin is a totally senseless basis for making investment choices on. Any cryptocurrency–even Bitcoin–could have been a sub-cent item, if Satoshi chose the final cap to be 21 quadrillion instead of 21 million. In that case, the unit price of a bitcoin (price per each whole bitcoin) would be $0.00001697 right now instead of $16,790 but the total market cap would still have been $284 billion. Everything would be the same, except that everyone would have a million times more bitcoin–and the unit price would be cheaper.

Since bitcoins (as well as many other cryptocurrencies) are divisible down to 10^8 satoshis (smaller units), it doesn’t really matter what the supply is, as long as there’s enough “particles” of the currency to go around for the economic use cases imagined to function properly. The number itself is not important. But it does directly effect the unit prices, which apparently has an enormous impact of the investment choices of mainstream investors. As stupid as it may seem, I contend that apart from what’s outlined in this great summary, the perceived “cheapness” of Ripple’s XRP (100 billion supply) is one of the reasons why it overtook Bitcoin as the largest cryptocurrency in the world by implied market cap this week.

The reason why we look at market caps when we compare coins is because that’s how we compare the values of a cryptocurrency as a whole rather than just looking at the unit prices, which we know, as illustrated before, to be completely arbitrary and therefore not a good measure of anything. To visualize this is in the clearest way possible, we can normalize the supply for different altcoins to see what the prices really would look like if they all had the same supply. This is how they would compare (as of 5 Jan 2017):

Trading Tip Column, `The Wall´ – Did Ripple Really Dethrone Bitcoin “Using This One Simple Trick”?Another interesting aspect to look at is how many units of each altcoin you need to hold to own the equivalent of 1 bitcoin of that coin:

Trading Tip Column, `The Wall´ – Did Ripple Really Dethrone Bitcoin “Using This One Simple Trick”?

In these tables, I’m using the “fully diluted market cap” (max supply) as a basis for the normalization. The currencies for which the max supply is unknown such as Ethereum, I’ve used the Y2050 estimations given by Onchainfx(*). The calculation I’ve used for the  normalization table is as follows:

Re: Trading Tip `The Wall´ – Did Ripple Almost Dethrone Bitcoin

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