Want to deflate the token bubble? Fix the market cap indicator.
Zach Herbert

You’re making a point in bespeaking a bubble creating madness that constitutes a threat to the crypto community as a whole. This is important and very praiseworthy of you. However your conclusions are mixing up fundamental features in market cap as a key metric and your outcome here i will argument would in fact lead to the opposite of what your ambitions are. An inflation indicator alone would accompany and play in favor of your aims though.

The article obscures “cap” as a theoretical capacity for capital, assuming that every coin of the unsold but potentially sellable supply will raise the same relative capital as is bound now in / attributable to one unit. Yet not impossible, such attraction of fund is highly speculative and applied to an indicator would yield a indefinite and misrepresenting figure running out of true.

Around since long before crypto, the standard term “market cap” resp. “market capitalization” is defined as outstanding shares x current price per share (http://www.investopedia.com/terms/o/outstandingshares.asp to not misconcieve). So market capitalization is a sum quoted in a currency, it’s exactly known and actual. It is not an indicator of valuability but the very valuation itself.

It’d be sort of quixotic blending a notional addend to harvest a higher number — and how would a naive investor or trader who hasn’t done a basic research be warned if he found even bigger numbers that would be the alleged indicator of valuation.

There are not $861 million in Gnosis, $487 million in Stellar Lumens, $230 million in Golem or $228 million in Storj. Such figures are by far more misleading.

I second you to prevent bubbles and harm to the community but to face an overvaluation madness by valuating held back and only potentially possible supply with yet unrealized funds would be mixing the madness into the metrics. Yes in some way that is actually your announced goal but it scarcely would play out as a mirror of contemplation for the traders and investors. An indicator of inflation (or much better: a metric as an indicator is only a derivation) would be adequate though and thus solely fulfil your wish for a banana skin indicator at hand. Please be astute when working it out — while i sure have more mushy days then you guys — Sia is great tech!

To further spread awareness for judicious and indicated funding, individual case future market analysis with argumentative blogging, forums and every channel of communication is the sensible and sometimes arduous way to go. Anybody who throws in money without researching those ressources might not be held back by a number, at least not as long as it’s called market cap, so no need to fix that.

Thank you for everything, keep up the good work!

Best regards,


— — — — — — —

slack: polarrabbit

Like what you read? Give Rainer Joos a round of applause.

From a quick cheer to a standing ovation, clap to show how much you enjoyed this story.