Partner at venture capital firm Castle Island Ventures and co-founder of analytical resource Coinmetrics Nick Carter is convinced that the market capitalization is irrational and inaccurate tool for measuring the volume of a prisoner in bitcoin capital. He stated this during his speech at the conference Honeybadger 2018 in Riga.
According to the results of several studies, a few million coins not moved since 2009-2010, including the suggestions Satoshi Nakamoto. Probably, he said, they can be in cold storage, but can also be lost forever.
“I’m not sure that we need to consider their aggregate cost in market capitalization.”
Instead, Carter proposed to calculate a so-called “cost of security” — the total income of the miners in the entire history of bitcoin, provided that they sell the coins immediately after mining.
“This is quite rough, the heuristic will lead us to $10 billion, from which can be build in the calculations of capitalalliance in bitcoin. The answer is somewhere between $10 billion and a market capitalization of $115 billion” — said the researcher.
Proposals for alternative metrics to market cap by @nic__carter #bh2018 pic.twitter.com/39AQTlFW02
— Jameson Lopp (@lopp) 23 Sep 2018
He proposed an alternative instrument, “capitalization”, which is based on aggregation UTXO [unspent outputs of transactions] with the price of bitcoin in their latest activity. So Carter came to the conclusion that the realized capitalization of bitcoin is about $88 billion.
“A significant portion of coins are lost forever, they should not be ignored, because they are no longer active”, he added.
A similar situation, he believes, exists in the networks of the Bitcoin Cash Bitcoin and Private. Most of the coins that the user has received through airdrop, never left their original locations, so the market capitalization, says Carter, is not applicable in such cases.
He stated that 18% of the realized capitalization is the first cryptocurrency wallets of bitcoin exchanges.
We will remind, earlier venture investor Tim Draper has predicted that the market capitalization of cryptocurrencies will reach $80 trillion over 15 years.
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