Topic: Bitcoin vs. Altcoins – projected Marketcap - page 3. (Read 939 times)

Anybody please correct me if I'm wrong. Ethereum's EIP-1559 update doesn't necessarily make it deflationary. The ETH burned is not fixed as it is taken from base fees. Since the amount of transactions in the network rise and fall, the amount burned also fluctuates. So when there are so many transactions and the amount burned is so high that it is higher than new coins issued, Ethereum becomes deflationary. But when the coins issued are higher than what is burned, then it is inflationary.

Ethereum's burning mechanism has been implemented since last year but it remained inflationary. I guess it was only just last month that Ethereum turned deflationary for the first time. That was after The Merge. And it was probably brought by the 90% reduction of ETH issuance, which was one of the effects of The Merge.

I also am not a big fan of altcoins and it's primarily because majority of them are nothing but a tool of greedy developers to make money.

How about the ethereum upgrade that makes some of the transaction fee to be burned. Or is that no more possible again? I think no changes to that in the last ethereum merge that changes its network from PoW to PoS which makes the the coin and its blockchain becoming more centralized and has been the what experts are discussing and becoming worrisome. The reason I do not like most altcoins is because they are centralized and also the fact that the presently over 21600 altcoins that are existing, nearly all are shit coins and anyone among can be like the old Luna and others that led to losses of live savings of some people. People should take anything about altcoins as gambling.

If you are a long term investor then this is supposedly your main goal. But having knowledge on how the market capitalization could hint us a potentiality of the coin or token. This analysis by OP is really a well versed and totally helpful.

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For certain reasons that some of the new projects are being identified as shitcoin is due to lack of clarity and dishonest approach. Like the tokenomics are bound by a lot of secrecy and tokens that can be monopolized.

Altcoins have many risks and one of them is minting from thin air. Their developer teams can mint new flow of token if they want to use the Mint function. They can mint it to resolve the case of hacks, blockchain compromises or to benefit themselves and make investors poorer.

The risk is we don't know what they will do with that Mint function. If anyone has yet known about the risk, do a research about Terra $LUNA that is rebranded to Terra Classic $LUNC.

It is interesting to note, however, that despite the generally negative perception of coins that don't have a maximum supply cap, a significant number of them have actually made it to the top.

You've already mentioned Polkadot (DOT). Ethereum (ETH) is another-- although recent updates could actually make it deflationary-- and then there's Dogecoin (DOGE), Solana (SOL), and others.

This is perhaps a testament that many do not actually prioritize whether a coin has a max supply cap or not as their basis for buying or investment. Although it certainly matters, a lot of other factors matter more. 

Inflation is a very important criteria in my opinion but if you are just loking for a quick profit, inflation isn't an important metric. Inflation is getting relevant for your coin in the long term.
Short-term, inflation can be significant if it's a highly inflationary DeFi shitcoin where 50% of the supply is dumped in the first year.
But still, scarce coins will attract more buyers and especially large ones (institutional investors), even in short-term considerations.


That's true, most Altcoins are Shitcoins. But I wouldn't call all Shitcoins which are obfuscating their coin metrics a scam, but still a very shady move of course. Let's take Polkadot, Polkadot is obfuscating statements about their circulating supply in the future. They have deleted documents and even the original documents were rather nebulous. It's a common tactic for Shitcoins to keep it vague and even from Ethereum we know that decisionmaking is very centralized. The difficulty bomb got delayed multiple times. Now Ethereum is advertising to be deflationary (if enough fees are burned) but it's very hard to predict, how many fees will be burned. Still, Ethereum can be considered far more scarce compared to Polkadot, where roughly 10% more coins are issued every year.
Especially large investors don't like unpredictability.
And we, as small investors, have many reasons to reject unpredictable and inflationary Shitcoins, like Polkadot, too.

You are right that it's essential to know how to evaluate marketcapitalisations of different coins and the Altcoin industry is also trying to make it very difficult for us to find it out. (advertise good characteristics, hide bad ones; it's how Altcoin marketing is done).

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That's true, when evaluating an Altcoin, many characteristics need to be checked. Inflation is only one of those but a very important one, especially in the long term, in my opinion. As we have seen, the bear market can really destroy weak shitcoins as it exposes all the weaknesses of Altcoins.

This analysis seems to be superb, And can be applied, while searching for new crypto project except for Bitcoin to dump some cash into and gambled upon.

In my case of deciding which project to invest on, I usually don't sight the influence of market capitalization even those it seems to be very very important, I usually look out for their Utilities, their road map, what have they done and stuff like. Let's not forget that every established project today were once new too.

If we're to make use of this analysis, it will help us a lot, but at the same time, I also think it will rekt us along the way, we just can stick our tools into farming one iteam, we've got to be diversified into things with future potential

On my scale of criterion when checking a cryptocurrency or new project, market capitalization is usually low on the list on what matters when deciding whether or not to buy that coin or token.
But knowledge on how to check predictable market capitalization would help save a lot of time in checking out shitcoins; if it is not possible to calculate the market cap, due to infinite supply or uncapped supply, then it is not worth considering at all.

99% of altcoin are already shitcoins. Clouds of secrecy around the functioning of a project is highly indicative that what you're looking at on your screen is a scam.

From a speculative point of view, it is essential to understand how to review market capitalisations of cryptocurrencies. Because current market capitalisations will only partially reflect if a cryptocurrency is suitable as a good store of value long term.  
Current market capitalisations are very deceptive, especially for Shitcoins – caution!

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Current market capitalization vs. projected market capitalization


When considering market capitalisation, a distinction should be made between current market capitalisation and projected market capitalization.


Current market capitalisation only includes all coins having so far entered the circulating supply. Potential inflation by additionally issued coins is not taken into consideration here.


Very important to know:

• Circulating supply:
  Current circulating supply (also including inaccessible coins, such as from lost private keys, etc.).
• Total supply:
  Current number of all existing coins, including coins which are currently already existing but still blocked by coin developers (e.g. at XRP) or coins which are not yet mined. Burnt coins are not part of it, as such coins do not exist (anymore).
• Max(imum) supply:
  The definitive (coded) maximum number of coins which can ever exist. For some coins, total supply and maximum supply are identical.
• Infinite supply:
  Some coins don’t have a caped supply at all and there will be issued more coins constantly.
  For such coins, we need to look up properly how many of them will be in circulation at some point of time because such coins are at risk of MASSIVE INFLATION.  
  

Keep in mind when a circulating market capitalisation is given because it’s very deceptive, as it only depicts a temporary state of coins in circulation and possibly many new coins will come inti existence later.


It is more reliable to consider an adjusted market capitalisation, where we will always choose a time in the future and look what a specified circulating supply and the resulting market capitalisation will look like.

= > Adjusted market capitalization = choosing a time in the future (for example 2050) and comparing how the projected circulating supply and the resulting market capitalisation will look like between two or more coins.

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Example Bitcoin:

For example, it is known that Bitcoin will have approximately 20,980,000 Bitcoin in circulation in 2050, which at current prices of $20,000 would result in an adjusted market capitalisation of approximately $420,000,000,000. Compared to the current situation of a market capitalisation of approx. 382,800,000,000 USD (at 19,140,000 BTC), it would only be a difference of just under 10 percent.
The closer this number goes to 0, the better for storing value. Practically, all other competitors of Bitcoin have significantly higher numbers here.

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Example Polkadot:

Polkadot is considered a highly inflationary altcoin based on nPoS (which is practically dPoS). According to current sources, Polkadot's inflation amounts to about 10% annually, which depends on how much Polkadot is staked. But normally it’s around 10% annually.
In addition, excess Polkadot from inflation can circulate back to Polkadot founders even with a different amount of staked Polkadot, as well as confiscated Polkadot, which can be used or burned by Polkadot developers.

However, there are only a few sources about Polkadot's inflation, since Polkadot's statements of most official sources are limited to the first year or Polkadot even completely deleted most previously available sources, like here: https://w3f-research.readthedocs.io/en/latest/polkadot/economics/1-token-economics.html#inflation-model.
It’s not available anymore.  
Which is definitely a very big red flag!!!!
Some information is only available on third-party sites anymore which analyzed Polkaot’s documents when they were still up, such as here: https://www.coinbase.com/de/cloud/discover/solutions/polkadot-token-economics.

Currently, Polkadot has a circulating supply of approximately 1,150,000,000 Polkadot at a price of $7.36 per Polkadot, which results in a current market capitalisation of approximately $8,464,000,000.

Assuming 10% annual inflation, the amount of Polkadot would increase to an amount of about 16,500,000,000 Polkadot by 2050, which is 12 times more compared to now.
At current prices of $7.36 per Polkadot, it would mean an adjusted market capitalisation of approximately $120,000,000,000, which would be worrisome 1400 percent above today's market capitalisation.
As a reminder: Bitcoin is only just under 10 percent here.
Anyone who knows about markets can only conclude that the price per Polkadot will decrease massively by 2050. Considering the same market capitalisation in 2022 vs. 2050, the price per Polkadot would have to decrease from $7.36 today to $0.51 (!) in 2050.

Conclusion: Polkadot is an inflationary Shitcoin where large quantities of Polkadot Coins coming into circulation in the future will go to rich stakers...
The price per Polkadot Coin will drop massively when looking at Polkadot's adjusted market capitalisation (for example 2050).

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Summary

Finally, it can be said for solid coins, such as Bitcoin, current market capitalisation and adjusted market capitalisation are very close. For inflationary Shitcoins, current market capitalisation and adjusted market capitalisation is far apart.

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Predictability of projected market capitalisations


Predictability of the adjusted market capitalisation means if it’s possible for us to find out if the amount of a certain cryptocurrency in circulation will be known in the future. We will need the number of coins in order to be able to classify a certain market capitalisation in the future.

If the amount of coins in circulation of a cryptocurrency cannot be predicted properly even in 20 years, such a cryptocurrency can be considered dangerous or unpredictable and this is an important reason to avoid this cryptocurrency. Because Altcoin developers already know why they are not disclosing such important information.
If there is no predictability of the projected market capitalisation, you therefore buy the cat in a bag.


Lesson of my article: analyzing the long-term assessment of a cryptocurrency as a store of value – by evaluating market capitalisation – and if the Altcoin can match market leader Bitcoin.

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Translations:

Language	translated by	Title
___________________________	_____________________	_______________________________________________________________________
Deutsch (German)	1miau	Bitcoin vs. Altcoins – bereinigte Marktkapitalisierung
Nigeria (Naija)	Dzwaafu11	Bitcoin vs altcoins-projected marketcap.
Română (Romanian)	GazetaBitcoin	Bitcoin vs. criptomonede alternative – capitalizarea de piață proiectată

Reserving new translations is currently available.