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The network effects of volatility and liquidity, Bitcoin vs other payment coins

 

The Volatility of 600 cryptocurrencies
Alt-coin volatility proportional to bubble size

2016 has been a bull year for privacy coins. Earlier this year we saw mooning of Monero which saw subsequent pumps in other dark-coins including ShadowCash and Navcoin. Then we witnessed a mega-hyped launch of ZCash which peaked at an astounding $5.3k per coin.

All of these coins are Payment Coins competing in the battle win the war to be General Money. Let me explain. While most alt-coins tend to be forging into market specific app-coin territory, what makes payment coins unique is the shear size of the potential win, while app-coins can capture a market segment which effectively puts a cap on their valuation, payment coins being a kind of generalised money can capture “M2 money supply” as a ceiling, i.e. trillions.

When I look at payment coins I see very strong economic network effects are in play. I covered earlier with my Commerce Index that liquidity and low volatility are very important for a coin to be useful for general trade. Both of these qualities are crucial to make it compelling for end consumers to charge their wallet with a payment token to spend. With high volatility there’s too much risk holding funds and with insufficient liquidity wallet recharge and merchant fees will be high.

When looking at the combined qualities of liquidity and price stability together as a Commerce Index, we could see other coins catching up with Bitcoin. In this study I will be doing a deeper dive into these two qualities individually.

For the sake of this study, I will be looking at the leading coins by market cap, namely Bitcoin, Monero, Dash, ZCash and ShadowCash. All of these coins are well above $5m market cap, NavCoin and others at less than $3m have been excluded.

Continue reading The network effects of volatility and liquidity, Bitcoin vs other payment coins

I have a lot of brain-farts on crypto-currency. For more farting, follow me on Twitter @dangermouse117

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My rapidfire thoughts on some emerging alt-coins

Thoughts on alt-coins

I made some comments on some of the leading alt-coins on a Slack channel yesterday. People found it useful, so this is an informal quick and dirty paste of comments for reference. I might add more to this post later.

FCT – I like Factom, have just recently started holding them. I like that the project comes from a founder deep inside an industry working on a solution rather than the other way around which is the norm for crypto projects. You can see this playing out with industry players coming onto the technology, including government departments

Continue reading My rapidfire thoughts on some emerging alt-coins

I have a lot of brain-farts on crypto-currency. For more farting, follow me on Twitter @dangermouse117

BTC Tips: 1KrYzd8y6gnJekibZpb4ixif4nJYbaaZct

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Analysis of Dash’s valuation as a function of transaction volume

dash-logo

Dash’s focus is a payment network so transaction turnover will be key. Let’s run some numbers to figure out transaction turnover and market cap valuations…

This is Bitcoin’s transaction turnover as a function of their market cap:

Bitcoin transaction turnover vs market capSource: https://twitter.com/dangermouse117/status/771387879117430784
Source Data: http://bit.ly/2ccjMDI

Continue reading Analysis of Dash’s valuation as a function of transaction volume

I have a lot of brain-farts on crypto-currency. For more farting, follow me on Twitter @dangermouse117

BTC Tips: 1KrYzd8y6gnJekibZpb4ixif4nJYbaaZct

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Who will win the anonymous alt-coin battle?

Since the recent explosion of Monero, it seems privacy-centric coins are all the rage right now. So I’ve been thinking a lot about anonymous coins of late…

Moner 2016 price breakout

Continue reading Who will win the anonymous alt-coin battle?

I have a lot of brain-farts on crypto-currency. For more farting, follow me on Twitter @dangermouse117

BTC Tips: 1KrYzd8y6gnJekibZpb4ixif4nJYbaaZct

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