Sirwin
Sirwin
Coinmarketcap capture

The reason market cap is not meaningful

By Aruno14 | aruno14 | 31 Mar 2022


When we want to compare cryptocurrency, we often heard about market cap.

Market cap = token value × total supply

In case of bitcoin max supply is 21,000,000, for Shiba coin it is 549,063,278,876,302!

But transaction volume is about $34,118,364,505 in 24h for bitcoin and   $1,140,628,540 for Shiba coin.

In both case most part of coin are never transferred, some are simply lost, if they were used the token price would decrease, because token offer would be higher.

Bitcoin market cap

18,995,887.00 × 46,960.60 = 892,058,251,052 (26/03/22)

However, about 4 million bitcoins has been lost forever.

So market cap should be:

(18,995,887.00 - 4,000,000) × 46,960.60 =  704,215,851,052

It is a quite big different!

So, token value is not multiply by really used coin but only by an arbitrary number.

As conclusion, I think volume transactions is much more important to rank cryptocurrencies.

 

 

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aruno14
aruno14

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