We have all seen the market caps for the crypto space grow to insane levels but as the numbers get bigger there is less to compare them to and hence their meaning gets lost.
Time to look at the S&P 500 to compare the levels crypto have reached and raise the interesting question.... Are the current valuations actually justified.
Lets start with the top 3 in the S&P and Crypto to see what we have:
S&P
- Apple = $478 billion
- Exxon Mobil = $420 billion
- Google = $376 billion
Crypto
- Bitcoin = $293 billion
- Ripple = $119 billion
- Etherium = $100 billion
The problem I have when you compare these valuations is that in the crypto space we have to think about the issues with all three coins.
Bitcoin has slow TX speed and throughput, high fees and insane infighting over control.
Etherium is a far better value proposition BUT still has TX and fee issues that will get out of hand as usage grows. Cryptokitties is a case in point.
So that leaves is with Ripple. This is where things get more interesting in that Visa has a market cap of $134 billion. So actually Ripple starts to look realistic here. It has throughput, cheap fees and the profile to do well. The trouble is that only 40% coins are in play. If you take into account the other coins you are at $300 billion.
For me the value of Bitcoin and Etherium is far too high but Ripple is more interesting. If it can grow and scale it could replace Swift/Visa and Mastercard or it might just become another coin that Visa and Mastercard support.
Will the banks really let go of Swift, which they own and control, for a 3rd party solution?
What do you think of the current market caps? If you think they are under valued why?
Woz