Market Cap plays a major role while determining buying a crypto project to know if you are an early bird or playing a catch up game.
Crypto in general, the current speculators/ HODLers are early birds comparing to the other ‘potential’ investors, currently in ‘CoinMarketCap’ website Market Cap is calculated by multiplying coin’s current price with the number of coins in circulation.
Ok, now we know how Market Cap is calculated, but do we know how high ‘our’ invested project will go (in terms of Market Cap), do we have any realistic ways/ tools to have a ballpark number for expectation. As we speak, we don’t have viable way to quantify our expectations, because we don’t have any real world parallel to extend the logic, but this logic may not be applicable to all blockchain projects.
For example, if you want to have a reasonable expectation for Ethereum before making an investment, we don’t have any real world parallel of ‘open’, ‘public’ General Computer. So all you have/ can to do is speculate the numbers. Whereas, Bitcoin is substituted as (Digital) Gold in today’s world so you can expect Bitcoin to have Gold’s market share at the max (subjected to the merits and de-merits of Gold Vs Bitcoin).
TL;DR – Blockchain infrastructure projects do not have a real world parallel, so you cannot have a reasonable expectation on returns.
Being said, do we have to speculate the returns of crypto investments all the time? Of course no. Blockchain has multiple use cases, there are few use cases where investors can draw parallel to the existing real world company/ product.
Major use cases of Blockchain that has a real world parallel,
- Social Media (Facebook, YouTube, Insta, etc.,),
- Storage (Dropbox, Amazon, Google, etc.,),
- Online gamings, eSports and gambling, and
- Marketplace (eBay, Amazon, etc.,).
To have an expectation, hypothetically speaking, Facebook today has more than $500B market share, they make their revenue out of individuals/ users time and creativity. If there is any Blockchain project goes after that Facebook (or any other Social Media), you know what you are after in terms of Market Cap. AGAIN, the expectation now you have now is still a speculation but an ‘educated’ speculation. No guarantee your project will gain traction and the percentage of market cap it can capture.
Blockchain is here to disrupt the existing business models in multiple industries, existing companies/ enterprises will see Blockchain technology as ‘process improvement tool’ to increase their revenue. The new startups will see technology as level playing ground as the infrastructure and computation power comes from the ‘decentralization’, so no upfront cost on infra is a big bonus.
Thanks for reading, see you until I see you..!