I hear a lot of people comparing cryptocurrency market caps to company market caps. "Ripple's market cap is higher's than Goldman Sachs!" You mentioned in your video that this was a legitimate way to check if a coin is overvalued. While I agree with you in that every single coin is overvalued in this market, do you think the comparison is accurate? To me coin market caps represent the value of the economy that the cryptocurrency revolves around, not the value of the company/organization that created the crypto asset.
Take for instance Publica (https://coinmarketcap.com/currencies/publica/). They've done nothing and they have a market cap of ~35M, so definitely overvalued. But what they're really doing is trying to create a whole publishing economy of its own. If they succeeded, don't you think the market cap would be much higher?
The main word in your sentence is "if". Let me put it to you this way: if you went to 100 angel investors and pitched them this idea, how much money do you think you would raise? Probably 0, or if some of them liked you, they would take a 50-100k punt. But you would never ever get 35M... without anything but a 350 dollars site. If they manage to build the platform, if it works, if it gets adopted, if it generates revenue for everybody involved, then you have a business. But, as you can see, there are alot of iffs.
Think about it, in the real world you first have to build something before it has any real value. An ideea is worth nothing...
Let me give you annother one: TokenCard TKN has a market cap of 65M and, not only have they done nothing, not only have they not delivered on their roadmap, but there are currently other similar products that work perfect and therefore nobody even needs it at this point. Yes, they promise some really nice tech, but it's just promises. So, I ask you, what is going on?
Oh I completely agree in that coins are overvalued. What I'm saying is that I don't think it's accurate to compare the market cap of a coin to the market cap of a security like a stock since coin market caps represent entire economies. I think that in general, coin market caps have the potential to be much larger than stock market caps.
It's not a fair comparison at all, no. Obviously if it's a currency, then it needs to be large enough to support the $ volume of transactions done on the network (as opposed to being the accumulated size of fees on the network like Paypal). In addition, there are some expectations of future value. In stocks, we actually have a way to estimate future value. In cryptocurrencies, it is difficult to mathematically calculate them, but it is the same concept: You take the future perceived value and calculate present value with a discount rate. The discount rate increases the higher the risk is. In other words, with your example, the less likely it is they create a publishing economy (which when they have done nothing yet, is pretty low), the higher the discount rate is. The concept applies regardless of whether or not we can actually accurately estimate the inputs.