Can you all take a take a distance ? : How long can this madness continue ?

in bitcoin •  2 months ago

Not wanting to spread FUD in any way but these price movements lately feel very unnatural. Every day another (even top 10) coin is going to the moon without any fundamental news.

I'm a fan of blockchain and trading but when I take a bit of distance and look at the facts I feel worried :

  • There is still a limited amount of real life applications on blockchain despite everybody is saying it's the future...
  • Every small news is used to let explode a coins. Ripple 150B really ? Why ? Apple as highest company is around 900B. All of this only on potential ? Ripple is in the Samsung area of 200B
  • Aside from Ripple all of the top 10 is above 10B. Some of them only exist for a few months and have no product yet.

Also when I talk to people who used to laugh with my blockchain hobby :

  • It's the future. They still have no clue what it is but it's the future :)
  • It always rises. Look at the charts. Hu what
  • It will make me rich. You have to be active with your savings
  • Bitcoin will be 100k. Why ? It's the same growth rate as 2017

My question to all of you is. How long will there be people buying at higher rates without any fundamental news ? Did anybody look at that yet ? There is only a limited amount of supply of fiat so eventually it has to stop. Just wondering when.

Please don't reply without any arguments that it's just FUD. It's an actual question from my side :)

For the time being I'm taking all of my money out. There seems no fundamental base to me to leave it in at this moment

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Ripple is so high because investors believe that real life banks are going to use it for all of their payment processing...

The rest of it? FOMO?

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Yes I know but this is still not sure. And even assume it happens for all banks in the world should it be valued at a Samsung market value ? Samsung is everywhere. Same as Coca cola : 150-200B. The correlation is not making sense

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And that's just 10 banks...

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But Ripple will be no bank. they will just provide a transfer service to some banks. Does that make it worth the Bank of China ? Without transferring anything for any bank at this time ? I'm talking at this time without any real action it's valued the same as one of the biggest banks in the world.

I just don't get that :)

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Bitcoin is valued more than some of the largest banks in the world.. Do you want to go into that conversation as well? =)

Perceived value is always higher than actual. And values can change fairly quickly in crypto.. as we've all seen!

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Yeah agreed Bitcoin same problem :)

But my point is perceived value cannot stay higher until some promises are delivered. And Im not seeing that in crypto. After all we are in for 10 years now...

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That's the interesting (and scary) part about Crypto. It's been around for 10 years, but it's only getting to see the light of day (mainstream views) over the past 6 months? 1 year?

If you think about other technologies and products, they don't really become mature until at least 10 years after they are introduced. Heck, the internet didn't really blow up until the late 90's, but it started off in the early 80's. People are naturally untrusting in something that they don't know, and even less trusting of something that they don't understand. Crypto is both an unknown and a complex idea to understand (at least in speaking about blockchain, to the average individual).

I'm hopeful that over the next year, we'll start to see more real-life use cases for crypto and crypto making a serious move into mainstream. I really like DigiByte for their forward thinking about applying Cyber Security to companies as opposed to simply being a currency.

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It's true it's getting widespread attention but 95% of the time its about Bitcoin setting new ATH. So it's getting speculative attention.

I don't see an increase in adoption of it so far

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This valuation would be even too high to me if they for example provided service to 30% of the banks in the world.

At this moment based on some statements that's super crazy. Maybe in the future it will be different but this is a valuation of a high end blue chip company not of some company with potential.

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So banks are valued by the number of customers that they have and the amount of deposits that they hold. Ripple would be valued by taking a portion of the value of all transactions being processed on a daily basis. So the effect is that they receive a higher valuation because they're dealing with significantly compounded amounts of value on a daily basis.

For Example: Bank of China is valued at $150 Billion USD. Their customers transact on a normal business day with an average of $500 Million USD (probably a lower number than actual). Now, say that Ripple is facilitating these transactions at a fee of 0.001 (0.1%) per transaction. That totals to $500,000 USD per day in fees alone. There are 52 weeks in a year, and 5 business days per week, less let's say 10 holidays, for a total of 250 business days. This conservative estimate example ends up at $125 Billion USD in 1 year revenue. For 1 Bank.

So that's how the valuation comes out at such a large number.

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In fact banks are valued to the profits they make. Transactions itself of money are in fact a cost for them if they dont charge it to the customer. The real value in it for them is making it last a few days until its on their customers account. In those days they can play with the money

But again apart from all of that. They are doing zero transactions today for banks.

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I completely agree. Transaction costs are free for bank customers (mostly), while those fees are being paid by the bank. However, banks are "loaning" money to each other at such ridiculously cheap rates (compared to what a consumer might see), and earning ridiculous amounts of money from that because the volume that they're loaning [which I'd prefer to say that they're "floating"] on a daily basis is absurd (which is where some of their value comes from -- and why their deposits are so important; collateral).

Anyway, Ripple is doing zero transactions today for banks. And I don't even know if they have contracts with any banks yet? But they have the infrastructure built, which is the hard part. If you build it, they will come???

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To be honest I'm afraid that a blockchain is a very nice invention that is not really needed.

But maybe paradigm will change in the real world creating a super use case for it.

Like always time will tell :) !

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Banks transact billions of dollars of various currencies, per day... yeah, the valuation is probably wrong.. it's probably too low...

Edit: I'm not a fan of ripple, but I see why some might value it.

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Yes but they would only deliver one service to banks. It's not like transferring money is the bank's main source of revenue.

Irrational Exuberance is the only thing that can describe the current situation

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That's so true ! Plus greater fool theory textbook example !

The Market Capitalisation is in some ways a deceptive value when looking at crypto projects. A share of a a bank is not really the same thing as a bitcoin or crypto token. The share of the bank does not represent the value of the deposited funds that the bank holds, it represents the markets valuation of the whole enterprise including assets like property owned by the bank etc.

The value of a bitcoin in some way represents the "deposited" funds of a bitcoin account holder, and is simultaneously just speculation.

Bitcoin is decentralised and has no "assets" its is just a concept and some open source software. What does the value of a bitcoin represent? What the next guy will pay for it based on his belief in the strength and cohesion of the bitcoin community of users.

The market cap is totally insubstantial. if everyone wants to get out at the same time, the market cap disappears in a puff of smoke. I guess the same applies to shares in Citigroup or JP Morgan, although they have some assets to liquidate and pay out shareholders if it tanks, while Bitcoin has zip.

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It is indeed a bit strange to compare market cap to the value of an existing company. But ok we dont have anything else. It's the valuation of the vehicle we try to get out a lot of money :)

But indeed no backup. No state to bail out if it ever goes wrong. Interesting times coming up :)

like your nice post