The future of Funfair
Often I see the news compare the market cap of a coin to the market cap of companies. “Bitcoin now worth more than apple” or “Ripple surpasses spaceX” and in our case “the total online gambling industry is worth 47 billion and Funfair’s market cap is only 800 million so there is lots of room for growth”. These comparisons are a severe case of apples to oranges. A company’s market cap is established based on its revenue/profit through one of these methods:
https://www.investopedia.com/terms/b/business-valuation.asp
The market cap of a (crypto)currency is the price times the total amount of coins. And the price is based purely on supply and demand. When someone sells a company he/she actually gets the amount of money that the company is valued at. Whereas if everybody would sell their bitcoin at the same time the value would instantly drop to zero as there would only be supply but no demand. You wouldn’t compare the value of the dollar to a company so don’t do it with cryptocurrency either. So which factors determines the price of FUN?
- Amount of supply
Currently the total amount of tokens is 11,000,000,000. Supply will decrease over time through token burn causing FUN to appreciate.
- Demand from speculation over future price.
I can’t predict future market sentiment around FUN but I know that FUN is an incredibly solid
project and I expect other people to realize that as well.
Demand from online casinos who need to have a bankroll.
Demand from people who want to gamble.
These last two factors are the point of this post. We shouldn’t only look at the size of the online gambling industry but at the combined bankroll of these online casinos and the amount of money in play at a given moment. Consider this example:
Mike likes to gamble once in a while and has an account at a Funfair casino. One day he is playing a few games of blackjack and wins 5 games in a row. Sadly, he now loses 5 times in a row and decides he's had enough for today. He gladly leaves the FUN in his account because he will gamble again soon anyway and it is secure on the blockchain. He also noticed it often became worth more.
Now, this scenario would have no influence on the incoming revenue of the casino and therefore its valuation, but it would have an effect on the price of FUN. The casino needs to have enough FUN to pay Mike up until that fifth bet. Mike needed FUN to place his bets and him leaving it in his account takes it out of circulating supply.
Regardless of all this the size of the online gambling industry is of course still a useful general statistic and correlated to the amount of money in casinos. I just want to say don’t limit yourself to it when thinking about how much FUN can grow. I did some googling and sadly couldn’t find any other data than the size of the industry. If anyone has access to data like average online bet size or customer capacity I would love to hear it (maybe Jez from his time at PKR?).
One more thing,
Funfair aims to make setting up a casino as easy as a few clicks. This would greatly reduce the barriers to enter the market causing the industry to maybe grow faster than expected with new casinos using FUN. More casinos also means more competition, which means companies will look for ways to reduce costs again leading them to Funfair.
Needless to say I’m crazy bullish on FUN and I can’t wait for the release of the first Funfair casino. I would like it if you guys pointed out any errors in my reasoning, spelling and grammar so I can edit it.