In crypto, the language of equities is often used. We have icos, dilution and marketcap. However these ideas don't transfer cleanly to crypto. Lets look at Coin Market cap.

## We know it's not quite right but why?

Here is a post on why coincap is different than equity cap . The author knows it's off but doesn't get all the way there.

## Every coin is different

For some groups of coins, that are closer to securities (the dao, according to the sec), Market cap makes sense. If the value of a coin can be imagined as its future profits a traditional definition of market ap seems reasonable. For others the answer is different. Here are my coin cap categories

### 1) security coins:

Coin cap is a similiar idea to equities. Namely the present value of cash flows (dividends, buybacks) for the life of the coin

### 2) usage coins one time:

Some coins provide the user with access to a good or service. These coins can represent a perpetual liscence or a one time liscence. A one time coin is one where a fee paid in coin is used to access the product. The concept of gas is useful here. The value should be the present value of the future gas values. This is pretty similar to revenue. Revenue is volume demanded times price ( this can change over time- many coins are deflationary). So coin marketcap represents the pv of revenue - A very different idea than pv of profits.

### 3) usage coin - license:

A perpetual license should be worth more than a one time license. However demand is lower because you don't use up your coin. In this case I think Coin Market cap represents the present value of the capacity of the network times value of capacity. This is a very new concept.

### So what does this mean for coin development strategy?

#### 1) **security coins should maximize profits** - that's easy

#### 2) **one time usage coins should maximize volume and price** - pretty straight forward

#### 3) **license coins should maximize capacity.** This is a very different idea. In these coins scaling debates are paramount to value.

What do you think?

(Note I accidentally tagged as steemit)

aqbayli (44)· last yeargreat post , keep the good work