How do you Value a Coin (Cyptocurrency)?

Discussion in 'Crypto Forum' started by Bryan Ngu, Nov 13, 2017.

  1. Bryan Ngu

    Bryan Ngu BoxMember
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    Nov 13, 2017
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    Hi Guys!

    This is my first question on the forum. My background is in financial analysis and I have been studying companies performance and value. My question is How Do We Value a Coin's worth?

    This got me thinking when Bitcoin Cash surge past $1K and hitting the all-time highs' in price. In the stock market, we study company past financial performances and understanding company's future plan to gauge its current market value. We use Price to Earning, Price to Book Ratio, Enterprise Value and so on to calculate it's value.

    I understand "Value" could be subjective as everyone has their own opinion on value, but is there a way to calculate an intrinsic value of a coin? Example: Etheruem is worth $xxx of USD.

    Thanks!
     
  2. Damon

    Damon BoxInitiate
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    Nov 10, 2017
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    hi Bryan,

    I just recently started trading coins as well and had similar questions. I'm not a investing or financial professional but rather a forex day trader who got tired of his IT job a couple years ago but that is another story.

    Here's some of the sites I use and things I've learned about value of crypto coin:

    1. Every day I look at Tradingview.com and go to their charts tab and look at the price action on the major coin like BTC, BCH, Dash, ETH, etc and compare it to USD. I also compare all the other coins to and BTC as well since my exchange does transactions in BTC.
    2. Next I look at Cryptocurrency Market Capitalizations | CoinMarketCap | https://coinmarketcap.com/ and then review total market cap for market, then volume and 24hr price changes for each coin.
    3. I opened an exchange account on Bettrix.com and review volumes and prices which gives me a feel of where I might invest for the day.
    4. COINS WORTH- this is the real question and from what I can see there are some basic ways to determine that are not measured such as market cap, like does the coin have a solid backing of developers, do they communicate daily on their direction and projects, using scalable technology and any other data you can find on the coin. From what I can tell there really is not any type of fundamental reports for coins, like you see in the main strean financial world, other than what each company's PR team reports to the public. I think DASH does a good job in this area. But the actual worth of each coin, is in my opinion, is very speculative.
    5. Pod cast and youtube post are really good source of info from people in the know. People such as Michael that host this site who is always posting on youtube and another fellow I like to listen to on youtube, goes by coin mastery does really good job.
    6. lastly something I think seems be over looked sometimes are the miners. The minute bitcoin miners decide that mining BTC is not profitably and other any other coin for that matter, there will be a mass exodus to another coin. Could be missing something here but that is just my opinion.
    7. I find that trading coins using technical indicators, has a high rate of success or at least more success than trading forex. I suspect that this has a lot to do with the lack of fundamental reports. I know in the forex world certain reports can really move the price of a currency against technical.
    8. Also purchased a news letter from called Palm Beach news letter but has not been all that great.
    9. Lastly, the total market capital has increased from 173 million to 202 billion in the last 12 months. That a 1100% gain.
    Not sure if I truly answered your question but thought I would pass along my 2 cents.

    D
     
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  3. Bryan Ngu

    Bryan Ngu BoxMember
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    Nov 13, 2017
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    Hey Damon,

    What a thorough guide! Appreciate it a lot.

    A good judgment and critical thinking about future are well important. Unlike Stock market, numbers tell you the management capabilities and company growth. Sometimes PR team reports can smoke a bad management. I still have a long way to go, to learn to see things from a different angle and making a better judgment.

    Appreciate your writings buddy! Cheers...
     
  4. Ethan

    Ethan Moderator
    Staff Member Moderator Founder CoinMaster

    Nov 10, 2017
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    One thing I would add is its code and technical standing. People can pretend all they want that their coin is the best, but you MUST look at the long term and think to yourself "does the technology surrounding this tech/coin stand the test of time and is there a real use case for it that another coin can't do better". If you are looking at short term, percentages and numbers may work best, but for long term growth its very important to get a technical understanding of the coin.

    That's why Doge coin isn't worth that much anymore, or at least not what it use too. It will always be around as a joke and fun token, but it doesn't have the most interesting and game changing technical specs and development has kind of stopped on the project.
     
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  5. Bryan Ngu

    Bryan Ngu BoxMember
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    Thanks Ethan. I will put that into my equation in future investment as well.

    I love this saying "does the technology surrounding this tech/coin stand the test of time and is there a real use case for it that another coin can't do better". Millionaire quote!
     
  6. Damon

    Damon BoxInitiate
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    Good point. Definitely looking at the actual application and technology of the coin and asking the question, will it be relevant now and in the future, would be worth the time.

    Also you bring up a really good point about investing long term verses short term. Good money, each day, can be made moving in out trades, but of course its risky as hell. Of course, thats crypto currencies in general. Putting money in a coin and waiting for it to increase in value can also be very profitable but requires lots of patience. My spouse and I developed a plan to dollar cost average invest and day trade, so doing both. Works for us.
     
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  7. Ethan

    Ethan Moderator
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    Agree! I am a stronger holder, and maybe I can make money along the way day trading and catching 5-10% swings and increasing my coin stack, but as a miner I just like to let my coin stack to increase by the hashing power I deliver and by removing as much risk as I can, which includes day trading.
     
  8. Paul Schellens

    Paul Schellens BoxMember
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    Nov 11, 2017
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    Fundamental analysis is useless in these markets in the short and medium term. Most coins are crap, useless or trying to reinvent the wheel in a decentralised way that there is no need for. Technical analysis might give you some luck with these. Also sentiment and news. So you have to be on top of things to trade well. But most (short-term) traders lose money. It's a tough game.
    Brand recognition, privacy and a well funded new tech idea are your best bets. Bitcoin, Litecoin, Dash, Monero, maybe IOTA come to mind.
    Token Platforms such as Ethereum, NEM, Nxt, Waves, etc have a problem with ICOs dragging down on their internal token's value. (Although watch for some big upgrades to the well funded Waves project in the coming months.)
    Just my opinion. Not financial advice!
     
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  9. DanielAl

    DanielAl BoxMember

    Apr 10, 2018
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    Lack of communication between the supplier and consumer leads to poor quality products

    What do high-quality products mean for you? It seems that the term "quality" is understood by everyone, but high-quality products are described by each consumer differently.

    However, there is a standardized definition of “high quality” which should be accepted. According to this definition, “quality” is how products comply with customer requirements.

    Even a product with many good characteristics can’t be called a “high-quality product” because even great products or services can be absolutely useless for clients. A high-quality product is one featuring characteristics most needed by the end user.

    In this regard
    , it is very important that manufacturers know what consumers need. After all, if a company producing goods does not understand the market, it will be producing products “for warehouse”. Its products can be of good quality, but what’s the point if clients don’t need them?

    For the manufacturer to be able to know what the buyer wants there should be communication between manufacturers and clients. Such communication should be direct, without intermediaries: the company that produces products needs information firsthand. This reduces costs and saves time for gathering information. Also, many intermediaries distort information on its way from clients to producers. As a result, producers receive distorted and misleading data.

    To solve this problem, it is necessary to establish effective direct communication between the producer and the consumer.

    Buyers should be able to directly contact the company that produces goods. This is the only way they can be sure their responses, opinions and wishes are taken into account. In turn, manufacturers will receive accurate information on consumer preferences by minimal time and money.

    Such systems can be maintained both by producers, consumers and third parties. After all, everyone is interested in having only the right products on the market.

    An example of such systems is the decentralized Yodse platform. Yodse will allow manufacturers and consumers to communicate directly.

    yodse_banner_black_2000x500_002.png
     

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