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Thousands of coins for one euro – are cheap currencies really that cheap?

Friday, January 12th, 2018 | bitcoin updates

Lately they prefer to invest in cheap cryptocurrencies – but are coins and tokens under one euro really so extremely cheap? How much does the investor get for his "cheap" investment? The past few weeks have been characterized by ups and downs in crypto currencies. Thus, quite young tokens can rise well into the ten largest crypto currencies before falling again by 66%. One reason for this nervous market situation seems to be young investors who have a special focus on crypto currencies and tokens whose unit price is well below that a bitcoin lies. Currencies like Ripple, whose price is currently in the single-digit euro area, are already expensive, investors seem to have the crypto equivalent to Pennystock's interest. Based on emotional arguments, this idea is understandable: Some investors feel small when they are only fractions of a Bitcoins can afford. Especially with the first investment, which may be in the range of 100 euros, it can be frustrating that you can not even buy a single coin from old-fashioned currencies. In addition, this focus on micro-currencies is fueled by hope, a small investment of millions close. "Bitcoin also cost only one euro and rose to over 15,000! That can happen even with Ripple / Cardano / Stellar / NEM / Tron? "At first glance, the hypothesis that cheap coins are worthwhile, can not be denied. At least in the short term, the price increase behaves inversely proportional to the price of a coin: Shown is the average price increase of the last week depending on the price per coin or token. As a database, the data listed for coinmarketcap.com has been accessed for all coins. To check whether this image came about only through the segmentation of the data set, other segmentations of the data set were analyzed, but all come to similar results. In summary, so at least applied for the last week: Cheap Coins are more expensive than expensive coins. However, the investor should ask himself whether these price increases are sustainable or whether the hoped-for profit of 1,000% or more is really possible. How likely is it that a coin experiences such a price increase? To clarify this, it is advisable to consider cheap investment opportunities from two perspectives, which are discussed in the following sections. What profit can one expect based on the current market capital as a basis for the considerations, with what maximum profits Investors could count on optimistic estimates, the crypto currency ripple is considered. Is an increase to 15,000 euros even conceivable? Looking at the network fees – currently at 0.01 XRP – one would speak of transaction fees of 150 euros. Even in comparison to Bitcoin this would be absurd! It can not be ruled out that the fees will be adjusted accordingly. If the XRP rate rises to 15,000 euros, one would speak on the basis of the available supply of a market capital of almost 600 trillion euros. That's roughly equivalent to fifty times the money of the European Union! Even more stringent should cryptocurrencies with very specific applications be considered: is a market capital of several billion euros really justified for each project? What's more, if this valuation is in the pure conception phase when only equity tokens are sold on the Ethereum Blockchain, is it really sustainable value? So if you want to estimate projects like Steem for the fundamental value, compare it to the Market capital of existing social networks is not wrong. For projects in the pure concept phase, it should also be considered what role the token will have in the long term. Are cheap coins really that cheap? In addition, consider how cheap cheap coins actually are. About 11,000 euros is worth a Bitcoin. With this bitcoin one has 59 ppb (parts per billion) of all existing bitcoins. So you own 59 billionths of the total Bitcoin supplies. That does not sound like much, but applying the same calculation to ripple means you'll own just 10 trillion of the current ripple supply with a ripple. Comparing the prices of all crypto currencies is a good way to ask how It would be expensive to buy a corresponding 59ppb of the total coin count. One possibility is the so-called Bitcoin Price Equivalence, or BPE for short. The formula is as follows: BPE = supply of currency / supply of Bitcoin * price of a coin of the currencyAfter calculation of the BPE is still visible that Bitcoin is more expensive than all other crypto currencies, however, the BPE of Ripple does not differ dramatically from Bitcoin: price in EuroBPE in EuroBitcoin11.338,9811,338.99Ripple1,689,996.52SolarCoin1,699,862.53Valorbit0,00011341066.227,12Ethereum998,125,759.43Stellar0,553,415.93Bitcoin Cash2.081,382,094.91Veritaseum320,001.905,00Exchange Union8,911,591,48Cardano0,601.109,83As the table It can be seen that the ten currencies with the BPE are all over € 1,000. In order to buy 59 ppb of the entire supply of a cryptocurrency, an investment of at least € 1,000 is necessary for the shown currencies. When investing in a cheap coin, therefore, always ask what share the investor buys in the currency and whether that is behind it standing project at all as hoped for. Cheap does not necessarily mean more! BTC-ECHO About Dr. Ing. Philipp GieseDr. Philipp Giese works as an analyst for BTC-ECHO and specializes in chart analysis and technology. In addition, he is actively involved in the crypto community – both online as a central contact person in the slack channel of BTC-ECHO and offline as a speaker and interviewer, he always maintains an exchange with startups, developers and visionaries. The PhD physicist can draw on many years of professional experience as a project manager and technology consultant. For many years, Philipp has not only been enthusiastic about the technological dimension of cryptocurrencies, but also for the underlying socio-economic vision. Philipp Giese


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