New Crypto Data Site Lists Coins By Their Fair Market Value
A new crypto data website aims to give crypto investors enhanced information about their favorite coins. Found online at CoinFairValue.com, the site aims to give users information about the fair market value of a coin.
Websites like BitcoinExchangeGuide.com and CoinMarketCap.com track the fiat value of cryptocurrencies. You can check our site, for example, to confirm that one BTC is currently worth around $7,000. With CoinFairValue.com, things are different: the platform aims to measure fair value without speculating on an asset.
What exactly is a coin’s “fair value”? How can the website track the fair value of a coin without speculating on an asset?
Well, the answer comes from understanding the way informational websites like CoinMarketCap work. There isn’t a single price of bitcoin. There’s no authoritative source that declares an accurate price for bitcoin. Instead, the price of bitcoin is based on the last price someone paid for it on an exchange. Websites like CoinMarketCap work by aggregating data from crypto exchanges worldwide. They aggregate data about the last price someone paid for bitcoin, for example, to deliver an approximate price of bitcoin.
How Does CoinFairValue.com Calculate Fair Value?
CoinFairValue.com works in a different way from websites like BitcoinExchangeGuide and CoinMarketCap.
Instead of using aggregated spot prices, the website measures “fair value” based on the current usage of each coin.
CoinFairValue.com heavily relies on an article written last year by Pablomp called, “Cryptocurrencies – What is the fair value of a currency?” In that article, Pablomp outlined a model for determining “Currencies Fair Value”, or CFV. That model uses a mathematical formula to derive the fair value of currencies. Essentially, the formula is dedicated to calculating the “usage’ of a currency. The more usable a currency is, the more fair value it will have, according to Pablomp’s model.
To calculate “usability”, the model analyzes money supply. Currencies with more circulating supply, for example, will be seen as being more active and higher value than currencies with a static supply.
“Our Market Cap differs from Market Caps in other sites because we do not make the artificial distinction between Circulating Supply and Supply,” explains CoinFairValue.com.
“Let’s put it simply: the fact that the founders hold a part of the supply does not make their part of the supply less circulating than a part of the supply held for years by an investor. ‘Static' supply is reflected in the Velocity of Money. The more ‘static' supply within the total supply, the smaller the velocity – hence, the higher the tendency to hold savings.”
The end result is an entirely new way to look at crypto data. The first and most notable thing you’ll notice about the CoinFairValue.com website is that the top two listed currencies aren’t cryptocurrencies: they’re the USD and EUR. The USD has a fair market value (FMV) of $1 per unit, while the EUR has an FMV of approximately $1.12 per unit. Both currencies have market caps exceeding $12 to $14 trillion. The website also notes that the market cap of the USD is 12,903% larger than the market cap of bitcoin’s $110 billion.
Why does the website include the EUR and USD? The website’s creator claims fiat currencies have an uncertain future supply function, which is why they should be included. However, calculating fair value of these currencies remains difficult because we can’t track the number of trades in a given period of time.
What about the top five cryptocurrencies? This is where CoinFairValue.com gets interesting. It’s where the data differs from websites like our own and CoinMarketCap.
Bitcoin (BTC), for example, has a price of around $6500 USD according to CoinMarketCap. On CoinFairValue.com, however, bitcoin has a fair value of $4,521.70 – a significant difference.
Ethereum, meanwhile, has a current spot price of $365 and a “fair value” of $532. BCH also experienced a similar rise, going from a $607.44 spot price to a $923.73 “fair value” price.
Some currencies have very similar fair value prices and market prices. Others have significant differences. ZCash, for example, has a spot price of $173.65 and a fair market price of $172.02.
It’s Similar to “Honest CoinMarketCap”
This isn’t the first time someone has tried to release rankings that differ from crypto spot prices.
There’s a spreadsheet online, for example, called Honest Coinmarketcap, created by Andrew Rennhack. That spreadsheet aggregates data based on global cryptocurrency volumes because, as explained by news.bitcoin.com, “the researcher claims a great majority of BTC and ETH volumes are phony.”
CoinFairValue.com is based on a similar premise. To calculate the fair value of a coin, the website analyzes speculative trades versus overall trades:
“It arrives at the rational conclusion that currencies must be trading at their fair value when the number of speculative trades in the particular currency itself is negligible with respect the total number of overall trades conducted using the same currency as a tool, such as in the case of when someone trades BTC for BCH because he thinks BCH will perform better.”
Although CoinFairValue.com tracks speculative trades, the website claims it doesn’t speculate on the future value of currencies, and that the information posted online should not be considered future predictions.
In any case, the website provides a unique and alternative view of cryptocurrency markets. You can check out CoinFairValue today at coinfairvalue.com