A study on Dash price and market cap valued as a payments network.

[Willy Woo]

Dash's focus is a payment network so transaction turnover will be key. Let's run some numbers...

This is Bitcoin's transaction turnover as a function of their marketcap:

Source: https://twitter.com/dangermouse117/status/771387879117430784
Source Data: http://bit.ly/2ccjMDI

For Bitcoin, the ratio of turnover to marketcap is 4.5x ($45b turnover vs $10b marketcap)

For PayPal it's 6x ($282b vs $45b)

Bitcoin is valued higher than PayPal for a given turnover, this seems justified as Bitcoin is growing at 100% vs PayPal's 27%.

To justify Dash's market cap of $80m, and if we assume Dash is growing like Bitcoin's rate... I don't have any figures with me... it needs to be turning over $360m per annum. I think Dash's marketcap is in anticipation of huge growth incoming when Evolution is released next year.

Just bear in mind for those who think Dash is gonna go to the moon, these things take time. They are multi-year/decade trends. Altcoin pump and dumps can be misleading. People thought Bitcoin would be valued at $50,000 by now - that may happen but to support this valuation as a payments network, it would need to do $4.5 trillion dollars of volume. By comparison credit cards do approx $6 trillion.

In real terms, I mean by historical adoption curves of new technology, this curve will be longer than a decade.

 

[Willy Woo]

I've updated this research with estimates of Dash's real transaction volume on the blockchain as a payments network and the finding are it is (really rough estimate) 6x over valued if it was a payments network. This gives us an idea of how much people value Dash for its governance model and probably some decent anticipation of Evolution.

I put this research up as a blog post to record these brain farts.

 

[Otaci]

Interesting. I'm guessing that DASH's over-valuation (according to this measure) is due to the masternode proof of stake requirements rather than actual use of the currency.

 

[Comodore]

You can't say that dash is this overvalued.

You need to take into account these facts:
1. Value of networks like internet is not just metcalfe's law. It is way beyond that
2. Bitcoin and Dash is really not the same thing to measere its value. Dash has greater transactio-throughput, better fungibility and Proof of Service tier is something that presents another source of value.
3. Structure of dash's supply demand is really different from bitcoin, much more inflation from the beggining that turned into greater deflation in perception.

 

[Willy Woo]

I'm not saying it's overvalued, I'm saying it's not valued as a payments network, it's valued for governance and excitement over its technology roadmap.

But maybe I should ditch the word valuation and call it speculation.

This is a fun but frivolous exercise as all alt-coins are too early to be valued.

We are just all speculators making guesses at what the project may be worth and it swings wildly month to month because the truth is we don't know. If you look at the startup world, early stage investors forgo valuation with convertible note instruments. Only when there is traction is there a valuation done by VCs. The tech may be promising, whether it wins in adoption is another question, only then can you actually apply valuation metrics.

 

[Comodore]

Well, payment network relies on its governance and vision. Without it, there will be lot less reason to use Dash.

You are probably new to this world. This debate is really about valuation. There is established consensus of speculation definition. Speculation is always on short and at most medium term.

What we talk is clearly about meta of value measurement.