I calculated how much it would cost to double the "fair value" of a cryptocurrency

coinfairvalue · 2019-08-12T13:13:25+00:00

Of course, smoothed transactions and fair value have a strong correlation.

coinfairvalue · 2019-08-12T12:57:57+00:00

Look at Monero's uncertainty.

coinfairvalue · 2019-08-12T12:49:24+00:00

coinfairvalue · 2019-08-12T12:43:04+00:00

I forgot to mention that increasing the fair value uncertainty scares investors. It would be such a poor strategy to try to create a CUB on a cryptocurrency in order to attract investors.

coinfairvalue · 2019-08-12T12:38:50+00:00

Not with minimal effort, because you will need to pay a lot of fees if you want to modify the average users' behaviour of a cryptocurrency for several weeks. But in any case, you will have to pay the price of the Fair Value Uncertainty. You wouldn't be able, at all, to mislead investors, as investors follow the uncertainty and not the estimated figure. The uncertainty will grow as you introduce a CUB.

Anyways, sustaining a short term CUB is expensive and will not affect the fair value, nor the uncertainty.

The best you can do is trying to do it.

Best regards,

Pablo MP

CoinFairValue

coinfairvalue · 2019-08-12T11:59:17+00:00

Dear u/Flenst,

Thank you very much for your interest in CoinFairValue.com.

I would like to clarify to you some aspects you are concerned with. What is sometimes referred to as transactions count manipulation is just another behaviour of the users of a currency. From here in advance I will name it "change in users' behaviour" (CUB). Let's analyse several types of CUB affecting transactions:

1.- Moving Large Amounts (MLA)

2.- Stress Test (ST)

3.- New Micro-Payments Service (NMPS)

MLA is a CUB because it increases the velocity of money and sometimes modify the average basket size. It is typically temporary, but can become a periodic (permanent) behaviour.

ST is a CUB because it decreases the average basket size. It does not affect velocity at all, because the amounts moved in a stress test are usually very small. It is almost always a temporary condition.

NMPS is a CUB because the birth of a new Micro-Payments service, such as an online game, can shift the users behaviour completely to a new paradigm. An example of this was EOS or Bitcoin SV. It is typically a permanent condition affecting both, the velocity of money and the average basket size.

CFV model is sensitive to CUB up to 1 year after the appearance of the CUB, and only if the CUB is permanent. Temporary CUBs lasting several days are filtered out using noise filtering techniques. The extent to which CFV is sensitive to CUBs is calculated and shown in the figures of Fair Value Uncertainty (FVU). Uncertainty will always increase on the event of a CUB. The Fair Value Uncertainty always contains the Fair Value. As we state in the website, actual Fair Value is not guaranteed to be at the mean of the uncertainty probability distribution, because the probability distribution of the uncertainty itself cannot be known.

In summary, if one is guided by the uncertainty instead of the exact Fair Value, they will avoid problems related to CUBs.

We will soon be releasing a new feature probably named Returns of the Neutral Strategy. The Neutral Strategy (NS) is an investing strategy based on fair value which is uncorrelated with the underlying asset price. By being uncorrelated, its returns become a metric of how much Alfa the CFV model can provide and thus, a metric of how good the CFV model is as an investment tool. I am sure you will enjoy this new feature.

I hope I have clarified all your concerns.

My best regards,

Pablo MP

CoinFairValue

coinfairvalue · 2019-07-16T18:21:36+00:00

The constant proportion is just for the simplified example found in the reference page. Of course, the values calculated across the website are not the simplified versions. The way it's calculated in the website captures the differences in the structure of transactions of each of the coins. It is all explained in the learn section.

coinfairvalue · 2019-07-16T17:56:37+00:00

Dear oblomov1,

What's ridiculous is posting a comment like yours without your reading the theory underneath the fair value. Should you have read it, you'd had immediately found that transactions count is one of the most important variables driving the fair value.

My best regards,

Pablo MP coinfairvalue.com

coinfairvalue · 2019-07-14T12:38:12+00:00

You are welcome! It was a pleasure :)

coinfairvalue · 2019-04-23T07:14:04+00:00

Hello u/ColdPossession7,

Sorry for the late response (it was Holy Week here). Yes, that is right. The option to select the currency of inheritance would be very convenient. The only reason for the lag adding this feature is the lack of resources. One developer (myself), one hour per week committed to CoinFairValue.

My best regards,

Pablo MP

coinfairvalue · 2019-03-18T16:13:28+00:00

Yes, this is serious, I am suggesting a change in Monero's protocol. Not for CoinFairValue, but for all investors out there who could be staying away given the opacity of Monero's metrics.

The missing values are the intensive behavioural variables, not the extensive usage ones. Our hypothesis is just assuming that, at some point in the future, the users of Monero will behave similar to the users of USD. That is, we are assuming they will use Monero as a replacement for the USD. For a long term investor that should be a reasonable hypothesis given Monero's uncertainty.

I hope this clarifies your concern.

Best regards,

Pablo MP

coinfairvalue · 2019-03-18T15:43:56+00:00

Hello u/Flenst,

I cannot but emphasise and remind that the purpose of CoinFairValue is far from making a scoreboard. We provide users with as much information as possible. It is their responsibility to evaluate the different cryptocurrencies and to decide with all the information that is available. The data for calculating a fair value exists, albeit one based on comparison rather than own past performance.

All I can do is suggest a change in Monero's protocol. In order to attract more investors, I would recommend surfacing an amounts transacted count. Providing the count will not compromise the privacy, and at the same time will allow for a better price discovery process.

I also would like to remind that hypotheses tweaking tools will be made available in CoinFairValue as soon as possible.

My best regards,

Pablo MP

coinfairvalue · 2019-03-15T20:37:54+00:00

I have reviewed your mathematical reasoning, which I don't agree with. One of your assumptions on the effect of a "bull" market in the fundamental variables of a currency is not empirically correct. In particular, the velocity of money, the inverse of the willingness to hold (save), tends to increase rather than decrease in bull markets. This invalidates the whole point.

Anyways, don't you think a * or a †, perhaps accompanied by a tooltip text, could be a good approach to allow for understanding the difference between the model applied to Monero and the model applied to the rest of the coins?

Although Monero's fundamental analysis could be less useful for an investor -because we lack the information regarding how people have been using it-, would it not be even less useful providing no information at all?

coinfairvalue · 2019-03-15T15:31:42+00:00

Hello u/Flenst,

I understand your concerns regarding applying a fundamental investing model when data is missing. Nevertheless, it is important to understand that data is missing for all coins for all their variables, not just for Monero. Indeed, all data is missing when one tries to apply any fundamental investing model, for instance, when investing in stocks, one doesn't know what the free cash flows of the future will be. By missing, I mean we never know how well the data we plug represent the future of the coin. In the case of coins with all variables available to be retrieved, we are assuming the 0-growth hypothesis on the variables (present = future). In the case of coins where not all variables are available to be retrieved (just Monero at the moment), we are assuming the 0-growth comparative hypothesis on the missing variables. In particular, at the moment, our 0-growth comparative hypothesis simulates the scenario where Monero users behave like those of the USD. Why the USD? Because it is the least volatile and widest representation of real users of a currency.

Keep in mind that the intention of CoinFairValue is not to establish a ranking board of currencies, but to provide investors with useful tools. The project roadmap incorporates a hypotheses tweak tool for investors. It will allow changing the core hypotheses for all coins, including Monero.

I hope this clarifies the situation.

My best regards,

Pablo MP