Bitcoin Private Valuation

Some of you may have noticed a new top 50 Cryptocurrency by market cap, Bitcoin Private. For those of you who are unfamiliar, Bitcoin Private (BTCP) was a recent fork off of both Bitcoin and ZClassic. It provided a 1:1 fork of either currency, so those wanting in on the fork mostly purchased ZClassic as the cost was much cheaper. The fork was pretty widely publicized going in, launching the price of ZClassic all the way to about $188 (USD). Then, as expected, ZCL plunged back down to single digits after the fork snapshot was complete. You may be surprised that you didn't hear much about BTCP after the fork. Mostly, this is due to it's inability to get on high volume exchanges. It could also be because so many of us were tricked into buying ZCL over $150 anticipating a return to ZCL's all time high of $235 to cash out or expecting BTCP to be valued much higher upon it's introduction to exchanges.

Source: Bitcoin Private Website

For a long time, BTCP was not ranked on coinmarketcap because it had not yet listed the circulating supply in order to calculate it. For those unfamiliar, the way cryptocurrency market caps are calculated currently are by taking the circulating supply and multiplying by the current price per unit. If you've studied economics, you know that it's not really plausible for the entire supply to be sold at the exact price it's at now, so most simply look at this as one of several indicators at how valuable a project is. With that being said, BTCP is now listed with a market cap and sits at rank 31 with a market cap of $634.34 M at the time of writing this. However, I would argue that this valuation is less accurate than most other cryptocurrency valuations out there, here's why.

Source: CoinMarketCap

Circulating Supply Caveat

BTCP calculated it's circulating supply by taking the entire amount of Bitcoin in circulation and the entire amount of ZCL in circulation at the time of the fork. Then, it's been adjusted for any block rewards mined since that time. Here's the problem with that: Not everyone with BTC or ZCL has participated in the fork, many will never. Here's some reasons why someone with BTC or ZCL might not have collected their BTCP:

• The BTC or ZCL is lost somewhere (user forgot about it or lost the seed to recover it)
• The BTC or ZCL is on an exchange that did not support the fork (perhaps this type could come up again if the exchange decides to cash in)
• The BTC or ZCL is such a miniscule amount of what someone owns, they don't care to participate. (perhaps it's dust left over on an exchange or wallet they don't use anymore)
• Someone did collect their BTCP but then promptly forgot their wallet seed. Sooooo, hopefully not too much of this going on but you know somewhere someone is kicking themselves over this mistake.

So, the real question is, what is the circulating supply in the market at this moment and what is it likely to be when nobody is collecting the fork anymore? I wish I could tell you those numbers, but it turns out it's not that simple! Unless we get an announcement from the team on how they're managing this, it's really anybody's guess.

Source: Pixabay

Implication of Circulating Supply

You may be asking yourself, what's the implication here? Well, if they continue to list as if there are 20M coins in circulating supply, there's positive and negative to that. The positive part is BTCP will remain in the top 100 for everyone to see. The negative is the higher it grows on that top 100 list, the fewer people will think it's worth the money. If the price of BTCP triples from about $30 to $90 per coin, that would bring the valuation all the way up to $1.9 Billion at rank 16 of all cryptocurrencies. Potential investors are likely to suspect it's near it's top dollar there, as they'll be comparing it's valuation to the coins in that range. Is BTCP really more valuable than Binance Coin or VeChain already at such a young stage? This kind of skepticism will make confidence waiver and might cap out the growth in comparison to other cryptos.

However, if the BTCP team can determine some way of keeping the circulating supply updated with how many people have actually collected, or perhaps if they can put a deadline for participating in the fork and then providing a circulating supply we might see a different story. What if only half got collected but the market decides that the market cap valuation is representative of the value of that entire project? Then, your $30 BTCP tokens shoot up to $60 to maintain the market cap. Who's to say it wont then grow further to the top 20? With different indicators, investors might end up valuing BTCP at much higher prices. Without any transparency into the actual circulating supply, it's going to have lower ceilings.

How to Monitor BTCP

Some may say I'm reading into the market cap too much. My counterargument is that many crypto investors base decisions off that indicator (likely to a fault) and although it might not be the most accurate indicator of what should happen, it often is a strong indicator of what will happen. So, what's my recommendation? If you're interested on staying on top of this, I would suggest becoming active in the BTCP community. Check out their Facebook, Twitter, Reddit, Discord, etc. from their website here and keep an eye out for any talk of "burning" uncollected tokens. If tokens are going to be burnt, it might be a good time to scoop up some BTCP. The key is to find out early, and the best way to do that is to stay on top of their media presence.

Source: Pixabay

I'd love to hear your thoughts on this. Where do you feel BTCP should rank among cryptocurrencies? If the circulating supply goes down, do you anticipate the price per unit to jump up or do you think investors will panic at the lower valuation and get out? Thanks for reading!

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Bitcoin (BTC): 15r2ktpJ8Tkw3MDc5GUmYEZBbBWSdv4r9p
Ethereum (ETH): 0x290a784EA092DDB9e665Bc8268eE242b3Fc269D1
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Disclaimer: I'm not a financial adviser. I'm a 28 year old dude that works full time doing something mostly unrelated to finance and investing. I'm also not your parent/guardian and you're (probably) an adult, make your own decisions and don't blame me if you lose money. If you make a bunch of money based on something you read here, I totally contributed to that though. You're welcome!