Radix Counter-FUD for dummies (1)
Economical
“The supply is too big”
That argument makes me go “Oh man tsc tsc smh”. Why do people think that matters? Let’s understand what’s completely flawed in this argument.
Crypto investment space got used to some narratives, the “scarce supply” being one of them. Well, that’s not completely wrong per se… That’s where people see the most value in Bitcoin, for instance. But what does that mean or really imply? If Bitcoin supply was 21B instead of 21m, would that make a difference? The short answer is NO. Let’s elaborate on the long answer.
What really makes the difference is that the supply is capped. It doesn’t matter if is capped at 21 million, 21 Billion or 21 thousand, as long as they are very divisible. Let’s see some examples.
At the time of this writing, BTC is priced at $45,977 with market cap of US$ 856,307,831,900 and a circulating supply of 18,624,700 bitcoins. If you multiply the circulating supply for the price, you get the market cap. You can also calculate the fully dilluted market cap, as you know BTC is capped at 21 million, which gives figure of US$ 965,517,000,000.
What if in some paralel Universe reality BTC was capped at 21 Billion instead? Then you would get a price of $45.977. Doesn’t sound so exciting, right!? I want to own a BTC in the range of tens of thousands, that sounds more valuable. Tsc tsc smh. In fact it doesn’t make a difference. The only thing that matters is the market cap, and the percentage of it you own. If you bought $100,000 of bitcoin at the top of 2017 bull run, you payed ~$20,000, getting 5 BTC. In this paralel universe where BTC would have a suppy of 21B, assuming the same market cap, the same $100,000 would buy you 5000 BTC. In both Universes you would have now $229,885 right now. Why? Because in both cases you bought ~2.38*10^-5 % of the fully dilluted market cap.
What if you wanted to buy the same in Radix? Simply calculate the same percentage of the fully dilluted market cap. In that case you would have to buy only ~5,714 eXRD, which at eXRD price right now @ 0.1376 would cost you the bargain of $786, because Radix market cap is still so low. So, you can be sure if in some distant future, if Radix market cap grows to the current size of Bitcoin market, that would be worth the same $229,885.
The smallest BTC divisible unity (for now, as that could be decided to change in some distant future), called the Satoshi, is equivalent to 10^-8 or 0.00000001 BTC. Currently, that divisibility is ok, because one Satoshi still in the range of a hundredth of a cent. What if in some other paralel universe BTC was capped at 21,000 coins? In that case, one Satoshi would be worth ~$0.45, and the bitcoin divisibility would not be enough to represent the smallest dollar unit.
Are we on the same page now? The supply is just an arbitrary choice of where to put the decimal point.
Now, what about Ethereum? Ethereum at the moment doesn’t have a capped supply and is an inflationary coin. Although that may change with EIP1559 or with Eth2 staking, but that’s how it is right now. So any comparison with Ethereum market cap is misleading. You have to compare apples with apples, oranges with oranges, capped supply coins with capped supply coins. Fully diluted market cap with fully diluted market cap. Current market cap with current market cap. Don’t fool yourself with misleading comparisons.
What have we learned today? The Radix capped supply is as scarse as bitcoin, providing one of the necessary economic bases for price appreciation in the future, that comes with adoption and demand. We’ll continue to clarify every misleading argument or misinfomation in the next articles. Stay tuned!!!
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