As Bitcoin gets more expensive, it makes sense to try your luck in altcoins. I trust you did your own research (DYOR) before considering investing. But please don’t get fooled by altcoins that are still at a very low price point. They might be a lot more expensive than you think.
How to calculate the true value of any altcoin
We have 1 Bitcoin, currently trading at about 46.000 usd. Then you see an altcoin like Dogecoin at *just* 0.07 usd and think: “Much cheap, such value!”. You’d end up buying 10.000 Doge for just 700 usd hoping for a target of 1 dollar per Doge. But there’s a good reason it’s still so cheap. That’s because there’s 128,345,470,276 of them. That’s 128.3 billion.
Humans are known to be terrible at being able to understand/grasp immense numbers. In order to put the value of Dogecoin in perspective. We need to compare it to 1 Bitcoin, of which there are just 21.000.000. That’s 21 Million. Over 10.000 times less(!)
It’s simple math:
- P = Actual price of 1 Doge (being 0.07 USD)
- S = Total supply of Doge (being 123.345.470.276)
Don’t get me wrong, a high price does NOT mean it’s a bad investment. Bitcoin eventually went over x100 after being 428 USD. At least now you have a better sense of where the coin is at on the BTC price-point.
- If you do the same exercise with tokens like VeChain (0.05 usd) & Nano (6 usd), you’d end up with 222 usd & 38 usd. VeChain appears to be 120x cheaper, but is actually 5.8x times more expensive than Nano. But both still have lots of growth potential and are just half the price or less than Doge.
- Another example is Ethereum. It still looks cheap compared to 1 BTC, but if you match the supplies: you end up at 8.133 USD. That’s how high BTC was just a few months ago. Things could go ether way (pun intended), and you could still make quite a lot of profit. But I wouldn’t expect an x100 return anytime soon.
You can easily check the price of any altcoin and its TOTAL supply (not to be mistaken with circulating supply) compared to Bitcoin on Coin Perspective or Marketcapof. You could check the ones not listed there on Coinmarketcap. It can be insightful to make a list of your favorite coins in an Excel/Google sheets. You could enter their total supply and actual value, and calculate their “Real value” using the simple formula mentioned above.
Last but not least: while many coins have a finite total supply (deflationary due to lost coins), others are inflationary and can be min(t)ed indefinitely. If you plan on holding long-term, this is something to keep in mind.
On a final note: This calculated ‘dollar value’ does not reflect the quality of any altcoin project/investment whatsoever. It’s a complex combination of multiple factors like its team, code quality, partnerships, functionality, integrations, actual use, incentives, global awareness, marketing, hype, inflation/deflation…
Good luck! Hope it helps you on your crypto-journey.