Yesterday, Jared Tate of Digibyte (DGB) came out in support of Charles Lee, with regards to the whole idea of using Coin market cap ranking, as a tool for making investment decisions. According to Charles, most of the coins are “printed”, which gives them an inflated market cap that misleads investors. Here is the tweet from Charles Lee.
In support, Jared sent out the following tweet.
Jared went ahead to tweet a coin market cap list of mineable coins, and on this list Digibyte is at position 12. That’s way higher than its current position at number 32.
So what really sets mineable and non-mineable coins apart, and does it really matter to an investor? Well, the key difference between a mineable coin and a non-mineable one is that minable coins come to the market through a competitive process. Different miners compete to generate the coins and bring them to the market. That’s quite different for non-minable coins, which are pretty much printed into existence by their developer teams. The people behind such coins simply decide how many coins to bring into the market, and how to distribute them.
There are a number of advantages that mineable coins have over non-minable ones. The first one is that they tend to have a base/floor price. That’s because there are costs associated with the mining process. This means that there is a certain price level that these coins can’t fall below. Otherwise, the cost of bringing them to the market would be higher than the cost of producing them, and it just wouldn’t make sense.
The point at which, the cost of mining equals the market price is pretty much the base price of such a coin. As such, the investor is somewhat assured that the coin cannot go to zero. That’s not the case with a non-mineable coin. Most of the non-mineable coins in the market have arbitrary valuations, which make them susceptible to manipulation. A non-mineable coin may have a very high valuation in one day, and go to zero in the next. There is no floor as to how low a non-minable coin can go, since its value is purely determined by what people think it is worth.
The other key difference between minable coins and non-minable ones is in the distribution of the coins. While several miners with deep pockets can take control of the mining activity of a mineable coin, the distribution in most cases decentralized. A coin like Digibyte (DGB), for instance, has a very decentralized mining system. Therefore, though mineable coins are susceptible to manipulation too, it can’t be as high as a non-mineable coin. In a non-mineable coin, the issuer can play around with the price, since they have the power to do so, to the detriment of investors.
In essence, by investing on the basis of research, and not just the ranking of a coin on Coin market cap, it becomes clear that a crypto like Digibyte (DGB), which is mineable, and supported by some amazing features such as security, and fast transaction speeds is an amazing long-term investment. Its way better than most of the coins that rank above it.