The market value of Ether (ETH), which increased 150 percent in 2021, exceeded $ 200 billion.
Especially investors from the traditional sector are used to comparing earnings, sales and market share indicators, unlike investors who mostly focus on the spot price. On the other hand, when evaluating a cryptocurrency with multiple uses, there is no single measure to measure its potential. While Ether functions as a necessary token to gain access to the Ethereum network, it can also be a digital store of value.
Cardano (ADA) may be the best example to illustrate the misperception created by the unit price. Traded for less than $ 1, ADA’s market value exceeds $ 26 billion. Therefore, the supply of crypto money is also of great importance in evaluation. As another example, the market value of Cover Protocol (COVER), whose unit price approaches $ 1,600, is below $ 100 million.
While comparing different asset classes side by side is controversial, market value works the same for commodities, stocks, and mutual funds. Other metrics such as free volatility, tradable amount and average trading volume are also used to analyze the size of an asset.
According to 8marketcap.com data, Ether’s market value surpassed the market value of Novartis (NVS), AT&T (T) and Cisco (CSCO).
Novartis International AG, headquartered in Switzerland, was founded in 1857. The company, which has more than 110 thousand employees, generated $ 8.1 billion in net income in 2020. It doesn’t make much sense to compare a 165-year-old research, development and distribution company with a technology-based protocol that doesn’t even have any server or developer team.
Moreover, while Ether has a fixed supply calendar, companies can create extra stocks. Similar risks exist in taxes, liabilities and possible government control. Decentralized protocols do not contain such risks.
As a result, although it makes sense to compare the market values of various assets, the purely technological nature of cryptocurrencies provides a much greater advantage.
The opinions and views expressed herein are those of the author alone and do not reflect the views of Cointelegraph. Every investment involves risk. Do your own research before making a decision.