Are Cryptocurrencies Overvalued? Compared to WeChat and Paypal

Are Cryptocurrencies Overvalued?
Compared to other disruptors

I am not a professional financial adviser, and the opinions I offer on this account are not financial advice.

Hello, and welcome to Let’s Invest, a show for amateur focus investors. Today we are going to take an in depth look into some interesting facts in order to try to determine the valuation of a few major cryptocurrencies to see if the current market caps of Bitcoin, Ethereum, and Dash were overvalued, undervalued, or reasonable compared to other disruptors in the financial industry like paypal and wechat.

But I want to point out one thing first:
Cryptos are infinitely overvalued, if you think that government regulation will eventually kill them or some kind of government or bank controlled cryptocurrency will eventually win.
And they are probably fairly priced, if you have strong convictions that open source, user controlled currencies will continue to gain popularity despite what the government entities and banks of the world do to try and stop them.

So basically what it all boils down to isn’t so much of the market cap comparison, but your opinion on what you believe the future is of user controlled, open source, crypto currency?

All investment decisions come down to making a call. When warren buffet put 3/4ths of his net worth into shares of Geico in 1951. He did so because he made the call, that Geico would grow greatly because they sold by marketing and not through agents and thus saved lots of money compared to other insurance companies. And he was right.

Now, I already have made the call for myself, that user controlled cryptocurrency will inevitably dominate any regulation or bank controlled competition in the long run, as they seem to already be doing. Some cryptos, such as Ethereum even have support of governments around the world. And despite bans, Chinese citizens still find ways to trade bitcoin on exchanges by the billions of dollars every day. So since I already made the call, let’s investigate if the prices are reasonable that we are seeing right now in this sort of investment?

So before we go into the chart, I’d like to point out one thing: I know that this is kind of a lopsided comparison because bitcoin is a currency, and paypal and wechat are just services that handle transactions, thus your experience with bitcoin depends a lot on which wallet you use and your knowledge of crypto. But I am comparing them on the basis that paypal and wechat are DISRUPTORS to the financial industry, just as crypto is. So by comparing one set of disruptors to the other, we might be able to see if there is a ummm…. valuation discrepancy, amongst them, that we can profit off of. Or at least see if current cryptocurrency valuation is incredibly overhyped compared to traditional investments in disruptive financial technology. And if crypto is overvalued, then we know it is a bad time to invest. If its priced reasonably, then maybe we should think about it some more.

So I know what I think, but before I say it clearly I'm going to leave it up to you to you guys to decide and discuss what you think. Please write your thoughts in the comments and I'll respond to the ones with the most well thought out opinions.

So I know what I think, but before I say it clearly I'm going to leave it up to you to you guys to decide and discuss what you think. Please write your thoughts in the comments and I'll respond to the ones with the most well thought out opinions.

Notes:
Google “red packet fees on wechat” it shows 4 different amounts wechat red packets sent over Chinese New year (768M, 46B!, 8B, and 668M), proves how hard info on wechat is to come by.

All of this info was hard to come by actually, and I don’t know who to trust. For example here is a website (https://www.cryptomorrow.com/2017/12/11/merchants-accepting-bitcoins-and-altcoins/) claiming that their link is to a list of 500 merchants that accept dash as payment. Sweet, that’s a lot of merchants, let me click on it. Ohh it's dash.org, I just counted this whole list and there were only like 115 merchants on it. Where are the other 385 that this guy talks about? Hmm must have been pulling numbers out his @$$ like the people reporting the number of wechat red packets sent over chinese new year. Great.

Now I know you are wondering why wechat is valued roughly similarly to paypal even though it has 4 times the user base and way more transactions. That is because wechat is actually owned by a gaming and media company called TenCent. And wechat does not charge transaction fees, thus it processes all of the p2p transactions for free. The way TenCent makes money off of wechat users, is when users buy one of TenCents games or in-game items, like skins and swords for your characters and so forth, which you use wechat to buy. Tencent just provides you with wechat pay in order to give you an easy method of buying their stuff.

Sources:

https://www.investopedia.com/articles/basics/03/031703.asp market cap defined
*http://www.businessofapps.com/data/wechat-statistics wechat guesstimated value
**https://expandedramblings.com/index.php/wechat-statistics/ wechat # of users
https://bitinfocharts.com/comparison/dash-transactions.html tx per day row
https://bitinfocharts.com/dash/ user counts row
https://etherscan.io/chart/address unique Ether addresses
https://bitinfocharts.com/comparison/transactionfees-btc-eth-dash.html#3m tx fee row
https://blog.bitpay.com/bitcoin-a-new-global-economy/ merchants that accept BTC
https://www.cryptomorrow.com/2017/12/11/merchants-accepting-bitcoins-and-altcoins/ dash 500 BS
https://www.statista.com/statistics/218493/paypals-total-active-registered-accounts-from-2010/ paypal user growth numbers
https://www.statista.com/statistics/255778/number-of-active-wechat-messenger-accounts/ wechat user growth
https://www.coindesk.com/using-google-trends-estimate-bitcoins-user-growth/ Bitcoin user growth