Monero Valuation – Update and Refocus

Monero Valuation – Update and Refocus


It only took about 2 days after I shared some thoughts on Monero valuation that I regretted doing so. Various other responsibilities have kept me getting around to sharing my updated thoughts, but I’m glad to finally be doing so now, with this note.

My regret hasn’t been so much around making an embarrassing technical omission (which I pointed out in it). Even with that, the directional and order-of-magnitude conclusions were still largely intact, it was an interesting idea to explore for me, and I’ve had some fun follow up email exchanges concerning modifications and refinements.

My regret was publicly focusing at all on an association between Monero and DarkNet/Criminal activities.

At the same time as I’m first and foremost interested in the truth, I believe that there are responsible ways to share it as well as reckless and ill-conceived ways to do so. I don't think my article did a very good job on this front.

Unfortunately, because of the unique threat that Monero poses to corrupt fiat-money regimes, it (like Bitcoin, though more Bitcoin of yesteryear.... way way back, like, in 2016...) is increasingly being targeted and attacked to try and prevent public adoption. I expect this will increase as its profile rises.

One of the main ways this occurs is to try and convince people that it is associated with ‘bad stuff’ and people should therefore stay away. Whether it’s a CNBC (does anybody even really watch that anymore?) attractive but mindless reader of other people’s words on the teleprompter anchor-person asking leading questions trying to denigrate it, or stories of association with the Boogey-men of the day (“Evil North Koreans like Monero! Boo!! Hiss!! It’s Bad!! Stay Away!!), there is undoubtedly an active campaign to create negative associations in the public mind so that prospective adopters don’t look more closely and realize its true merit.[1]

By writing an article discussing Monero’s valuation potential as a ‘Dark’ coin, I unwittingly fed that association, and it’s for that reason that I regret it.

So let me here try and set the record straight. 

Monero’s real promise is not its ability to be successfully used in support of illicit or illegal activity. That is a valid trait, but is a relatively minor point.

Monero’s real promise is not that it’s a coin for people who value privacy, and hate the fact that we are all routinely, continually (and illegally for the most part) spied upon by governments, their cronies and puppet-masters.  That is again, a valid trait, and one that is deeply connected with the bigger story – but is still not quite ‘it’.

The big story of Monero is that it is uniquely positioned (and far more so than any other cryptocurrency – and therefore as a true successor to Bitcoin) to displace corrupt fiat money and bring back sound money.

Sound Money is a tough concept to express to the average person. Most people don’t even realize that there is anything wrong with the current fiat money system, much less that many societal problems are intimately connected to Fiat money being unsound. To name just a few of the connected issues (and without explaining them in great detail, as I do so here) they are:

-         Inflation: Despite technological advances that (according the ‘futurists’ of years ago) should have us all living in a world of 3-day workweeks (or less) and material abundance for everyone… more and more people (even intelligent, hard-working people!) struggle to keep up with rising prices for homes, food, fuel, healthcare, and all manner of basic living expenses.

-         Increased wealth inequality: Those closest to the ‘spigot’ of new-money creation (starting with the banks) benefit the most from fiat monetary policies. Everyone else foots the bill – contributing to our current situation where the vast majority of wealth is concentrated in a small fraction of the population… with the rate of that transfer increasing and concentrating.

-         Social & Political Engineering and Interference: With an unlimited ability to create and control money, whatever projects and plans those who control the money supply desire can be attempted and/or implemented: even if they are horrible and morally reprehensible things like war, repression, and propaganda.

Monero, as sound money, has the potential to significantly contribute to the healing of much of the damage caused by Fiat systems – and it can do this by working to correct these problem closer to their root causal level. By bringing the system back to equilibrium at a very fundamental basis, social and economic systems will begin to organically reflect core adjustments.

But what is sound money? Much has been said (by me, and others) about the requirements for money to be sound… but that can be confusing for a lot of people. So let’s take a different tack and talk for just a moment about what sound money is NOT.[2]

Sound money cannot be created out of thin-air by an un-elected, un-accountable, and often sociopathic ruling class.

Sound money cannot be used as a means to track, trace, spy-on, or control the people who use it.

Sound money cannot be used to institute a stealth theft of wealth on its user-base through inflation.

Sound money is not the result of people and efforts aiming to ‘get rich’ by launching a new coin.[3]

Are you starting to grok me on the bigger picture? It’s not about picking what the next most-pumped ICO is so you can maybe afford that car/house/thing you currently *can’t* afford. It’s about working to correct the mechanisms of a broken system which on the one hand tells us that we live in a world where our species has conquered the elements, harnessed subtle and powerful forms of energy, and approaches creating new forms of life (organic and inorganic) … and on the other hand tells us that it’s perfectly acceptable that the vast majority of our species struggles to ’work hard enough’ to provide enough for themselves and their families without having to either go into debt or rely on handouts… both of which are so conveniently provided by the very same institutions which corrupted the system in the first place!

The story of Monero is the story of money – sound money. In case you didn’t know, Monero actually means money in Esperanto… a language created by a man over a century ago who dreamed of people coming together in a more evolved degree of consciousness and level of connectedness.

There are currently conversations going in within the Monero community to figure out how to best communicate this message – ideally with a short tagline that is digestible for even the average layperson. There are a lot of suggestions floating around, and I have my own opinions (everyone does, right?) If you’ll humor me on this little soapbox, I’d like to make a pitch to you of my personal favorite, along with my reasons. (note: there's no particular reason why you should listen to or like my idea better than anyone else's... but this is my blog, right? you can at least hear/read me out :)) 

Monero: Sound Money.

The first thing this does is identify Monero as ‘money’ – which is different from most other coins, and hopefully gets people’s ears to perk up – after all, most people like money, right?

As far as the word ‘sound’ – well, I recognize this may take a little more exposition, and the process of informing people on what it means will probably be slow. But it is true and powerful in its implications – encapsulating all the other features of Monero – especially the privacy aspect which is necessary for fungibility (focusing solely on the privacy aspect though, while massively powerful for the libertarian elements of society, may unwittingly paint Monero in the public’s mind as something only useful for when you want or ‘need’ privacy… never mind illicit associations that confuse the issue).

While ‘sound’ may not translate well into other languages (a better translation might at times be ‘true’) I think that’s OK. The soundness of money is such a big and important concept, that sticking to it and forcing people to do a little learning to grasp its meaning could actually be a useful way of ensuring that people ‘get’ it: as opposed to something that is immediately obvious and digested – but perhaps with a shorter shelf-life.

Finally, there is an aspect of ‘Sound Money’ that some people might consider a little tame, or boring. But ultimately, money is not meant to be super-exciting, snappy, or witty. It’s a tool meant to facilitate human value exchanges, for the real bigger purpose – allowing us all to live and enjoy our day to day lives. Keeping the tagline relatively subdued and without lots of glitz and flash is to me taking the high road - ennobling rather than sensationalizing its profound importance. Getting people to ‘buy Monero’ but without an understanding of how it’s truly different from other cryptos might pump the price for a bit, but won’t do anything to engender what’s really needed for broad adoption and success – raised awareness.

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Since this is a piece (nominally) on valuation, I’ll give a little tidbit for the dreamers (and ‘creative visualization enthusiasts’ alike).

Considering Monero as a serious and viable successor to not only Bitcoin but Fiat money, the formula for valuation is really quite simple (and I’ve shared it before):

= {[Global Money Supply Penetration] x [Global Money Supply]} / [Number of Coins]

While long-term success is still a big question-mark, this is what we’re “playing for”… and so the numbers for believers are ‘roughly’: 

$80 trillion  x [5% to 50% ] / [let's say for simplicity 20 million coins]

 This would put the price target in the wide-wide range of between $200,000/coin to $2,000,000/coin… or 500x – 5,000x current values.

All that said though, I will finish by sharing what I consider to be the single best slide ever produced on Monero’s valuation (courtesy of Fluffypony) – and which I think speaks the loudest about it’s true prospects for success.




Cheers,
Izzy



P.S. the most appreciated form of support is an earnest email or message (on twitter, or izzyotomakan@gmail.com) even criticism is great so long as it's constructive! but as a few people have asked me to include it, a monero address that may receive donations/support if you feel so inclined is :

41fksK8rNJ7VUWHr5yW58C75oAJbL8mEh3ytfLDucVq3StwTudzbGPyQ75Sj3BeqvNjKtw3Mn5Gni5nD62aWZCiDNjaPY8k







[1] That Monero is grouped along with other ‘privacy coins’ is another unfortunate obstacle that needs to be overcome. That DASH -  a ‘privacy coin’ which I liken to the Club in its inability to deliver privacy - has a bigger capitalization than Monero will I think be looked back upon as nothing short of an absurdist testament to the power, albeit temporary, of deceptive and manipulative marketing.
[2] Note: some of these traits are direct results of adhering to the 4 positive traits of sound money: Store of Value, Unit of Account, Medium of Exchange, and Fungibility. Others are ancillary or indirect traits.
[3] Especially those that steal the codebase of another coin, and despite not having a meaningful developer community, relentlessly pump the rip-off. Yes, I’m looking at you Electroneum.

Comments

  1. Very enlightening post cryptoizzy.

    I want to paraphase something I read on Bitcointalk:
    "Monero is being accumulated big time by big players in the market. It is being price suppressed and will continue to be until its annual inflation decreases below bitcoin (2 years approx). The big players realize that with Monero, they are playing Texas Hold'em with pocket Aces. The way to extract the greatest profit from your opponents is to slow-play."

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  2. Very nice blog... This blog share very useful information on bitcoin and stratis bitcointalk. I found this blog content very useful. Thanks for sharing

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  3. using monero as a store of value for 'final settlement' could service a similar scale of need, with less transactions than using it as the be-all-end-all cash. Appreciate the way you calculated the valuation.

    I do work in a Crypto Marketing Agency we meet and discuss the blockchain marketing aspects with the blockchain startup founders and not all of them really do understand the basic idea of cryptocurrency but they have focus on making money rather than solving a problem.

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