I follow a couple Crypto Youtubers (Cedric Dahl & Louis Thomas) that claim “adoption” is the best way to measure present and future value and thusly, the best way to make long term investment decisions. They value adoption over “hype” and even over legitimate technological advancements.
ITT discuss:
1. Why or why not that “adoption” is the best indicator for long term investments. 2. If adoption is the best indicator, why I shouldn’t allocate my portfolio like Pic Related?
Pic Related is shows the coins with the most transactions (source Blocktivity.info)
I'd like to point out VeChain, which seems to get a lot of usage but is very cheap. Thoughts on that?
Owen Davis
>adoption So everything should be worth about zero
Lincoln Howard
Well obviously it wouldn't make sense to compare crypto to fiat that way. But I don't see why it couldn't be used to compare cryptos.
Nathaniel Adams
OP why are you valuating it with the most transactions and why not with who actually uses it? I'd rather fully know who or what is behind those transactions instead of ones that look like it could be spam.
Blake Rogers
Idk, that's why I made this thread. So you all contribute considerations like this. You make a valid point.
Mason Cruz
Can someone backtest a Blockchain activity weighted portfolio and see the returns vs just holding btc?
>1. Why or why not that “adoption” is the best indicator for long term investments. I think it is, because of the network effect. A system is more useful the more users it has (even exponentially so), therefore when new users are choosing which system to adopt, they tend to choose the one which already has the most users, because that consideration might outweigh even other alternatives which is technically superior. Therefore it is very hard for other blockchains to catch up with the leaders in adoption.
>2. If adoption is the best indicator, why I shouldn’t allocate my portfolio like Pic Related? Because number of operations isn't really a good indicator of adoption. It's better than nothing but it has several huge flaws, such as the fact that on blockchains where transactions are free (such as EOS), there is no incentive to optimize the number of transactions per user, in fact people can just spam pointless transactions to make the system look active even if it's not. Bitcoin and Ethereum has fewer transactions on paper, but actually likely processes more information, because on average each transaction matters much more because the sender needs to be willing to pay for it. The problem is that it's quite hard to accurately measure this.
Additionally, in these days where many projects are still in development, and killer apps still haven't been invented, developer adoption may even be more important than user adoption. And indeed we see that the metrics for this looks very different from OP's chart, pic related.
