In the search for investment coins, one may choose to search for those that are undervalued. Valuation can be a tricky issue, but fortunately there are some numbers available that we can use to better inform our judgements. In principle, when looking for the best value we would be looking for the coin that is doing the most with the least market cap. In other words, we may search for the most active coins PER market cap. This should yield us coins that are being used extensively, but may have so far have escaped being 'invested in'. This method may not always work, But neither does any method always work, or we would already be rich.
In this article some simple measures of activity per market cap are graphed to give us some idea of what coins may be more active than others. It should be noted that this data varies, a lot, sometimes inexplicably. For example, the number of transactions can vary significantly without any clear market reason. The same goes for the total money sent. We can remember when Dogecoin had 4 times its market cap sent each day.
Our first measure is the amount sent in USD per day per $1,000 of market cap. Obviously if a coin has a lot of money sent each day, meaning it is being used a lot, and yet a small market cap, then it might represent a good value according to our formula. Following is a chart of amount sent in USD per day per $1,000 of market cap:
We can see that Litecoin leads with $0.23 sent each day per one dollar of market cap. In other words, 23% of market cap is sent each day. Dogecoin follows with 18%, and Vertcoin follows with 10% of market cap sent each day. When investing in any currency, we are betting that it will be used to send money. These three coins lead the list in this category.
Our second measure of 'activity' is going to be the number of transactions in a 24 hour period per $1,000, in market cap. This is similar to the last measure, but in this case we could get a high level of activity even if all the transactions represented small amounts. Following is a chart of transactions per day per $1,000 in market cap:
From the coins that made it in the first round we see Vertcoin again followed by Dogecoin.
Finally, for our last measure we will use the number of active addresses used in the last 24 hours per $1,000 dollars in market cap. See chart:
In this case, Vertcoin leads with 2.3 active addresses per $1,000 in market cap followed by Dogecoin with 0.86.
From the charts we see that Vertcoin is winning in both transactions and active addresses while it shows well in the category of amount sent per day, all relative to its fairly small market cap. So you may be wondering, What is Vertcoin and are there any other reasons to invest in it?
Vertcoin was designed similar to Litecoin for the purpose of being resistant to ASIC mining. Vertcoin carries this evolution one step further by increasing the memory requirements required for mining as time goes forward. Here is a quote from their paper:
"Vertcoin has now been released as the logical evolution of Litecoin and introduces what's known as Adaptive N-Factor. The N-Factor component of Scrypt determines how much memory is required to compute the hashing functions. Vertcoin N-factor increases the memory requirements with time to stay one step ahead of any possible ASIC development."
The advantage of all this is that, without the excessively centralized mining of high power computing centers, the network is more distributed reducing the possibility of a 51% attack.
Whatever the technical advantages of the coin it currently tops the most active list followed by Litecoin and Dogecoin. If the active list proves useful, we will produce further installments.