TD₿: Why the Bitcoin Dominance Index is Deceiving by Jimmy Song
TL;DR Bitcoin Dominance is a flawed, easily manipulated metric used to promote inferior altcoins.
Hey Bitcoiners,
Bitcoin Dominance is one of these metrics that has become popular throughout the broader “crypto” ecosystem that’s embarrassing to anyone who has actually studied statistics.
The fact of that matter is that Bitcoin Dominance is a flawed metric because it uses market cap which fails to take into account liquidity or network security.
On top of that, Bitcoin Dominance is easily gameable because the cost of production to create a new altcoin is zero. Someone could make a new altcoin, put their own money into it, and now they’ve increased the broader “crypto” market cap against Bitcoin.
Jimmy Song goes into more detail on why Bitcoin Dominance is a dumb metric in this blog post (05/08/2017).
Unfortunately, metrics like this seem to stick around because it’s useful for altcoin promoters to sell newcomers on their scams.
Bitcoin Dominance is an IQ test.
Tick tock next block,
Cory Klippsten
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Quote of the Day
“To be clear, "Bitcoin Dominance" compared to altcoins is still a stupid metric. Better Bitcoin Dominance is via comparison to global money supply.” - Jameson Lopp, Co-Founder and CTO of Casa
Meme of the Day
(h/t @level39)