Showing posts with label marketplace. Show all posts
Showing posts with label marketplace. Show all posts

December 22, 2017

Correlation between cryptocurrency value and exchange listings: Expert Blog

By Munair Simpson - December 21, 2017 (

There is a positive correlation between the value, or market capitalization, of a cryptocurrency and the number of exchanges that it is listed on. For the top 1,000 cryptocurrencies, the correlation is over 50 percent. Rudimentary data analysis indicates that the market capitalization of the coin or token crudely increases with exchange listings. However, correlation is not causation and it is not wise to conclude that simply listing a cryptocurrency on more exchanges always adds more value to the cryptocurrency.


Correlation explains how much two variables are related. A correlation of 100 percent would mean that the positive change in one variable is perfectly related to the positive change in the other variable. If the correlation between cryptocurrency value and exchange listings was 100 percent, then it would possible to observe an exactly proportional increase in market capitalization with an increase in the number of exchange listings.

Since the correlation is over 50 percent, it might be tempting to list on as many exchanges as possible to maximize token value. Do not be tempted. Even though market capitalization and the exchange listings are somewhat linearly correlated, it does not mean that listing on more exchanges definitely results in an increase in market capitalization. Especially when a little more analysis reveals the presence of major outliers.


Thanks to the Coin Market Cap API it is easy to observe outliers in the top 1,000 cryptocurrencies. Dumping the market capitalization and exchange listing data into Google Sheets or an RStudio dataset helps to explain a lot. Plotting value against listings shows that cryptocurrencies like Bitcoin are not normal in comparison to the majority of other cryptocurrencies.

Plotting the log of market capitalization against exchanges listed reveals roughly three different clusters of value in the cryptocurrency world.

Clusters of value

The first cluster includes Bitcoin, Litecoin, Ethereum and Bitcoin Cash. This group of cryptocurrencies are all listed on over 75 exchanges. The second cluster of cryptocurrencies are scattered between 15 and 55 exchange listings. The second includes DASH, Ripple, ZCash, and popular cryptocurrencies. Finally, the vast majority (~98%) of cryptocurrencies have 15 or fewer exchange listings.

Statistical summaries show that median cryptocurrency is listed on just two exchanges and the average is listed on just under four exchanges. Using a box plot to graphically describe the data shows the large number of outliers in relation to the majority of cryptocurrencies.

Box Plot of Exchange Listings. Data obtained from on Dec. 10th 2017.

In general, the major outliers widely function as mediums of exchange and stores of value. To be globally valuable as intermediary instruments used to facilitate buying, selling or trading goods and services, these cryptocurrencies should be listed on many exchanges as possible. Currencies generally have more legitimacy the more widely they are used, and listing on many exchanges advances those network effects.

Not all of the outliers present in the dataset serve as money. Ethereum is an exception. Though it was designed with a different purpose in mind, the market decided that it too should function as a medium of exchange and store of value.

There are other exceptions in the first and second cluster of cryptocurrencies. Qtum and TenX were also not purposed as mediums of exchange, yet they are listed on over 15 exchanges.

Strategy implications

In spite of these outliers, analyzing the relationship between value and exchange listings has implications for cryptocurrency strategy. Further dividing cryptocurrencies into subsets and rerunning the analysis provides more meaningful information to can reinforce or redirect the intuition of a cryptocurrency strategist.

Knowing that the outliers are primarily used as stores of value or mediums of exchange, it only makes sense to list widely if planning to compete with cryptocurrencies used as money. There are always exceptions. However, if the purpose of a cryptocurrency is to be a better form of money, then it may need to be widely listed to in order to compete with the other widely listed currencies.

For example, cryptocurrencies competing to be a medium of exchange in Venezuela may increase their market capitalization through listing on a Venezuelan cryptocurrency exchange. With each new geographical market entered, it might experience additional increases in value.

This might not be the case with tokens. Since tokens usually represent an asset, the economics of valuation with respect to exchange listings may be different. Being listed on a Venezuelan exchange may add no value at all.

Security tokens may observe increased market capitalization with exchange listings, as investors will appreciate more trading options in the case there are problems at one of the major centralized exchanges. However, there will most likely be diminishing returns to increasing exchange listings.

The long tail

Focusing on cryptocurrencies with fewer than 15 listings makes sense for getting a rough idea of the relationship between value and exchange listings for average tokens. This subset is the third cluster of cryptocurrencies. They represent over 97 percent of the top 1,000 cryptocurrencies. This cluster also includes cryptocurrencies, like IOTA and NEM, which are not tokens but are highly valued and listed on fewer exchanges than their peers.

Top 1000 Cryptocurrency [Data Source:]

Graphically, with the aid of a histogram, it is possible to observe the concentration of cryptocurrencies. The chart exposes the first and second clusters as the long tail cryptocurrency exchange listings.

Focusing third cluster makes it possible to notice that the linear correlation between market capitalization and exchange listings drops to 20 percent. That means that it might not really matter that much how many exchanges the average token is listed on. The correlation between the average token’s value and exchange listings is not very significant.


The ICO is becoming an increasingly popular fundraising vehicle. Traditional businesses are starting to look to this crowdfunding mechanism and bypassing other traditional forms of financing.

Nonetheless, planning an initial coin offering requires a lot of thought and thorough research. Even deciding which exchanges to list on and how many exchanges to list on requires careful research. Fortunately, there are already hundreds of cryptocurrencies out there that can help to determine if it is worth the time and effort to pursue a certain strategy.

There is a correlation between market capitalization, but it is not very strong. Be guided by that. Whenever in doubt about correlation and causation, just look at Litecoin and Bitcoin. Litecoin is listed on 94 exchanges compared to Bitcoin’s 88, yet Bitcoin is a magnitude larger in market capitalization.

Munair Simpson is a business strategist and the principal researcher at Useful Coin Research. Munair lives in South Korea and enjoys teaching Capoeira when not thinking about the future of finance. Munair graduated from the Wharton School with an MBA in Marketing.

October 29, 2017

Your MVP is minimal, but is it viable?

By Alex Iskold - October 07, 2015 (

In this day and age, when startups talk about MVP the emphasis is always on minimum.

Everyone encourages founders to not wait too long to launch, to get it out there, to get feedback, and to start learning from the market.

That is great advice in general, and I am personally a big fan of going fast vs going slow. Yet, to me there is a subtlety that is lost in the message, which leads to misinterpretation and bad outcomes.

"The minimum product that comes out still needs to be viable".

If a product is too simple, and falls below the bar, it won’t be well received, and won’t be likely to take off. If the product is too simple, doesn’t solve the problem, and doesn’t activate and retain the customers, it is not an MVP. It may be a prototype, and there lies the difference.

"MVP is good enough, and can be improved to be great one day. Prototype isn’t good enough".

Simple, but not simpler than it needs to be

Einstein said that everything should be made as simple as possible, but not simpler. He implied that difficult problems are just that – difficult, and ultimately, some things can’t be simplified.

"A great MVP isn’t only simple, it is also sufficient".

It embodies the solution to the problem, or an elegant approximation to a solution that is good enough. Sure, it lacks features. Sure, it is raw and unpolished, but good MVP can be recognized as having the potential to be great – to fully solve the problem.

Viable literally means alive

If you look up the word viability in the dictionary you will see that it comes from the Latin word vita, meaning life.

"Being viable literally means being alive".

How can a product be alive?

Products that we fall in love with have a vital quality to them. They feel great, respond right – they delight us with their UX, simplicity, and the way they solve the problem.

They feel different, they feel alive.

A branch of science called Complexity studies patterns across disciplines, and seeks to understand the dynamic of different systems.

Roughly speaking, Complexity distinguishes between systems that are in the state of chaos, dead and alive. Systems that are considered alive are close to the edge of chaos. They have enough interesting dynamic built in, but they aren’t out of control.

The analog for MVP is that you can have a product that has too many features – it’s chaotic and hard to understand. On the other extreme, you can have a product that just doesn’t have enough built in. It is not good enough, it is not alive.

It is in the middle that you find your great MVP. It is minimal and vital. And key to vitality are feedback loops.

How to think about your MVP

It turns out that the key to vitality is feedback loops. This is what makes natural systems alive and this is what makes great software alive as well.

"Strive to create a minimal product that has correct feedback loops".

Step 0: Talk to customers and confirm verbally that you are on to something.
Do the unscalable things to validate the market.

Step 1: Map out MVP based on your gut and understanding of the market.

Repeat steps 2-4 until done:

Step 2: Remove features that feel unnecessary.

Step 3: Combine features that can be combined, simplify.

Step 4: Check the flows and feedback loops. Are you solving the problem you set to solve? Is the system dynamic enough? Will it be alive?

What you are doing is you are focusing on a minimal set of features, but not at the expense of viability. Sometimes after removing a bunch of things you may need to add some things back.

Viability for different types of businesses

How exactly to make your MVP viable is as much art as it is science. But there is science to it, for sure. Let’s take a look at different types of businesses to get the idea of what to look for.

Consumer utility/social: For consumer product activation and retention are two important feedback loops. The product is not immediately viable if users aren’t activated. Similarly, the product won’t be viable in the future if the users aren’t retained.

Activation for most consumer products is one or more actions that the user has to perform to become engaged and have potential to be retained. For example, on Twitter, an activated user may be expected to follow at least 10 other users and post a Tweet. To become retained, the user is expected to come back at least once a month and read a tweet.

Marketplaces: For marketplace the key thing is to enable liquidity. For example, for Airbnb, it wouldn’t be enough to just list the apartments or express a need for a rental. Both need to be in place. There needs to be a mechanism to match buyers and sellers. Most often it is done via Search and Discovery, but in different types of marketplaces matching can be done differently.

Again there needs to be the basic feedback loop around activation, and ultimately each successful seller and buyer need to experience the joy of the first transaction. What happens next is equally important for viability. Could Airbnb work if you removed seller and buyer ratings? Perhaps not. Maybe this feedback loop is critical to make sure that the marketplace can self-organize and weed out bad players. Including or not including ratings into the MVP is a critical decision.

E-commerce: For e-commerce business, the ability to find and buy products is critical. Purchase is the feedback loop. But a bunch of other things need to work correctly. For example, imagine an e-commerce site without the search capability. It might be fine if you have a handful of products, but not if you have a large catalog. Should search be part of your MVP?

For retention, you need to decide what will make the users come back. Is it promotions? Is it personalization? Perhaps subscription? Maybe a mix of all of it? What is the minimum investment you make in MVP that maximizes the chance of users sticking with you and coming back for more?

SaaS: For SaaS business, activation is signup and retention is non-churn. The first one relies on building features that are needed, and the second relies on repeat usage. The second feedback loop is a lot harder to get right in MVP, but it’s pretty important.

Unlike consumer businesses that don’t charge, SaaS products are paid. The fact that you are paying for something is already an incentive to use it, but it is not a guarantee.

For more details on building your MVP go read this awesome guide. Below is the image from the post.

Compute your MVP

There is a method to great MVP. It captures and brings to life the minimum, yet sufficient version of your solution to a business problem.

"Don’t rely on luck or minimalism to get you to YOUR MVP. Compute it".

MVP is a product computation on a napkin or a whiteboard. MVP is not about furiously typing code. Rather, a great MVP is about rigorously thinking.

We can’t predict the future, but we can do better than roll the dice.

We can be intelligent about our MVPs, make them simple, build in feedback loops, and make sure they have a shot at being alive.

Please share your MVP experiences here. What worked / didn’t work for you in your business?

Alex Iskold is an Entrepreneur, Managing Director at Techstars in NYC, and an investor in 80 companies.

October 25, 2017

Bitcoin price struggles to recover beyond $5,500; Bitcoin Gold lacks community support

By Joseph Young - October 25, 2017 (

For the past two days, the bitcoin price has struggled to recover beyond $5,500, after surging above $6,000. Analysts have attributed to the recent decline in the price of bitcoin to the upcoming Bitcoin Gold hard fork, and the lack of support from the community.

Earlier today, on October 25, the price of bitcoin dipped below $5,400, dropping to $5,365. Since then, within a relatively short period, the price of bitcoin has rebounded to $5,500, but still, due to the Bitcoin Gold fork that is set to occur prior to the SegWit2x hard fork on November 16, the bitcoin price will likely remain in the $5,500 region, at least until the Bitcoin Gold development team adds strong replay protection.

Bitcoin Gold and its Negative Impact on Bitcoin Price

The Bitcoin Gold hard fork was abruptly introduced by Chinese miner Jack Liao earlier this month. Essentially, the long-term vision of Liao and the Bitcoin Gold team is to close the gap between ASIC mining and GPU / CPU mining, to decentralize the mining industry.

But, the bitcoin and cryptocurrency community criticized the BItcoin Gold hard fork, primarily because of its unoriginal and impractical idea, and also due to its plans to premine the cryptocurrency. In the cryptocurrency market, the concept of premining a cryptocurrency before its launch is not welcomed by investors, traders, users, and developers, because it leads to a centralization of funds and supply before the launch. Major cryptocurrencies like Dash were criticized for that reason in the past.

Additionally, the community has been fundamentally opposed to the Bitcoin Gold fork considering its lack of replay protection. Without it, bitcoin investors and holders prior to the fork will not be able to receive Bitcoin Gold in a 1:1 ratio, as it would danger existing bitcoins. As the Trezor development team explained:

“Bitcoin Gold’s codebase is, at the moment of the writing, incomplete. Most importantly, it lacks replay protection. For this reason, TREZOR Wallet will not support Bitcoin Gold yet, as it would endanger your bitcoins.  As Bitcoin Gold is a fork of Bitcoin, the transaction format, the signatures, etc. are the same. A transaction on one chain could be copied to the other chain and will be valid, possibly leading to unintended loss of coins.”

Consequently, as highly regarded bitcoin developer Jimmy Song explained, bitcoin investors have started to sell their holdings and temporarily move on to alternative cryptocurrencies (altcoins) to avoid the Bitcoin Gold hard fork.

Short-Term Price Trend

The Bitcoin Gold development team has announced that they intend to integrate strong replay protection prior to its hard fork. But, as leading cryptocurrency exchanges such as Bittrex noted, the codebase itself is not ready, and most of the Bitcoin Gold codebase has not been tested and audited.

Unless the Bitcoin Gold development team adds replay protection in the upcoming days, the price of bitcoin will likely suffer as a direct result. While analysts like Tuur Demeester predicted a similar trend with SegWit2x in mid-November, since SegWit2x has replay protection, it is likely that a sell-off will not occur.

Featured image from Shutterstock.

October 21, 2017

Cointal, the first multi-cryptocurrency Peer-To-Peer Marketplace, is Launched

By PR - October 21, 2017 (

The one website you’ve been waiting for is finally here. Cointal launched their platform some few hours ago, and it looks as promising as they said it to be.

Now, we’re only a few clicks away from being able to post offers for buying or selling Bitcoin, Ethereum, Ripple and Litecoin with any payment method we could use.

The company affirms that more cryptocurrencies will be made available ‘soon enough’, which should stick to their original schedule of making 10 other cryptocurrencies available before early 2018 (including Monero, NEM, NEO, Dash, Bitcoin Cash, etc.), along with other features that will be revealed on their next platform update. The website looks stable, although they have already started working on their next major update.

The team worked hard enough to make the navigation over their platform very light. After a few tries, you can easily get used to the user-friendly interface with all the security needs (including verification on request, 2-Factor Authentication, etc.). We can now have access to the offers, the ‘create an offer’ section to drop our own ads, the community’s global forum, and their support system is operational and works just fine. We can also manage all of our offers, trades, and past operations over one single ‘Dashboard’ page. We can also customize our profile as we see fit, and we benefit from many fancy options on our settings page to even control the traffic over one’s profile and offers. As promised, an all-in-one wallet has been made available with 4 cryptocurrencies, easy to access and very useful to manage a large portfolio. No way of hacking through it seems possible.

Everything seems to be in place. It is so simple to use that trading cryptocurrency has just reached a whole new other level.

Cointal honored their word by slowly rolling out the advantages that the 5000 pre-registrants of their pre-sign up campaign were willing to get some few weeks ago. As promised, if you have signed up some weeks prior:

– You will be exempt from all charges for your first 100.000,00 USD trade volume.

– Your profile will be given a significant label:

– You will be eligible to apply to be a moderator in the social chat, the blog, and even the Cointal forum.

– Your requests will be given first priority, without support tickets; you can instantly request a phone call to deal with your issues.

– Once every month, 3 Cointal Builders will have the chance to be given 10.000,00 USD worth of BTC.

It does look too good to be true, but the signed up accounts could benefit indeed of all these features. If you have signed up, you can try it out! They have notified the registrants by SMS and email and invited them to confirm their adhesion before benefiting from their unique features.

The team is still working on finding any flaws to better their next platform version. They are also very mindful of the community and are willing to assist, as they have promised, every user involved with them, without any delays.

You can get familiar with it by signing up over their website

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