Companies Behind The Cryptocurrencies
Cryptocurrencies have evolved in the past year from a dark underworld technology associated with the infamous Silk Road to one of the hottest investments of 2017. Earlier in January, a Forbes article reported that if a person invested $100 in each of the top ten cryptocurrencies in January 2017, their yearly profit would have been almost $65,000. However, it hasn’t solely been straight upward trajectories - the past year has been a wild roller coaster ride for cryptocurrency investors. In the past month alone, the total market capitalization has ballooned from $422 billion up to $830 billion and back down to $428 billion.
The most illuminative way to illustrate this frenzy is by looking at the growth rate since the ICO of a cryptocurrency. In 2017, there were a total of 894 ICOs that cumulatively raised just over $6 billion, as reported by ICO data. For twenty of the top cryptocurrencies by market capitalization that had an ICO, we took a look at the growth rate in price since the ICO and the resulting annualized rate of return. Dragonchain, with an ICO price of $0.0663, was trading at $1.35 at the time of this writing.
Having an understanding of what the companies behind these cryptocurrencies actually do is crucial for evaluating these coins and tokens. To help facilitate this type of transparency, the team here at Craft put together profiles for the companies behind the top 99 cryptocurrencies, which can be found here.
Another interesting metric to consider for evaluation of cryptocurrencies is Github commits (commits are like a record of all the changes/updates that have been made to a project). How many of these cryptocurrencies have a real team behind them, who are constantly working to develop the vision that their whitepapers outline? One way to measure this is by looking at the number of Github commits a given crypto has. The chart below shows that, of the top cryptocurrencies by market capitalization, some - like EOS, Cardano, Monero, and Bitcoin - have had a lot more commits than others - like Populous or Bitconnect.
When we compare the total number of Github commits for the past 6 months to the market capitalization for each of these coins, we see there is a very slight positive correlation between the two metrics (correlation coefficient of 0.153).
When we remove the four cryptocurrencies (Bitcoin, Ethereum, Ripple, and Bitcoin Cash) skewing this distribution upwards, the correlation grows stronger (correlation coefficient of 0.226). This shows us that tracking Github commits may be an indicator for which of the cryptocurrencies with lower market capitalization may be successful in the future.
The general consensus is that the cryptocurrency craze has grown too big, too quickly and a burst of the bubble is inevitable. Tracking Github commits may be a strong relevant signal of which companies are actually building a real product.
Craft is a machine-learning powered data and analytics platform building the ‘Source of Truth’ on companies, and mapping the global economy. We organize data from thousands of sources to provide comprehensive, up-to-date sector and company profiles, ranging from early-stage to the largest companies in the world.
As the economy, and nature of work continue to undergo massive transformation, Craft’s mission is to provide context and freely available tools to help people discover and evaluate companies and opportunities. Our platform is used for market and sector research, customer lead generation, competitive analysis and career search.
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