Samson Mow, CEO of JAN3, and a long-time Bitcoin proponent, dropped a valuation bomb on XRP recently. His calculation? If XRP had Bitcoin’s hard cap of 21 million coins, each XRP token would theoretically be worth at least $5,800 each. At first glance, it's a mind-blowing figure. Or is this a big blunder, masking bogus benefits? Or is it just Bitcoin maximalist FUD (Fear, Uncertainty, and Doubt) in a math-y disguise? Let's dive in.
Unit Bias: Are We Being Tricked?
Mow’s central argument rests on the idea of “unit bias.” He reminds that investors usually fall under the spell by the low altcoins prices. By doing so, they ignore fundamental factors such as the full market cap and the circulating supply. It's like buying penny stocks, thinking you're getting a great deal when, in reality, the company might be worth peanuts.
This is a valid point. After all, we are hardwired to gravitate towards perceived deals. Think about it: would you rather own 1,000 shares of a $1 stock or 1 share of a $1,000 stock, assuming both represent the same percentage of the company? Without thinking, most would select the former, even though the economic benefit is the same. Mow claims that altcoins, because of their usually large supplies, take advantage of this psychological bias.
Is this always the case? After explaining unit bias, we’ll show it’s not the only factor driving altcoin investment. That's where things get murky.
Market Cap: Flawed Valuation Metric?
Mow’s estimation stretches XRP’s worth according to its current market cap. This is a common approach, but it relies on a crucial assumption: that market cap accurately reflects intrinsic value. In the still very volatile world of crypto, that’s a HUGE assumption.
Dogecoin, a cryptocurrency famously started as a joke, once boasted a market cap in the tens of billions. Did that just reflect a lack of genuine utility or inherent value? Of course not. It was driven by hype and speculation.
Taking the current market cap and extrapolating that into future value is disingenuous. … like using today’s weather to predict tomorrow’s climate a hundred years in advance! It is a useful look at the situation, but it doesn’t cover everything. It makes no allowance for future growth, technological innovation and changes in market sentiment.
XRP: More Than Just A Number?
Mow's analysis largely disregards XRP's specific utility. While Bitcoin has emerged as the leading store of value, XRP is built specifically for cross-border payments. It is intended to make cross-border transactions faster, cheaper, and more efficient. This is a fundamentally different use case, and it’s one that might very well lead to massive demand in the near future.
Consider a future in which XRP is the new normal for interbank transfers across borders. The subsequent demand might make it a fortune instead. For one, Mow’s calculation—based only on the supply and market cap—doesn’t consider this possible paradigm shift. It’s comparable to trying to value a car simply by looking at the price of steel and excluding its engine, features, or ability to carry people.
XRP has some technological advantages over Bitcoin, including faster transaction speeds and cheaper fees. These benefits would increase its appeal for targeted use cases, enhancing its enduring value.
Bitcoin Maximalism: The Elephant In The Room
First, it’s pretty much impossible to ignore that Samson Mow is a Bitcoin maximalist. He’s a very public face for Bitcoin and an outspoken critic of altcoins. This does not by any means discredit his analysis, but it does call into question the possibility of bias.
It’s akin to asking a lifelong vegetarian to provide an unbiased critique of a steakhouse. Sure, they’ll be in a position to deliver an objective high-level judgment, but their built-in bias is going to shape their view given their preferences.
Mow's skepticism towards altcoins is well-documented. Friedberg’s past criticisms, like his warnings about Solana being overvalued and his denunciation of Ethereum spot ETFs. This long-standing anti-altcoin attitude is important to keep in mind when weighing his thoughts on XRP. Might his approaches and assumptions simply be clouding his judgment? It's a question worth asking.
The $5,800 Question: What's the Real Value?
So, is Mow’s $5,800 XRP price target a stroke of genius or Bitcoin maximalist fear, uncertainty and doubt (FUD)? The truth is probably somewhere in between.
His analysis helps illustrate the importance of understanding changes in market capitalization versus supply dynamics. Rather, it can be an extremely helpful reminder to consider more than just the upfront cost of each token.
His calculation would actually result from a number of assumptions that likely don’t hold in the long run. It largely fails to address or consider XRP’s unique use case, potential technological benefits, and futuristic market scenarios.
Unquestionably, the value of XRP, or any cryptocurrency for that matter, is based on a mix of demand and supply factors. There is no single, definitive formula. Mow's analysis provides a provocative thought experiment, but it shouldn't be taken as gospel.
So, let’s be cautious about outright accepting or dismissing his conclusions. Rather, we should take them as an invitation to use as a launching pad for our own contrarian, critical thinking. Do your own research. Understand the technology. Consider the potential use cases. And keep in mind that in the world of crypto, certainty is not only a poor substitute for a full analysis — it’s usually a downright scam.
It is easy to create models and calculations to prove a point if the assumptions are tailored to the result. This is a key point for anyone who is new to the crypto space to understand.
