Filecoin price and market value forecast, a new perspective

• Traditional VC Valuation Method

• Current valuation methods in the cryptocurrency world (4 types)

• A new and simple approach to valuation

• Principle Analysis

• Summarize

01 Traditional VC Valuation Method

When traditional VCs invest in a project or company in the angel round or seed round, the models they use are generally based on looking at people, market capacity, and comparisons with similar companies. The method generally used in the final decision-making stage is "shooting with your head" - this is not a joke, and this is also the subtext of the "investing by looking at people" theory. In the early stages, there are no financial reports or detailed data, and the team does not have the "three statements" (balance sheet, income statement, cash flow statement). In many cases, there is not even a full-time financial staff. The final valuation and investment decision are based on the investment directors' judgment of the project and the degree of recognition of the project founder and founding team, that is, the degree of liking.

The success rate of almost any angel investment institution is not high, and statistically it does not exceed 5%. For relevant data, you can search for "success rate of angel investment" to get a lot of detailed data, which will not be repeated in this article. However, once the angel investment is successful, dozens or hundreds of times of returns can also be generated. For investment companies with strong capital, they will invest all of their money in a related enterprise, which is called "track theory". For example, Shen Nanpeng and Masayoshi Son are both firm supporters of the track theory. There is a prerequisite for the use of the track theory: strong capital. For example, Inno Fund, Qingsong Fund, and Meihua Venture Capital (these are all the top 15 angel round venture capital funds in the country), the funds under management are about 3 billion yuan, and this size cannot choose the "track theory".

It is not that you have to be capable to be rich; being rich is a capability in itself. Sequoia China, led by Mr. Shen Nanpeng, has this capability. Shen Nanpeng once said that he does not understand blockchain and is still learning. If the top figures in the industry are like this, please keep calm and continue to read on.

Digital asset investment has its own unique logic. The traditional VC methodology is not very accurate in the traditional Internet field, and it has been even more frustrated in the cryptocurrency circle. For individual investors, a 5% winning rate is simply gambling, not to mention that the winning rate is even lower now. The size of funds is relative. Although the size of traditional VC angel funds is small, it is not comparable to that of ordinary individuals.

Summary: Using traditional VC to judge project valuation is no longer feasible at this point.

02 Current valuation methods in the cryptocurrency world (4 methods)

If the traditional VC valuation method is inaccurate, the current valuation method commonly used in the cryptocurrency world is even more unreasonable.

A. Peer comparison method

Compare the market value of distributed storage projects such as Sia and Stroj to Filecoin. There is no comparability. The popularity and status are different, and the number of participants is also very different. There is no comparison. It is a waste of time to list the market value of these projects.

B. Comparison with traditional cloud service platforms (most common)

This is the most commonly used valuation method at present. The general meaning is: the cloud service market is a trillion-level market, and a public chain project has finally landed and connected with the real world. Then, the data lists the market value of well-known cloud service platforms such as Amazon Cloud and Alibaba Cloud, as well as the market growth potential in the future under 5G.

There is a logical fallacy here. First, can the Filecoin network be used to replace the cloud service market? Second, is it easy to use? The fact that the main network has not been launched is an unknown factor. Even if it can be used and is very easy to use, the migration cost is huge, and the 2B business will not be able to develop that fast. It will take at least a year until the main network is running well and the speed is accelerated before there is a glimmer of hope.

It is worth mentioning that an important role of Alibaba Cloud and Amazon Cloud is cloud computing rather than cloud storage. The market valuation of cloud platform services often confuses all markets such as computing and storage, so there are large market valuations of hundreds of billions or trillions of RMB. China's GDP is about 90 trillion, and the global cloud service market is indeed worth hundreds of billions of US dollars. However, it is definitely not a cloud storage market. Filecoin does not do computing, but cuts into the cloud storage market. Storage is of course important, but the technical difficulty and influence are weaker than computing.

C. Comparison of exchange futures prices

When the spot is not listed, the futures are listed, which is said to give everyone the expected price. In fact, the Fil futures prices of each exchange are different, and the Fil futures delivery cycle is also various (Fil June, Fil December, etc.). When the spot is not yet available (the main network is not online), listing the futures is equivalent to shouting the price in the air. The futures price of 20 or even 50 US dollars is only a small factor as a reference. Of course, for exchanges, listing the futures before the main network is a test of the water, and they can certainly do what is beneficial to them.

D. Assumption

Yes, many people now make valuations based on guesswork. For example, after BTC and ETH, Filecoin is next. Some even silently believe or shout that Filecoin will definitely exceed the market value of ETH and BTC. The reason given is: Filecoin is a disruptive innovation that has changed the landscape of http and cloud platforms, and also changed the landscape of the blockchain industry. Please review the second content ("Comparison with cloud service platforms"). This valuation method can be considered subjective, that is, blind guessing.

Summary: The current valuation method in the cryptocurrency world is even more unreasonable, mixed with too many assumptions and incorrect market comparisons, and is not of reference value.

03 A new and simple valuation method

The traditional VC valuation method does not work, and the current valuation method in the cryptocurrency circle is too arbitrary and not referenceable. We can only summarize past experience and data and make a preliminary prediction about the future. My prediction is that about one month after the launch of the Filecoin mainnet, the price of the coin will reach US$50 (or above), and the market value will be about US$1.5-2 billion.

Why? What is the basis for the conclusion? First, let’s talk about the ICO financing amount of major projects (pre-sale or private placement).

EOS: About 4 billion US dollars

Telegram: $1.7 billion

Filecoin: $257 million

Tezos: $230 million.

Pull out the table again and show it to everyone:

We will find that among the top 13 digital currencies by market value, BTC and ETH are digital currencies that have been developed for many years and have a good ecosystem; Tether is a stable currency; then we exclude exchange platform coins (OKB, BNB), those related to physical mining machine super giant companies (BCH), and those ICOs 3 years ago (LTC, etc.). For the remaining digital currencies, the market value can basically be judged by the amount of financing. EOS has centralization problems and frequent code vulnerabilities, but its market value is still good; the Tezos team has split into this (please search for relevant information yourself), but its market value is still good; TON (telegram) has been postponed for the time being. Therefore, in the current digital currency market, do not use the vision before the main network is launched to analyze the market capacity, and do not use the technical advantages and disadvantages to judge a project. Whether Filecoin uses zero-knowledge proof, ring signature, or Mimblewimble, there is not much difference for the general public. Please look at the market value issue from the perspective of financing. Based on this reasoning, given the current popularity of Filecoin, its market value will reach a level consistent with its financing amount within 1-3 months after its launch, which is higher than Tezos and lower than EOS, between 1.4 billion and 2.35 billion US dollars. The simplified model makes its market value approximately equal to 1.8 billion US dollars.

780,000 Filecoins are the amount on the first day after the mainnet was launched. The linear decrease within the two-month period is negligible. If it reaches 1.8 billion US dollars in one month, 1.8 billion/(780,000*30 days)=77 US dollars. If it is achieved in two months, it is 1.8 billion/(780,000*60 days)=38 US dollars; if it is achieved in three months, it is 25 US dollars. With the continued popularity and the enthusiasm of market participation, although the circulation of Filecoin has increased, the market value is also likely to continue to rise, so it can basically run between 20 US dollars and 80 US dollars, taking the middle value of 50 US dollars. Moreover, the current circulation volume cannot be fully determined, because the mechanism of staking mining has not been fully determined, which will further reduce liquidity and push up the price of the currency in reverse. 50 US dollars is likely to be achieved. I have eliminated the parameters that should be excluded and the parameters that cannot be used. Do not use futures prices or arbitrary expectations to refute this result. It has been discussed above, please look back.

04 Principle Analysis

Some people would think that the logic is the opposite, that the market value is the product of the coin price and the circulation volume, rather than the other way around; that it is because the project itself is excellent and can obtain a high market value that it receives more investment.

The digital currency market is still in its early stages, and the ability to obtain investment is one of the core capabilities of entrepreneurs. Without excellent financing, an Internet project cannot proceed. You can refer to the early and mid-term financing process of Internet companies such as Alibaba, Youku, Tudou, Uber, and 58.com. Platforms that cannot get money and cannot get money earlier will face a brutal market and the fate of being acquired. I use the above space to talk about the traditional VC valuation method and the current valuation method in the currency circle, aiming to tell readers that I know the core logic of these methods, and I also know that these methods are ineffective at this stage.

05 Conclusion

This article predicts the price and market value of Filecoin about 1-3 months after the launch of the Filecoin mainnet from a new perspective: it will most likely reach $50+; the market value will be around $1.8 billion.

The core of the method is the linkage between financing amount and market value ranking, which eliminates more unreasonable valuation factors and methods.

“When you eliminate the impossible, whatever remains, no matter how implausible, must be the truth.”