RE: How ICOs inflate the cryptocurrency market cap
This is an interesting point and perspective. I have been thinking about how to rationalize market caps recently and one thing that strikes me is the potential double counting when looking at the market cap of a basket of tokens.
Ethereum or Bitcoin or any coin have value because they have a utility that will in some way be utilised in the future and may generate income. In Ethereums case it will be a supercomputer running smart contracts tokens or whatever. You may consider the value of Ethereum as reflecting the value of its network of applications, those that will use the platform. I think of it more akin to an economy where it's applications are it's goods and services that give the currency value.
When you view coins like this it means that by counting the value of a token issued on the Ethereum blockchain and Ethereum we are double counting the value of the network and the value of the network that is already baked in to the Ethereum valuation.
My two cents. Still haven't gotten it quite figured out.
Yeah, I wonder if that would be a good way to approximate the value of a platform like Ethereum. It becomes difficult partially because the price of Ether reflects the market's perceived value of the basic platform itself, given the fact that all of the tokens issued on Ethereum are valued what they are; that is, in principle, the possibility of double-counting has already been accounted for and the market caps actually reflect the reality.
Of course things are always more complicated than the basic principles would have you believe.