Financial analysis comparing Bitshares and Bitcoin

[cylonmaker2053]

very interesting perspective, thanks for sharing!

[xeroc]

I know that a prominent and respected member of this community owns *bitassets.io*

[MrJeans]

I have the domain sharemarketcap.com waiting for something like this. Next steps are get real-time feeds for those datapoints, then add more coins

Nice!

Awesome, I also have bitindex.info
I was hoping to do something like that but dont have the programming skills.
Anyone is welcome to jump aboard/takeover

[Permie]

I have the domain sharemarketcap.com waiting for something like this. Next steps are get real-time feeds for those datapoints, then add more coins

Nice!

[toast]

I have the domain sharemarketcap.com waiting for something like this. Next steps are get real-time feeds for those datapoints, then add more coins

[MrJeans]

This is some excellent work MrJeans, well done!

I'm glad we have some financial whiz kids around here to balance out this community of techies like me.

Thanks  hardly a financial wiz though, looks like I made some errors here. Will correct them.

Its great to have analysis like this and I'd like to see much more in future regarding BitShares' economics.

I'd suggest some changes in treatment, although its arguable what the optimal treatment is for some of these things.

BTC holders do not receive any transaction fees as revenue as they all go to miners. The dilution is an expense though, resulting in net loss and negative P/E. For BitShares, I personally would treat the fees as revenue, and the delegate pay (dilution) as expenses. So again EPS and P/E is negative.

I'm not sure BTC and BTS are strictly comparable though. BTC is positioning itself as free-market money, so there are other transactional metrics of value to owners, such as those shown here... https://blockchain.info/charts. BTS is positioning itself as a profit-making enterprise, so there are other financial metrics of value to its owners, such as revenue growth, exchange transaction growth, active user growth, and once we have 2.0, compositional metrics such as UIA growth and establishment fees, and referral fee splits.

I agree with this. Negative P/Es are just a bit funny to look at but will make changes.

[MrJeans]

I'm not sure BTC and BTS are strictly comparable though. BTC is positioning itself as free-market money, so there are other transactional metrics of value to owners, such as those shown here... https://blockchain.info/charts. BTS is positioning itself as a profit-making enterprise, so there are other financial metrics of value to its owners, such as revenue growth, exchange transaction growth, active user growth, and once we have 2.0, compositional metrics such as UIA growth and establishment fees, and referral fee splits.

  OP is comparing a company to a currency. What is the EPS of gold?

Yep thats definatly a good point. As I said this would be much more useful when comparing DACs to other DACs, I just used Bitcoin because it is very well recognized and information is readily available.

It would be great to compare BitsharesPLAY and Peertracks at some point.

[xeroc]

Related (but old)
https://bitsharestalk.org/index.php/topic,8650.0.html

[Empirical1.2]

I'm not sure BTC and BTS are strictly comparable though. BTC is positioning itself as free-market money, so there are other transactional metrics of value to owners, such as those shown here... https://blockchain.info/charts. BTS is positioning itself as a profit-making enterprise, so there are other financial metrics of value to its owners, such as revenue growth, exchange transaction growth, active user growth, and once we have 2.0, compositional metrics such as UIA growth and establishment fees, and referral fee splits.

  OP is comparing a company to a currency. What is the EPS of gold?

[starspirit]

Its great to have analysis like this and I'd like to see much more in future regarding BitShares' economics.

I'd suggest some changes in treatment, although its arguable what the optimal treatment is for some of these things.

BTC holders do not receive any transaction fees as revenue as they all go to miners. The dilution is an expense though, resulting in net loss and negative P/E. For BitShares, I personally would treat the fees as revenue, and the delegate pay (dilution) as expenses. So again EPS and P/E is negative.

I'm not sure BTC and BTS are strictly comparable though. BTC is positioning itself as free-market money, so there are other transactional metrics of value to owners, such as those shown here... https://blockchain.info/charts. BTS is positioning itself as a profit-making enterprise, so there are other financial metrics of value to its owners, such as revenue growth, exchange transaction growth, active user growth, and once we have 2.0, compositional metrics such as UIA growth and establishment fees, and referral fee splits.

[Thom]

This is some excellent work MrJeans, well done!

I'm glad we have some financial whiz kids around here to balance out this community of techies like me.

[Chuckone]

I am not suggesting that we should start comparing DACs to brick and motor companies, however we could use this to compare DACs to other DACs. Perhaps in the future DACs need to be profitable and reduce their P/Es to survive.

^^This!

No matter what is the coin being pumped at the moment, strong financial metrics will always create value and attract serious investors in the long run.

[BunkerChainLabs-DataSecurityNode]

  for the perspective analysis.

[MrJeans]

To create a bit of context

When the Nasdaq Composite Index peaked in March 2000, technology companies in the U.S. had a mean price-to-earnings ratio of 156.

Todays average tech P/E on Nasdaq is about 20.

Apple stock metrics:
Earnings per share (EPS):   USD 8.09
Price/EPS (P/E ratio):   15.58
Return on Equity:   39.51
Operating expense ratio (expenses/earnings):   0.614

I am not suggesting that we should start comparing DACs to brick and motor companies, however we could use this to compare DACs to other DACs. Perhaps in the future DACs need to be profitable and reduce their P/Es to survive.

[MrJeans]

I have made an attempt at comparing fundamentals of Bitshares and Bitcoin when viewing both cryptocurrencies as DACs.

The maths and thinking involved is explained in this paper I wrote (which is largely based on Daniel and Stan Larimer's ideas). Can be found here:
http://bitpaper.info/paper/5664248772427776

I have done this in an open Google spread sheet for anyone to change and edit:
https://docs.google.com/spreadsheets/d/1Zd8gyzZqWz1uSbj2kTmGHYj2pNYaSI7KNoEJzo_WQMg/edit?usp=sharing

Here is another copy of the same which I have made un-editable in case the above breaks.
https://docs.google.com/spreadsheets/d/1y9MlbSYXTb4VgUaACIQrLgefAUPpsYXJjUzW2AmE_PE/edit?usp=sharing

I have made some serious SWAGs when it came to Bitshares, but hopefully it can give us a wild ball park. SWAGs obtained from bitsharesblocks.com. An awesome website, but could not extract data from it the way I could for blockchain.info. Maybe soon 

Please feel free to edit and leave your comments regarding maths errors I may have made or thoughts on differing philosophies regarding how to calculate the metrics.

My main findings:

BITCOIN
Annual share inflation (YTD):   10.52%
Price/EPS (P/E ratio):   -7.8
Return on Equity:   -12.8%
Operating expense ratio (expenses/earnings):   278.4


BITSHARES
Annual share inflation (annualized): 1.275%
Price/EPS (P/E ratio):   -12.0
Return on Equity   -8.3
Operating expense ratio (expenses/earnings)   13.9

This could be an interesting way for us to monitor Bitshares for profitability, and in the future an interesting way to compare DACs for investment purposes.