THE FUTURE OF CURRENCY VALUATION

Measuring Absolute Values in a Relative World

Prices reflect perception. Entropy indicates value.
Markets are subject to manipulation and liquidity. Entropy quantifies the utility value

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CORE INNOVATION

Breakthrough: Coin Entropy

Scientists in the Sapience.org thinktank made a breakthrough discovery: Coin Entropy is an indicator tied with the fundamental value of currencies. While market prices are driven by speculation and subject to manipulation, coin entropy offers a universal, absolute, and objective method of quantifying the utility value of a coin of any currency.

Universal

The entropy of a coin is quantified in bits of information: A universal metric, a pure number greater than 0. It therefore provides a universal measure of value, since it does not depend on price, exchange rates, GDP, interest rates, or any other unit. We can even use coin entropy to compare the values of any two currencies, at different points in time.

Absolute

Coin Entropy quantifies the amount of information in each coin. It is an absolute, context-independent measure: it does not depend on the USD or gold or any other security whose value depends on context and fluctuates with time.

Objective

Traditional measures of value rely on subjective, disputed, and context-dependent metrics such as credit ratings or purchasing power parity. The entropy of a coin is measured by the metrics of currency itself. The blockchains of Bitcoin, Ethereum, Ripple, Solana, and other currencies offer all the objective metrics to measure their entropies.

Leveraging Coin Entropy

Sentiment immunity/Volatility resistance

Cryptocoin market prices are highly volatile, swayed by sentiment and affected by liquidity and other fleeting factors. Coin Entropy offers a steadier and more reliable indicator of value, allowing traders to make consistent, data-driven decisions.

Comparing two currencies

The NFT craze: On 11 March 2021 Beeple’s “Everydays Sold for $69 Million and CryptoPunk for $7.6 Million, and on 23 August Visa Purchased CryptoPunk. The ETH/BTC exchange rate (blue) fluctuated wildly during this period, while the ratio between the respective coin entropies (brown) reflected a much stabler curve with more moderate gains/losses

Enhancing Trading Strategies

Profit and Loss of the Moving Average trading strategy between Jan 2020 and Oct 2024
In Brown: PnL using Coin Entropies ratio of ETH/BTC
In Blue: PnL using exchange rate of ETH/BTC

The Science Behind

Coin Entropy quantifies the amount of information as a physical property of the currency. It can be measured and quantified, just as the temperature of a coffee cup or the pressure inside a balloon.

Derived from information theory, entropy is a fundamental measure of the currency’s utility and the overall robustness of the network. It is universal, absolute, and objective measure of the currency’s intrinsic ability to carry information and enable its flow, independent of external factors.

Crucially, the entropy of each currency is determined solely on itself. The entropy of bitcoin for example depends only on its own blockchain. Unlike any other value indicator, coin entropy does not depend on other currencies, prices, exchange rates, interest rates, credit rating, GDP, purchasing power, trade balance, budget surplus or deficit, or any other index external to the currency itself.

WHO WE ARE

About Moneta Sapiens

Moneta Sapiens is the brainchild of the Sapience.org thinktank, where scientists made a breakthrough in understanding the real value of currencies.

Their discovery of the entropy of a currency made it possible to calculate the expected value of bitcoin without price history. In essence, they discovered a way to “calculate the price without the price”.

Moneta Sapiens was created to explore the application of this discovery to cryptocurrency trading.

Contact Us

We invite Forex traders, macroeconomists, and cryptocurrency enthusiasts to join us in exploring the potential.
contact@monetasapiens.com

Press Release: Information Theory Measures Bitcoin’s Real Value

White paper: “On the Utility Value of Currencies“

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