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Over 95% of Bitcoin trade is speculation on Chinese exchanges; the rest is mostly drugs and then ransomware. The "market cap" of Bitcoin is a meaningless conce

Over 95% of Bitcoin trade is speculation on Chinese exchanges; the rest is mostly drugs and then ransomware. The "market cap" of Bitcoin is a meaningless concept - trading is thin enough there's no way you could ever realise the supposed value of a large holding. Single trades can send the price up or down $30.

followaway 10y ago
Do you have any sources on the 95% claim? I know a recent Quartz article entitled "Bitcoin doesn't care what Silicon Valley thinks" stated a similar premise. Also, I saw you are writing a dismissive book on bitcoin where you refer to the motives behind it as those of cranks promoting libertarian pseudoeconominics. I was hoping for a more objective analysis aside from, "you're crazy if you support bitcoin."
gst 10y ago
> The "market cap" of Bitcoin is a meaningless concept - trading is thin enough there's no way you could ever realise the supposed value of a large holding. Single trades can send the price up or down $30. I just checked the charts on Kraken which according to https://coinmarketcap.com/currencies/bitcoin/#markets https://coinmarketcap.com/currencies/bitcoin/#markets has about 5.4% of the trading volume: https://www.kraken.com/charts https://www.kraken.com/charts. If you want to reduce the price by 30 Euros you'd have to sell coins worth a total of 775k Euros at once (using EUR instead of USD for the comparison, as Kraken's USD volume is only a small fraction of the EUR volume). Also, according to https://coinmarketcap.com/ https://coinmarketcap.com/ the total BTC trading volume over the last 24h was $187M. However, this number only includes exchanges that charge fees (as the volume in exchanges that don't charge fees could be artificially inflated), and thereby excludes almost all of the large Chinese exchanges. The top 3 Chinese exchanges all report volumes of over 3 billion USD during the past 24 hours. So yes - single trades could definitely bring the price up or down by $30. But in practice most of the traders probably won't be affected by this.
- ajamesm 10y ago
  Those trades are probably black market profits, primarily drugs. Or oligarchs, whose circles haven't been penetrated by journalists. (Or, what, overstock.com?) I imagine Bitcoin would be a lot more popular if it weren't for the moral hazard of providing fungible currency for people trafficking in 9mms and ecstasy.
- jcfrei 10y ago
  Afaik the reported volumes on Chinese exchanges are fake. They are much lower if you look at the order books.
HappyTypist 10y ago
Right now, it takes an order of $2,440,537 to send the price up $30, and $3,184,447 to send the price down $30.
- gnaritas 10y ago
  That's well within the reach of a single trade.

followaway 10y ago

Do you have any sources on the 95% claim? I know a recent Quartz article entitled "Bitcoin doesn't care what Silicon Valley thinks" stated a similar premise. Also, I saw you are writing a dismissive book on bitcoin where you refer to the motives behind it as those of cranks promoting libertarian pseudoeconominics. I was hoping for a more objective analysis aside from, "you're crazy if you support bitcoin."

gst 10y ago

> The "market cap" of Bitcoin is a meaningless concept - trading is thin enough there's no way you could ever realise the supposed value of a large holding. Single trades can send the price up or down $30. I just checked the charts on Kraken which according to https://coinmarketcap.com/currencies/bitcoin/#markets https://coinmarketcap.com/currencies/bitcoin/#markets has about 5.4% of the trading volume: https://www.kraken.com/charts https://www.kraken.com/charts. If you want to reduce the price by 30 Euros you'd have to sell coins worth a total of 775k Euros at once (using EUR instead of USD for the comparison, as Kraken's USD volume is only a small fraction of the EUR volume). Also, according to https://coinmarketcap.com/ https://coinmarketcap.com/ the total BTC trading volume over the last 24h was $187M. However, this number only includes exchanges that charge fees (as the volume in exchanges that don't charge fees could be artificially inflated), and thereby excludes almost all of the large Chinese exchanges. The top 3 Chinese exchanges all report volumes of over 3 billion USD during the past 24 hours. So yes - single trades could definitely bring the price up or down by $30. But in practice most of the traders probably won't be affected by this.

ajamesm 10y ago
Those trades are probably black market profits, primarily drugs. Or oligarchs, whose circles haven't been penetrated by journalists. (Or, what, overstock.com?) I imagine Bitcoin would be a lot more popular if it weren't for the moral hazard of providing fungible currency for people trafficking in 9mms and ecstasy.
jcfrei 10y ago
Afaik the reported volumes on Chinese exchanges are fake. They are much lower if you look at the order books.

HappyTypist 10y ago

Right now, it takes an order of $2,440,537 to send the price up $30, and $3,184,447 to send the price down $30.

gnaritas 10y ago
That's well within the reach of a single trade.