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It seems really disingenuous to talk about market caps in cryptocurrencies. The US dollar doesn't have a market cap. No currency does. Market cap is the markets

It seems really disingenuous to talk about market caps in cryptocurrencies. The US dollar doesn't have a market cap. No currency does. Market cap is the markets valuation of a company. The term is used to contrast it against their actual valuation. The use in crypto is just a mechanism to dress them up like stocks. If you call these currencies, then you need to recognize that they are extremely deflationary and will never be used as fiat currencies are. If you call them speculative investments, you need to realize they're not backed by any actual value. I haven't done a deep dive on Ethereum yet, so this is mostly addressing Bitcoin and all its derivatives.

pja 9y ago
Ethereum is BTC with an even greater wealth transfer to early adopters built-in in the form of the switch from proof-of-work to proof-of-stake. What's the acceptable stake? Ether. How do you get Ether? You're going to have to buy it off the early adopters who mined it. IOW, the Ether guys thought that Satoshi was a chump who left too much value on the table.
- deleted 9y ago
  [deleted]
- uncoder0 9y ago
  In the bitcointalk forums they have a special name for these sort of coins... 'pre-mined shitcoins' The whole PoS swap makes that even more apparent in Ether's case. I mean hell they hardforked because some rich friends on the dev team got 'hacked' by a poorly written smart contract.
- mrfusion 9y ago
  Explain like I'm from 2010? ( and what/when is a proof of stake swap?)
  - raisedbyninjas 9y ago
    Proof of stake mints new coins based on who already has coins (they have a stake in the platform's success). This is opposed to solving arbitrary math problems to mint new coins, which is called "proof of work". At some point in the future the Ethereum client will have the proof of work algo swapped out with the proof of stake algo.
- rfugger 9y ago
  The other side of the coin is that Ethereum has a well-funded foundation behind its software and business development, making it easier for established companies to interface with on various levels...
sputknick 9y ago
This is a valid point, one counter point is that currently the law treats cryptocurrencies like assets, and we usually track our assets in terms of dollars.
kgwgk 9y ago
Money does have indeed some kind of market cap (there are multiple definitions depending on what do we want to count as money): https://en.m.wikipedia.org/wiki/Money_supply https://en.m.wikipedia.org/wiki/Money_supply
wcoenen 9y ago
I think it is still a more useful metric than price. If you consider a cryptocurrency with a price of $1/unit, it still matters a lot whether there are 1 million or 1 billion units in circulation. Multiplying price with the number of units takes this into account. I agree that "market cap" is a bit misleading. What would be a better name?
- aml183 9y ago
  Network Value. https://www.google.com/amp/s/www.arilewis.com/blog/2017/5/10/network-value%3Fformat%3Damp https://www.google.com/amp/s/www.arilewis.com/blog/2017/5/10...
steveplace 9y ago
Maybe dollar weighted volume would be a better comparison.
noddy1 9y ago
> If you call these currencies, then you need to recognize > that they are extremely deflationary and will never be used as > fiat currencies are. For me, one of the best things about bitcoin is that it is actually going allow a lot of arrogant economic dogma to finally be put to the test, including that: - currencies must be inflationary or the universe will explode and people will save so aggressively that they will die of hunger - printing free money and giving it to rich banks is a good thing and doesn't totally fuck the little guy - monetary stimulus smooths out economic cycles, and totally isn't part of the cause of the ridiculous boom-bust cycles we are having now
- mathgenius 9y ago
  > economic dogma Let's not forget this one: - regulating the exchanges aids in price discovery
- notruthallowed 9y ago
  Are you going to provide any reasoning for your 'woke' economic views? It's well understood that a deflationary currency decreases investment incentives.
- aoeuasdf1 9y ago
  Have you seen this graph? https://pbs.twimg.com/media/C8H9i9IUwAEBo5s.jpg https://pbs.twimg.com/media/C8H9i9IUwAEBo5s.jpg
- TACIXAT 9y ago
  You need some semblance of stability though. No one is going to agree to pay me 1 BTC per week if they're implicitly giving me a 30% raise in week 2. Just the same, I would not be happy to get paid in an extremely inflationary currency that meant I was taking a pay cut week over week. It has not shattered any belief in traditional currencies or governments for me. In fact, it has made me realize their value. People are just using it for speculation which makes it feel a lot more like a multi-level marketing scheme than a currency.
  - cgmg 9y ago
tristram_shandy 9y ago
Market capitalization is simply units * price. It has nothing to do with companies (or stocks), specifically: market cap is a simple formula that provides the total valuation of a commodity. Frankly, it's a misnomer to refer to Ethereum (and certain others) as being currencies in the first place. The newer, functional cryptos have much more in common with barrels of oil or bushels of wheat than with traditional money
deleted 9y ago
[deleted]
sbenitoj 9y ago
What do you believe fiat currencies are backed by?
- TACIXAT 9y ago
  Taxes, primarily. Everyone needs to pay taxes and they need to pay taxes in their national currency (see: Modern Monetary Theory). This makes everyone seek out their national currency. Additionally, countries have a very different goal when creating money than miners do. Miners are profit driven and countries are interested in continuity and stability. You could also consider the GDP of a country as a backing for its currency, this demonstrates the currency is being used and the backing entity will remain solvent. The only thing cryptocurrencies are used for is speculation and buying drugs online, in all other cases they simply act as a pass-through for transactions in fiat.
  - colorint 9y ago
    The "solvency" of a government (that issues its own currency and only issues debt in that currency) is the same thing as its credibility. Or to tie it to what you said, a government is exactly as solvent as its ability to collect taxes.
  - sbenitoj 9y ago
    Well, its certainly a common belief that the requirement to pay taxes in the national currency gives a national currency its value, but the hyperinflationary events in Zimbabwe and the Weimar Republic (and the subsequent worthlessness of those national currencies) demonstrate that this requirement is insufficient to give currencies their value. In fact, the only thing that gives currencies their value is people's belief that they have value (much like gold before national currencies). I'd also like to add that "countries" dont have goals, countries are made up of people, and only people have goals -- and all people are self-interested. The people in control of monetary policy are just as self-interested as the miners are, instead of receiving profit directly like the miners they inflate currencies to the benefit of major banks in their countries (and subsequently get highly paid jobs at those banks or elsewhere in the finance industry).

pja 9y ago

Ethereum is BTC with an even greater wealth transfer to early adopters built-in in the form of the switch from proof-of-work to proof-of-stake. What's the acceptable stake? Ether. How do you get Ether? You're going to have to buy it off the early adopters who mined it. IOW, the Ether guys thought that Satoshi was a chump who left too much value on the table.

deleted 9y ago
[deleted]
uncoder0 9y ago
In the bitcointalk forums they have a special name for these sort of coins... 'pre-mined shitcoins' The whole PoS swap makes that even more apparent in Ether's case. I mean hell they hardforked because some rich friends on the dev team got 'hacked' by a poorly written smart contract.
mrfusion 9y ago
Explain like I'm from 2010? ( and what/when is a proof of stake swap?)
- raisedbyninjas 9y ago
  Proof of stake mints new coins based on who already has coins (they have a stake in the platform's success). This is opposed to solving arbitrary math problems to mint new coins, which is called "proof of work". At some point in the future the Ethereum client will have the proof of work algo swapped out with the proof of stake algo.
rfugger 9y ago
The other side of the coin is that Ethereum has a well-funded foundation behind its software and business development, making it easier for established companies to interface with on various levels...

sputknick 9y ago

This is a valid point, one counter point is that currently the law treats cryptocurrencies like assets, and we usually track our assets in terms of dollars.

kgwgk 9y ago

Money does have indeed some kind of market cap (there are multiple definitions depending on what do we want to count as money): https://en.m.wikipedia.org/wiki/Money_supply https://en.m.wikipedia.org/wiki/Money_supply

wcoenen 9y ago

I think it is still a more useful metric than price. If you consider a cryptocurrency with a price of $1/unit, it still matters a lot whether there are 1 million or 1 billion units in circulation. Multiplying price with the number of units takes this into account. I agree that "market cap" is a bit misleading. What would be a better name?

aml183 9y ago
Network Value. https://www.google.com/amp/s/www.arilewis.com/blog/2017/5/10/network-value%3Fformat%3Damp https://www.google.com/amp/s/www.arilewis.com/blog/2017/5/10...

steveplace 9y ago

Maybe dollar weighted volume would be a better comparison.

noddy1 9y ago

> If you call these currencies, then you need to recognize > that they are extremely deflationary and will never be used as > fiat currencies are. For me, one of the best things about bitcoin is that it is actually going allow a lot of arrogant economic dogma to finally be put to the test, including that: - currencies must be inflationary or the universe will explode and people will save so aggressively that they will die of hunger - printing free money and giving it to rich banks is a good thing and doesn't totally fuck the little guy - monetary stimulus smooths out economic cycles, and totally isn't part of the cause of the ridiculous boom-bust cycles we are having now

mathgenius 9y ago
> economic dogma Let's not forget this one: - regulating the exchanges aids in price discovery
notruthallowed 9y ago
Are you going to provide any reasoning for your 'woke' economic views? It's well understood that a deflationary currency decreases investment incentives.
aoeuasdf1 9y ago
Have you seen this graph? https://pbs.twimg.com/media/C8H9i9IUwAEBo5s.jpg https://pbs.twimg.com/media/C8H9i9IUwAEBo5s.jpg
TACIXAT 9y ago
You need some semblance of stability though. No one is going to agree to pay me 1 BTC per week if they're implicitly giving me a 30% raise in week 2. Just the same, I would not be happy to get paid in an extremely inflationary currency that meant I was taking a pay cut week over week. It has not shattered any belief in traditional currencies or governments for me. In fact, it has made me realize their value. People are just using it for speculation which makes it feel a lot more like a multi-level marketing scheme than a currency.
- cgmg 9y ago

tristram_shandy 9y ago

Market capitalization is simply units * price. It has nothing to do with companies (or stocks), specifically: market cap is a simple formula that provides the total valuation of a commodity. Frankly, it's a misnomer to refer to Ethereum (and certain others) as being currencies in the first place. The newer, functional cryptos have much more in common with barrels of oil or bushels of wheat than with traditional money

deleted 9y ago

[deleted]

sbenitoj 9y ago

What do you believe fiat currencies are backed by?

TACIXAT 9y ago
Taxes, primarily. Everyone needs to pay taxes and they need to pay taxes in their national currency (see: Modern Monetary Theory). This makes everyone seek out their national currency. Additionally, countries have a very different goal when creating money than miners do. Miners are profit driven and countries are interested in continuity and stability. You could also consider the GDP of a country as a backing for its currency, this demonstrates the currency is being used and the backing entity will remain solvent. The only thing cryptocurrencies are used for is speculation and buying drugs online, in all other cases they simply act as a pass-through for transactions in fiat.
- colorint 9y ago
  The "solvency" of a government (that issues its own currency and only issues debt in that currency) is the same thing as its credibility. Or to tie it to what you said, a government is exactly as solvent as its ability to collect taxes.
- sbenitoj 9y ago
  Well, its certainly a common belief that the requirement to pay taxes in the national currency gives a national currency its value, but the hyperinflationary events in Zimbabwe and the Weimar Republic (and the subsequent worthlessness of those national currencies) demonstrate that this requirement is insufficient to give currencies their value. In fact, the only thing that gives currencies their value is people's belief that they have value (much like gold before national currencies). I'd also like to add that "countries" dont have goals, countries are made up of people, and only people have goals -- and all people are self-interested. The people in control of monetary policy are just as self-interested as the miners are, instead of receiving profit directly like the miners they inflate currencies to the benefit of major banks in their countries (and subsequently get highly paid jobs at those banks or elsewhere in the finance industry).