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The article states "The singular “price” of Bitcoin doesn’t exist — it’s a made-up number." This is the same for every stock traded on any stock exchange in th

The article states "The singular “price” of Bitcoin doesn’t exist — it’s a made-up number." This is the same for every stock traded on any stock exchange in the world. The "singular price" is, in most cases, just the mean of the closest bid and offer listed on the exchange and is thus a "made-up number" On top of this, it obviously doesn't take into account everything from transaction costs to the fact that attempts to purchase substantial volume at this price would not be possible.

jsmeaton 9y ago
Isn't the difference that a stock is only traded on a single exchange? If stocks were traded on multiple exchanges, and the value was reported as the average across all of them, then that number would be just as made up.
- patd 9y ago
  A lot of stocks are trading on multiple exchanges. Unilever and Shell trade on the NY, London and Amsterdam stock exchanges. People typically use the one closer to them geographically or from a currency point of view. And things like gold or oil barrels also have multiple exchanges.
  - tantalor 9y ago
    Unilever is actually 2 companies: https://en.wikipedia.org/wiki/Unilever#Legal_structure https://en.wikipedia.org/wiki/Unilever#Legal_structure Unilever plc and Unilever N.V. ...operate as nearly as practicable as a single economic entity, whilst remaining separate legal entities with different shareholders and separate stock exchange listings
- barnabee 9y ago
  Stocks are also traded on many different order books [1], each of which will have different prices, so the quoted price is just as made up (although usually by ignoring all but one venue rather than averaging across them). Also worth noting that for both stocks and cryptocurrencies, the price that is shown is almost always the last traded price not a quote for a price you could trade at anyway. [1] in the US, for example: https://www.sec.gov/foia/docs/atslist.htm https://www.sec.gov/foia/docs/atslist.htm
ebbv 9y ago
> This is the same for every stock traded on any stock exchange in the world. While we do live in an age where stocks seem increasingly untethered from reality, that's still not remotely true. Stocks are, in theory, based on the value of the company. Which is something you can calculate based on its assets and revenue. Granted the math doesn't add up for a lot of companies right now, but that's an indication we're in a bubble not an invalidation of the concept of stocks.
- hndamien 9y ago
  It is more of an indication that QE made cash worthless.
  - sho 9y ago
    > QE made cash worthless Really? All your cash is worthless? Well that sucks but tell you what, I'll help hedge your losses by swapping it all for a big mac meal (which I assume I'll have to barter for, but I'll do that for you).
    - hndamien 9y ago
      how about worth less.
- chrisco255 9y ago
  The market cap is still a simple calculation of the last share price * the number of shares outstanding. There's no magic there. The market cap is subject to huge swings as well if someone were to suddenly sell off a big chunk of shares.
dredmorbius 9y ago
No, it's the fact that the trading in Bitcoin is so thin. A modestly-large trade can completely swamp the markets. The NYSE sees on the order of a billion trades per day. The high over the past year is about 1.9, the low about 0.46. The dollar trade was $16 - $107 billion/day. I'm not finding transactional volume for bitcoin, but the dollar vollume has peaked at $2.5 billion, and until September, 2017, was under $500 million. Before that date, roughly, more money moves through one stock exchange in a single day than all of Bitcoin in a year. Which gets to an interesting question of just what it is price is, and represents. If you can control and regulate the supply of a good then price is something of a fiction: it's the amount demanded, relative to the supply. But for a fixed asset, the more you can restrict that supply, the higher the price goes. There's an analogy with electric circuits that I was kicking around with Gerard some months back. Just as R = V/I, the higher the demand (V), and the lower the supply (I), the greater the price. (This ... doesn't entirely hold up, but it's an interesting parallel.) http://www.nyxdata.com/nysedata/asp/factbook/viewer_edition.asp?mode=table&key=3141&category=3 http://www.nyxdata.com/nysedata/asp/factbook/viewer_edition.... https://blockchain.info/charts/trade-volume?timespan=1year&daysAverageString=7 https://blockchain.info/charts/trade-volume?timespan=1year&d...
- deleted 9y ago
  [deleted]
- sowbug 9y ago
  24-hour trading volume for Bitcoin is $4.86 billion (https://www.coingecko.com/en/coins/bitcoin https://www.coingecko.com/en/coins/bitcoin). Most active NYSE stock last Friday was Bank of America, trading about $3.1 billion (http://www.wsj.com/mdc/public/page/2_3021-activnyse-actives.html http://www.wsj.com/mdc/public/page/2_3021-activnyse-actives....). I don't understand why you'd compare a single security's trading volume to an entire stock exchange's volume. It is not a meaningful comparison.
  - dredmorbius 9y ago
    If you wanted a fair comparison, we wouldn't be comparing exchanges at all, but total financial transactions. That is if we're going to treat Bitcoin as a currency and not some sort of asset transfer vehicle. Visa International handles 300 million transactions/day, and $3 trillion/year. Or you could look at total US GDP or GWP (gross world product), which are in very rough numbers, $17 trillion and $70 trillion respectively. Bitcoin at a $5 billion daily trade is 1/8 the US financial transactions market, and roughly 1/40th that of total global trade. Honestly, that's higher than I'd have expected, but it's also in vastly greater trade blocks than most daily purchases.
kensey 9y ago
I think a large part of the point in that part of the article is that the price gap between exchanges is much wider than it is for just about any security trading on an established stock or commodity exchange (because the time and fees involved in exploiting that gap for Bitcoin make arbitrage hard to pull off, so the gap-tightening effects of it don’t kick in). You aren’t going to see inter-exchange differences of several percentage points in the price of a share, because savvy traders/trading bots would instantly jump on it and the gap would tighten up again.

jsmeaton 9y ago

Isn't the difference that a stock is only traded on a single exchange? If stocks were traded on multiple exchanges, and the value was reported as the average across all of them, then that number would be just as made up.

patd 9y ago
A lot of stocks are trading on multiple exchanges. Unilever and Shell trade on the NY, London and Amsterdam stock exchanges. People typically use the one closer to them geographically or from a currency point of view. And things like gold or oil barrels also have multiple exchanges.
- tantalor 9y ago
  Unilever is actually 2 companies: https://en.wikipedia.org/wiki/Unilever#Legal_structure https://en.wikipedia.org/wiki/Unilever#Legal_structure Unilever plc and Unilever N.V. ...operate as nearly as practicable as a single economic entity, whilst remaining separate legal entities with different shareholders and separate stock exchange listings
barnabee 9y ago
Stocks are also traded on many different order books [1], each of which will have different prices, so the quoted price is just as made up (although usually by ignoring all but one venue rather than averaging across them). Also worth noting that for both stocks and cryptocurrencies, the price that is shown is almost always the last traded price not a quote for a price you could trade at anyway. [1] in the US, for example: https://www.sec.gov/foia/docs/atslist.htm https://www.sec.gov/foia/docs/atslist.htm

ebbv 9y ago

> This is the same for every stock traded on any stock exchange in the world. While we do live in an age where stocks seem increasingly untethered from reality, that's still not remotely true. Stocks are, in theory, based on the value of the company. Which is something you can calculate based on its assets and revenue. Granted the math doesn't add up for a lot of companies right now, but that's an indication we're in a bubble not an invalidation of the concept of stocks.

hndamien 9y ago
It is more of an indication that QE made cash worthless.
- sho 9y ago
  > QE made cash worthless Really? All your cash is worthless? Well that sucks but tell you what, I'll help hedge your losses by swapping it all for a big mac meal (which I assume I'll have to barter for, but I'll do that for you).
  - hndamien 9y ago
    how about worth less.
chrisco255 9y ago
The market cap is still a simple calculation of the last share price * the number of shares outstanding. There's no magic there. The market cap is subject to huge swings as well if someone were to suddenly sell off a big chunk of shares.

dredmorbius 9y ago

No, it's the fact that the trading in Bitcoin is so thin. A modestly-large trade can completely swamp the markets. The NYSE sees on the order of a billion trades per day. The high over the past year is about 1.9, the low about 0.46. The dollar trade was $16 - $107 billion/day. I'm not finding transactional volume for bitcoin, but the dollar vollume has peaked at $2.5 billion, and until September, 2017, was under $500 million. Before that date, roughly, more money moves through one stock exchange in a single day than all of Bitcoin in a year. Which gets to an interesting question of just what it is price is, and represents. If you can control and regulate the supply of a good then price is something of a fiction: it's the amount demanded, relative to the supply. But for a fixed asset, the more you can restrict that supply, the higher the price goes. There's an analogy with electric circuits that I was kicking around with Gerard some months back. Just as R = V/I, the higher the demand (V), and the lower the supply (I), the greater the price. (This ... doesn't entirely hold up, but it's an interesting parallel.) http://www.nyxdata.com/nysedata/asp/factbook/viewer_edition.asp?mode=table&key=3141&category=3 http://www.nyxdata.com/nysedata/asp/factbook/viewer_edition.... https://blockchain.info/charts/trade-volume?timespan=1year&daysAverageString=7 https://blockchain.info/charts/trade-volume?timespan=1year&d...

deleted 9y ago
[deleted]
sowbug 9y ago
24-hour trading volume for Bitcoin is $4.86 billion (https://www.coingecko.com/en/coins/bitcoin https://www.coingecko.com/en/coins/bitcoin). Most active NYSE stock last Friday was Bank of America, trading about $3.1 billion (http://www.wsj.com/mdc/public/page/2_3021-activnyse-actives.html http://www.wsj.com/mdc/public/page/2_3021-activnyse-actives....). I don't understand why you'd compare a single security's trading volume to an entire stock exchange's volume. It is not a meaningful comparison.
- dredmorbius 9y ago
  If you wanted a fair comparison, we wouldn't be comparing exchanges at all, but total financial transactions. That is if we're going to treat Bitcoin as a currency and not some sort of asset transfer vehicle. Visa International handles 300 million transactions/day, and $3 trillion/year. Or you could look at total US GDP or GWP (gross world product), which are in very rough numbers, $17 trillion and $70 trillion respectively. Bitcoin at a $5 billion daily trade is 1/8 the US financial transactions market, and roughly 1/40th that of total global trade. Honestly, that's higher than I'd have expected, but it's also in vastly greater trade blocks than most daily purchases.

kensey 9y ago

I think a large part of the point in that part of the article is that the price gap between exchanges is much wider than it is for just about any security trading on an established stock or commodity exchange (because the time and fees involved in exploiting that gap for Bitcoin make arbitrage hard to pull off, so the gap-tightening effects of it don’t kick in). You aren’t going to see inter-exchange differences of several percentage points in the price of a share, because savvy traders/trading bots would instantly jump on it and the gap would tighten up again.