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Money isn't "put into" Bitcoin. Every USD "put into" an exchange in exchange for Bitcoin was simultaneously taken out by the person on the other side of the tr

Money isn't "put into" Bitcoin. Every USD "put into" an exchange in exchange for Bitcoin was simultaneously taken out by the person on the other side of the trade. The future value of Bitcoin in USD is entirely dependent on people in the future wanting to buy Bitcoin for USD; if no one wants to, it is not worth any USD.

frenchie14 9y ago
I guess the question should be rephrased then as "how much have the current owners of bitcoin collectively exchanged for their coins?" This question also becomes more interesting when you factor in every coin that has been mined but not yet exchanged for money. I believe the GP is correct in guessing that the number will be much smaller than the current market cap of BTC
- aplummer 9y ago
  Yeap this is what I meant, using 'put into' like "putting money into stocks". Good point about bitcoins that have never been exchanged.
  - saalweachter 9y ago
    You do put money into a company when you buy its shares ... during an IPO. Meanwhile, owning shares of a company convey fractional ownership of it, its assets, and its future earnings. People will consider the stock price of a company relative to its assets and earnings (P/E) as an indicator of whether the company is overpriced or under-priced. No one really notes the "total volume" of the trades of stocks, which is what you're asking for for Bitcoin; it isn't really a meaningful number. If people pass a stock - or a Bitcoin - back and forth for 10 trades for [$99, $101] or for 100 trades for [$99, $101], it isn't really meaningful. The best you can do for Bitcoin is to try to gauge the "depth of the market" right now, ie, how many "buy" and "sell" orders are out at what prices, how much Bitcoin you could buy or sell right now and what the average price you could buy or sell a large quantity of Bitcoin at. (Eg, if you wanted to sell X Bitcoin, you might be able to sell X/2 Bitcoin at $PRICE and X/2 Bitcoin at $PRICE/2, for an average price of $PRICE*3/4.)
    - miketery 9y ago
      > No one really notes the "total volume" of the trades of stocks OP is asking about Market Cap not volume. The question at hand is - market cap vs. money invested by current owners of bitcoin. Hypothesis being that this ratio is high.
      - saalweachter 9y ago
        So you might be able to figure out the last price paid for each Bitcoin. That total is almost certainly less than the "market cap". What does that number tell you? It doesn't tell you the minimum value of a Bitcoin.
- scottnyc 9y ago
  The number is without question much smaller than the current market cap of BTC. The current price and number of shares traded on the exchanges is not very meaningful since exchanges are unregulated and you have behavior such as wash trading where you can manipulate the price and inflate volume. What I would like to know is how much money has actually been transferred into the exchanges. That is what matters. If Coinbase has 12 million accounts, and on average only $100 was invested (I'm assuming there are MANY opened yet unfunded accounts), then we're talking about $1.2billion at play moving back and forth on that exchange. (this is just a hypothetical number, I would love Coinbase to produce statistics, but know they have no incentive to.) If no new accounts get opened and no more money flows in, That $1.2b will slowly drop to zero as Coinbase and the miners eat up that pool with fees.
21 9y ago
You can say the same about many (most?) things. Every USD "put into" AAPL is simultaneously taken out by the person on the other side of the trade. Very few things truly destroy money, and I'm pretty sure all of them are done by banks or treasuries.
- saalweachter 9y ago
  AAPL has associated assets, including cash assets, and owning shares of AAPL is a direct encumbrance on those assets.
- CPLX 9y ago
  This is factually incorrect. Apple can and does issue stock and buy back shares.
  - 21 9y ago
    Please explain how issuing/buying back shares destroys dollars.
    - saalweachter 9y ago
      AAPL buying/selling itself is a direct link between the assets inside AAPL and its stock price. Money can literally be "put into" and "taken out of" AAPL.
      - 21 9y ago
        Those "assets inside" AAPL are still dollars. User payed dollars for AAPL share which ended up in a dollar account or a treasury bond. Stop being so obtuse. Otherwise I can also say the same thing, that you can literally put dollars into Bitcoin by buying GBTC shares, since the dollars become "assets inside" the Bitcoin Investment Trust company.
        saalweachter 9y ago
        Sure, the Bitcoin Investment Trust is no different than any other stock. Buying shares of GBTC entitles you to a share of its assets and earnings, same as any other company. But what are those assets worth? AAPL owns patents, inventory, raw material, real estate, subsidiaries, investments (stocks, bonds, commodities, T-bills, the whole shebang) and straight-up cash. You can add all those together and you can evaluate each of them based on how their value can change over time and under different market conditions. What assets does GBTC hold? If the answer is "Bitcoin", you've just recursed on "What is the value of a Bitcoin?"; if the answer is "Bitcoin, cash, other cryptocurrencies, and a whole lot of other assets", great, you can evaluate each of them independently and add them all together. But again, you're recursing on the value of cryptocurrencies without really coming any closer to an answer.

frenchie14 9y ago

I guess the question should be rephrased then as "how much have the current owners of bitcoin collectively exchanged for their coins?" This question also becomes more interesting when you factor in every coin that has been mined but not yet exchanged for money. I believe the GP is correct in guessing that the number will be much smaller than the current market cap of BTC

aplummer 9y ago
Yeap this is what I meant, using 'put into' like "putting money into stocks". Good point about bitcoins that have never been exchanged.
- saalweachter 9y ago
  You do put money into a company when you buy its shares ... during an IPO. Meanwhile, owning shares of a company convey fractional ownership of it, its assets, and its future earnings. People will consider the stock price of a company relative to its assets and earnings (P/E) as an indicator of whether the company is overpriced or under-priced. No one really notes the "total volume" of the trades of stocks, which is what you're asking for for Bitcoin; it isn't really a meaningful number. If people pass a stock - or a Bitcoin - back and forth for 10 trades for [$99, $101] or for 100 trades for [$99, $101], it isn't really meaningful. The best you can do for Bitcoin is to try to gauge the "depth of the market" right now, ie, how many "buy" and "sell" orders are out at what prices, how much Bitcoin you could buy or sell right now and what the average price you could buy or sell a large quantity of Bitcoin at. (Eg, if you wanted to sell X Bitcoin, you might be able to sell X/2 Bitcoin at $PRICE and X/2 Bitcoin at $PRICE/2, for an average price of $PRICE*3/4.)
  - miketery 9y ago
    > No one really notes the "total volume" of the trades of stocks OP is asking about Market Cap not volume. The question at hand is - market cap vs. money invested by current owners of bitcoin. Hypothesis being that this ratio is high.
    - saalweachter 9y ago
      So you might be able to figure out the last price paid for each Bitcoin. That total is almost certainly less than the "market cap". What does that number tell you? It doesn't tell you the minimum value of a Bitcoin.
scottnyc 9y ago
The number is without question much smaller than the current market cap of BTC. The current price and number of shares traded on the exchanges is not very meaningful since exchanges are unregulated and you have behavior such as wash trading where you can manipulate the price and inflate volume. What I would like to know is how much money has actually been transferred into the exchanges. That is what matters. If Coinbase has 12 million accounts, and on average only $100 was invested (I'm assuming there are MANY opened yet unfunded accounts), then we're talking about $1.2billion at play moving back and forth on that exchange. (this is just a hypothetical number, I would love Coinbase to produce statistics, but know they have no incentive to.) If no new accounts get opened and no more money flows in, That $1.2b will slowly drop to zero as Coinbase and the miners eat up that pool with fees.

21 9y ago

You can say the same about many (most?) things. Every USD "put into" AAPL is simultaneously taken out by the person on the other side of the trade. Very few things truly destroy money, and I'm pretty sure all of them are done by banks or treasuries.

saalweachter 9y ago
AAPL has associated assets, including cash assets, and owning shares of AAPL is a direct encumbrance on those assets.
CPLX 9y ago
This is factually incorrect. Apple can and does issue stock and buy back shares.
- 21 9y ago
  Please explain how issuing/buying back shares destroys dollars.
  - saalweachter 9y ago
    AAPL buying/selling itself is a direct link between the assets inside AAPL and its stock price. Money can literally be "put into" and "taken out of" AAPL.
    - 21 9y ago
      Those "assets inside" AAPL are still dollars. User payed dollars for AAPL share which ended up in a dollar account or a treasury bond. Stop being so obtuse. Otherwise I can also say the same thing, that you can literally put dollars into Bitcoin by buying GBTC shares, since the dollars become "assets inside" the Bitcoin Investment Trust company.
      - saalweachter 9y ago
        Sure, the Bitcoin Investment Trust is no different than any other stock. Buying shares of GBTC entitles you to a share of its assets and earnings, same as any other company. But what are those assets worth? AAPL owns patents, inventory, raw material, real estate, subsidiaries, investments (stocks, bonds, commodities, T-bills, the whole shebang) and straight-up cash. You can add all those together and you can evaluate each of them based on how their value can change over time and under different market conditions. What assets does GBTC hold? If the answer is "Bitcoin", you've just recursed on "What is the value of a Bitcoin?"; if the answer is "Bitcoin, cash, other cryptocurrencies, and a whole lot of other assets", great, you can evaluate each of them independently and add them all together. But again, you're recursing on the value of cryptocurrencies without really coming any closer to an answer.