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[sincere question] aren't cryptocurrencies creating new money supply, though? I often hear "market cap raised by X billions", but it's not just that fiat billio
by oelmekki 9y ago
[sincere question] aren't cryptocurrencies creating new money supply, though? I often hear "market cap raised by X billions", but it's not just that fiat billions are used to buy bitcoins, it's also that existing bitcoins are gaining value against fiat. Am I making any sense?
- Tepix 9y agoThe market cap is merely a metric that you get by multiplying the circulating supply by the price last paid for a single unit. It's the same as with stock. If people today pay $1000 more per bitcoin than yesterday, it doesn't change the circulating supply.
- grenoire 9y agoMarket cap is not what you think it is. If there are X amount of bitcoins with the last one traded at price P, then the market cap is X * P. However, if people attempted to liquidate these bitcoins into 'real' currency, P would continuously go down. Market cap hence is not the amount of 'real' money that's contained within the bitcoin ecosystem.