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From the title: > $100B in Market Value When the market price of an assets drops, it loses market value.

brndnmtthws 9y ago
Wrong. The market value is only what you get for it when you sell it. It's a subtle but very important difference. A good analogy is comparing the advertised price of a used car versus what you actually get for it. You might think it's worth $5k, but there's only 1 person who wants to buy it and they're only willing to pay $4k, so it's actually worth $4k, not $5k. It doesn't matter if someone else sold theirs for $5k.
- solotronics 9y ago
  maybe a more accurate metric be average sell value over period of time or number of trades?
- Klathmon 9y ago
  I hear this all the time, but does anyone really think that the market cap is what you can really get for an asset? It's a metric, one as "untrue" as an average or median. It's not a contract, and you won't get that if you change the market, which selling and buying does. I don't think that means we shouldn't use it as a metric to use to get information from for comparisons. And I don't think that it's bad journalism to say that the market cap dropped by $100B when it did, even if that doesn't equate to $100 billion being burned.
  - brndnmtthws 9y ago
    The point is that no one really knows the actual value of any asset until you've sold it. You can only measure value in the past; future values can only be guessed (excluding things like future contracts). This is true regardless of whether we're talking about Bitcoin, stocks, metals, houses, chickens, or seashells. Most of these stupid market movement predictions are equivalent to astrology and only exist because WSJ and others have nothing interesting to say. The daily market fluctuations are pretty much random, and this has been proven many times over.
    - Klathmon 9y ago
      I completely agree about "market movement predictions", but market cap is not a prediction, it's a metric, a statistic, a made up value that can help you compare one asset to another. It is used like a unitless measuring stick, not a prediction on what you can get if you sold. And I'll argue that it does it's job fairly well. It's difficult to "game", and can help give you some information about an asset. It doesn't say everything, it can't tell you if it's stable, or if it's being used or not, or if it's a scam. It's just a tool, a metric, something that you use with a bunch of other tools to get an idea of the ecosystem. I would be happy to "rename" it to a unitless value that doesn't imply a "total worth", but that ship has sailed, and it's not going to be possible, so we have what we have.
- supercanuck 9y ago
  I'm not exactly sure what you are arguing but the value of these coins were trading about 30% lower, so using your definition above, the market value was clearly lower as can be seen by actual market activity. The price has since recovered. I don't think anybody is claiming the number on Coin Market Cap is the actual market value because it is simply a metric derived from aggregating across multiple, very volatile exchanges. EDIT: ok i saw your comment below, and it seems you are arguing, albeit very aggressively, that daily market fluctuations are random and cannot be attributed to an actual event, such as this one?
- everdev 9y ago
  Wrong. https://www.investopedia.com/terms/m/marketvalue.asp https://www.investopedia.com/terms/m/marketvalue.asp Market value definition: > obtained by multiplying the number of its outstanding shares by the current share price The reality of selling has nothing to do with it. It's just a math equation.
  - brndnmtthws 9y ago
    How can a thing which never existed to begin with vanish? There wasn't $100B sitting around in a bank account waiting to be claimed, which then suddenly evaporated. Also investopedia isn't exactly a high quality source.
    - DennisP 9y ago
      It's not only dollars that have value. Lots of assets do, like company shares. In the stock market, if a company has ten million shares at $100 each we say the company is worth a billion dollars, even though that $100 price is only the most recent transaction. We say that because if price times quantity didn't match what the overall market thinks the whole company is worth, the price would quickly correct until it did.
    - jawilson2 9y ago
      What about the Financial Times? http://lexicon.ft.com/Term?term=market-capitalisation http://lexicon.ft.com/Term?term=market-capitalisation "Market capitalisation or market cap is the market value of a company's issued share capital – in other words. the number of shares multiplied by the current price of those shares on the stock market."
    - everdev 9y ago
      $100B was created on paper and lost on paper. Net worth is the same concept. Jeff Bezos net worth is calculated based on how much his assets are theoretically worth based on current fair market prices. He doesn't have to sell all his assets to determine his net worth. People don't like the "lost $100B in market value" part, but it is accurate since market value is calculated on paper.
  - 9y ago
ddebernardy 9y ago
There are a bunch of websites that offer to value this or that website. I once plugged an old website of mine in there and it was well over $1M. I was like - please tell me who the buyer is, I'd sell right away. "Market value" doesn't mean squat if you've no buyer in front.
- everdev 9y ago
  Right, market value != Money in the bank But, market value means the market price * total assets. So, market value is erased when market prices drop and created when they rise. How you interpret a ride or drop in market value is up to you. It's just like saying my house was appraised at $300k. That doesn't mean you will get an offer at that price, but it's not accurate to say that the appraisal value isn't $300k unless you find a buyer at that price. The appraisal price and purchase price are separate.
jstanley 9y ago
But the market price didn't drop. An aggregator changed its reporting methodology. Coinmarketcap is a price aggregator, not a market. All of the markets are unaffected, it just happened that the markets that got removed from the aggregator are the ones that had the highest prices. But they're still there. You can still trade on them the same as before.
- DennisP 9y ago
  Actual prices on exchanges did drop temporarily, apparently because a lot of people panicked.

Wrong. The market value is only what you get for it when you sell it. It's a subtle but very important difference. A good analogy is comparing the advertised price of a used car versus what you actually get for it. You might think it's worth $5k, but there's only 1 person who wants to buy it and they're only willing to pay $4k, so it's actually worth $4k, not $5k. It doesn't matter if someone else sold theirs for $5k.

solotronics 9y ago
maybe a more accurate metric be average sell value over period of time or number of trades?
Klathmon 9y ago
I hear this all the time, but does anyone really think that the market cap is what you can really get for an asset? It's a metric, one as "untrue" as an average or median. It's not a contract, and you won't get that if you change the market, which selling and buying does. I don't think that means we shouldn't use it as a metric to use to get information from for comparisons. And I don't think that it's bad journalism to say that the market cap dropped by $100B when it did, even if that doesn't equate to $100 billion being burned.
- brndnmtthws 9y ago
  The point is that no one really knows the actual value of any asset until you've sold it. You can only measure value in the past; future values can only be guessed (excluding things like future contracts). This is true regardless of whether we're talking about Bitcoin, stocks, metals, houses, chickens, or seashells. Most of these stupid market movement predictions are equivalent to astrology and only exist because WSJ and others have nothing interesting to say. The daily market fluctuations are pretty much random, and this has been proven many times over.
  - Klathmon 9y ago
    I completely agree about "market movement predictions", but market cap is not a prediction, it's a metric, a statistic, a made up value that can help you compare one asset to another. It is used like a unitless measuring stick, not a prediction on what you can get if you sold. And I'll argue that it does it's job fairly well. It's difficult to "game", and can help give you some information about an asset. It doesn't say everything, it can't tell you if it's stable, or if it's being used or not, or if it's a scam. It's just a tool, a metric, something that you use with a bunch of other tools to get an idea of the ecosystem. I would be happy to "rename" it to a unitless value that doesn't imply a "total worth", but that ship has sailed, and it's not going to be possible, so we have what we have.
supercanuck 9y ago
I'm not exactly sure what you are arguing but the value of these coins were trading about 30% lower, so using your definition above, the market value was clearly lower as can be seen by actual market activity. The price has since recovered. I don't think anybody is claiming the number on Coin Market Cap is the actual market value because it is simply a metric derived from aggregating across multiple, very volatile exchanges. EDIT: ok i saw your comment below, and it seems you are arguing, albeit very aggressively, that daily market fluctuations are random and cannot be attributed to an actual event, such as this one?
everdev 9y ago
Wrong. https://www.investopedia.com/terms/m/marketvalue.asp https://www.investopedia.com/terms/m/marketvalue.asp Market value definition: > obtained by multiplying the number of its outstanding shares by the current share price The reality of selling has nothing to do with it. It's just a math equation.
- brndnmtthws 9y ago
  How can a thing which never existed to begin with vanish? There wasn't $100B sitting around in a bank account waiting to be claimed, which then suddenly evaporated. Also investopedia isn't exactly a high quality source.
  - DennisP 9y ago
    It's not only dollars that have value. Lots of assets do, like company shares. In the stock market, if a company has ten million shares at $100 each we say the company is worth a billion dollars, even though that $100 price is only the most recent transaction. We say that because if price times quantity didn't match what the overall market thinks the whole company is worth, the price would quickly correct until it did.
  - jawilson2 9y ago
    What about the Financial Times? http://lexicon.ft.com/Term?term=market-capitalisation http://lexicon.ft.com/Term?term=market-capitalisation "Market capitalisation or market cap is the market value of a company's issued share capital – in other words. the number of shares multiplied by the current price of those shares on the stock market."
  - everdev 9y ago
    $100B was created on paper and lost on paper. Net worth is the same concept. Jeff Bezos net worth is calculated based on how much his assets are theoretically worth based on current fair market prices. He doesn't have to sell all his assets to determine his net worth. People don't like the "lost $100B in market value" part, but it is accurate since market value is calculated on paper.
- 9y ago

ddebernardy 9y ago

There are a bunch of websites that offer to value this or that website. I once plugged an old website of mine in there and it was well over $1M. I was like - please tell me who the buyer is, I'd sell right away. "Market value" doesn't mean squat if you've no buyer in front.

everdev 9y ago
Right, market value != Money in the bank But, market value means the market price * total assets. So, market value is erased when market prices drop and created when they rise. How you interpret a ride or drop in market value is up to you. It's just like saying my house was appraised at $300k. That doesn't mean you will get an offer at that price, but it's not accurate to say that the appraisal value isn't $300k unless you find a buyer at that price. The appraisal price and purchase price are separate.

jstanley 9y ago

But the market price didn't drop. An aggregator changed its reporting methodology. Coinmarketcap is a price aggregator, not a market. All of the markets are unaffected, it just happened that the markets that got removed from the aggregator are the ones that had the highest prices. But they're still there. You can still trade on them the same as before.

DennisP 9y ago
Actual prices on exchanges did drop temporarily, apparently because a lot of people panicked.