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> But if you tried to sell some significant fraction of the outstanding coins then the sale price would plummet, and you'd never actually reach $5M total. Yes.

> But if you tried to sell some significant fraction of the outstanding coins then the sale price would plummet, and you'd never actually reach $5M total. Yes. But it's the same for the market cap of company stocks. So saying that "the market cap isn't truly $5M" is missing the point a bit. The market cap can truly be $5M without $5M having been invested. That's just not what market cap means.

vkou 8y ago
No, this is precisely why trying to calculate the market cap of a crypto-currency is pointless. A company is a productive enterprise, that produces value for you, if you sit on shares of it. Something like bitcoin is a purely speculative instrument, that produces no value if you sit on it. The market cap for a company is an imprecise proxy for all expected revenues, discounted by time[1]. The market cap for a currency is an imprecise proxy for... How much you can hope to unload it to the next fool. [2] [1] At least, it's supposed to be. [2] Yes, yes, we know, Bitcoin is useful for transferring money. This usefulness is completely disjointed from its market cap. It doesn't matter if it's $20/coin, or $20,000/coin, if you're using it to send money.
- this_user 8y ago
  Strictly speaking there is not even a "market cap" for currencies, because the term applies, by definition, only to stocks of publicly traded companies.
- perl4ever 8y ago
  It is correct to say that the market cap of a company is not the amount you can buy the company for. Most of the owners of shares in any company aren't ready to sell for the market price. That is the salient parallel being drawn.
  - thaumasiotes 8y ago
    That's not a good parallel. The market capitalization of a company is more than you could sell the company for. It's less than you'd have to pay to buy the company. But in this hypothetical attack, the complaint is that the "market capitalization" is more than you'd have to pay to buy out the network.
- antocv 8y ago
  > A company is a productive enterprise, that produces value for you Hmm, does this mean Boeing, Saab Aerospace, the ammo factory is also a productive enterprise, which produces value for me? The bombs dropped on people in sandals in Yemen, how is that producing value for anyone owning the stock of war companies? Also owning said stock indirectly through pension funds. How many companies are not in any definition "productive" and end up bankrupt, restructured or just bailed-out?

vkou 8y ago

No, this is precisely why trying to calculate the market cap of a crypto-currency is pointless. A company is a productive enterprise, that produces value for you, if you sit on shares of it. Something like bitcoin is a purely speculative instrument, that produces no value if you sit on it. The market cap for a company is an imprecise proxy for all expected revenues, discounted by time[1]. The market cap for a currency is an imprecise proxy for... How much you can hope to unload it to the next fool. [2] [1] At least, it's supposed to be. [2] Yes, yes, we know, Bitcoin is useful for transferring money. This usefulness is completely disjointed from its market cap. It doesn't matter if it's $20/coin, or $20,000/coin, if you're using it to send money.

this_user 8y ago
Strictly speaking there is not even a "market cap" for currencies, because the term applies, by definition, only to stocks of publicly traded companies.
perl4ever 8y ago
It is correct to say that the market cap of a company is not the amount you can buy the company for. Most of the owners of shares in any company aren't ready to sell for the market price. That is the salient parallel being drawn.
- thaumasiotes 8y ago
  That's not a good parallel. The market capitalization of a company is more than you could sell the company for. It's less than you'd have to pay to buy the company. But in this hypothetical attack, the complaint is that the "market capitalization" is more than you'd have to pay to buy out the network.
antocv 8y ago
> A company is a productive enterprise, that produces value for you Hmm, does this mean Boeing, Saab Aerospace, the ammo factory is also a productive enterprise, which produces value for me? The bombs dropped on people in sandals in Yemen, how is that producing value for anyone owning the stock of war companies? Also owning said stock indirectly through pension funds. How many companies are not in any definition "productive" and end up bankrupt, restructured or just bailed-out?