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Assets that have a real income stream behind them at least have a price floor. For example you would not expect a house to sell for less than the present value

Assets that have a real income stream behind them at least have a price floor. For example you would not expect a house to sell for less than the present value of some number of years rent, you would not expect the sum of shares of a company to sell for less than the liquidation value of its assets less its liabilities, etc. Bitcoin has precisely 0 equity or income stream attached to it. It is not an income producing asset. It does not grant claim to real assets like a bond or a stock. There is zero underlying. That is why the term "Bitcoin market cap" is BS. There is nothing to capitalise. Bitcoin could be priced at $0 or $1,000,000 either way its present price per unit does not relate to the net value of all Bitcoins as a market cap would.

gruez 6y ago
>Assets that have a real income stream behind them at least have a price floor. [...] Bitcoin has precisely 0 equity or income stream attached to it. Is this a relevant factor considering that many assets are trading several times above this price floor? In other words, if you bought $5000 worth of shares in a highly overvalued company (eg. GME or TSLA), and the bubble pops, is it really much consolation to you that there's a price floor of $100 rather than $0? >That is why the term "Bitcoin market cap" is BS. There is nothing to capitalise. This is technically correct in the sense that "market cap" is only defined for companies (according to wikipedia at least), so you could say that it's wrong to quote the "market cap" for anything other than companies (cryptocurrency, precious metals, commodities, houses).
- morpheos137 6y ago
  >Is this a relevant factor considering that many assets are trading several times above this price floor? Yes. But the market can stay "irrational" for a long time. Many people have won the greater fool game over the years. >This is technically correct in the sense that "market cap" is only defined for companies. Market cap is a measure of the total equity of company as priced in the stock market. Since nobody can own the "Bitcoin network" like they can own a shares of a company "market cap" is nonsense when used as a term to describe the value of the Bitcoin network. There is no underlying equity to capitalise at any price.

gruez 6y ago

>Assets that have a real income stream behind them at least have a price floor. [...] Bitcoin has precisely 0 equity or income stream attached to it. Is this a relevant factor considering that many assets are trading several times above this price floor? In other words, if you bought $5000 worth of shares in a highly overvalued company (eg. GME or TSLA), and the bubble pops, is it really much consolation to you that there's a price floor of $100 rather than $0? >That is why the term "Bitcoin market cap" is BS. There is nothing to capitalise. This is technically correct in the sense that "market cap" is only defined for companies (according to wikipedia at least), so you could say that it's wrong to quote the "market cap" for anything other than companies (cryptocurrency, precious metals, commodities, houses).

morpheos137 6y ago
>Is this a relevant factor considering that many assets are trading several times above this price floor? Yes. But the market can stay "irrational" for a long time. Many people have won the greater fool game over the years. >This is technically correct in the sense that "market cap" is only defined for companies. Market cap is a measure of the total equity of company as priced in the stock market. Since nobody can own the "Bitcoin network" like they can own a shares of a company "market cap" is nonsense when used as a term to describe the value of the Bitcoin network. There is no underlying equity to capitalise at any price.