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Am I missing something about how much crypto is out there? I get that bitcoin is worth 50k each etc and so on, but the net amount of actual real world money th

Am I missing something about how much crypto is out there? I get that bitcoin is worth 50k each etc and so on, but the net amount of actual real world money that has gone from IRL into crypto I have assumed to be quite small (ie it's either money laundering going in and out just leaving fees behind, or it was coin bought for a dollar each and now the owner thinks it is worth a Tesla, but the amount of actual value transferred so far is one dollar) So, forgive me, if there is not much actual wealth been put in, if it collapses why is it a risk?

deleted 5y ago
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kaycebasques 5y ago
At first I thought that quoting the total market cap of all cryptocurrency markets (or the big ones at least) would answer your question. But after reading again I think that you're asking a different question and I'm not sure if total market cap explains it, or whether it's even possible to calculate. For a toy example, suppose there's only 200 coins of XCoin. Person A buys 100 coins for $1 each ($100 total). Person B buys the remaining 100 coins for $100 each ($10000 total). The total amount of USD put into the system is $10100 but the market cap is $20000. To get the value you're looking for I think you would need to get the cost basis of the last transaction for every coin in existence.
imtringued 5y ago
>So, forgive me, if there is not much actual wealth been put in, if it collapses why is it a risk? There is zero wealth put into Bitcoin. When you buy Bitcoin, someone else sells their Bitcoin and gets your money. The money enters and leaves instantly. The USD works a little bit different. New USD are created when you borrow. Loans create future buyers, therefore USD has value in the sense that people need it to repay their debts. People will willingly exchange real goods for USD to pay the loan. The wealth used to pay the loans doesn't exist in the banking system. It exists in the real world. So loans encourage real wealth generation to some degree and the presence of real wealth makes USD a very convenient medium of payment as people willingly exchange real wealth for USD.
ac29 5y ago
Coinbase had $1.8B in revenue, and $800M in expenses during Q1 of this year according to their most recent 10-Q. That is certainly not a small amount of real world money.

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kaycebasques 5y ago

At first I thought that quoting the total market cap of all cryptocurrency markets (or the big ones at least) would answer your question. But after reading again I think that you're asking a different question and I'm not sure if total market cap explains it, or whether it's even possible to calculate. For a toy example, suppose there's only 200 coins of XCoin. Person A buys 100 coins for $1 each ($100 total). Person B buys the remaining 100 coins for $100 each ($10000 total). The total amount of USD put into the system is $10100 but the market cap is $20000. To get the value you're looking for I think you would need to get the cost basis of the last transaction for every coin in existence.

imtringued 5y ago

>So, forgive me, if there is not much actual wealth been put in, if it collapses why is it a risk? There is zero wealth put into Bitcoin. When you buy Bitcoin, someone else sells their Bitcoin and gets your money. The money enters and leaves instantly. The USD works a little bit different. New USD are created when you borrow. Loans create future buyers, therefore USD has value in the sense that people need it to repay their debts. People will willingly exchange real goods for USD to pay the loan. The wealth used to pay the loans doesn't exist in the banking system. It exists in the real world. So loans encourage real wealth generation to some degree and the presence of real wealth makes USD a very convenient medium of payment as people willingly exchange real wealth for USD.

ac29 5y ago

Coinbase had $1.8B in revenue, and $800M in expenses during Q1 of this year according to their most recent 10-Q. That is certainly not a small amount of real world money.