3 ms·

First, you are confusing market cap with "value" or some other concept. Market cap is price of the last sale multiplied by stock. So every asset has it by defin

First, you are confusing market cap with "value" or some other concept. Market cap is price of the last sale multiplied by stock. So every asset has it by definition. Second, how do you back up that statement of not being able to sell it? How do you know you couldn't sell those Bitcoins back to the market? Would you think the same about buying up all gold?

themitigating 4y ago
This is what I was thinking. Anything that another person wants has value. Gold, water, btc. People make this big distinction for things like oil because it's used for something but I don't see how's thats relevant.
- Eisenstein 4y ago
  It is relevant because if something has a use, there is a basis for the value. If something is only valuable because people believe it to be valuable, then you must maintain that belief in order to maintain that value. For instance a used stamp that is rare is valuable to collectors even though it has no use, but aside from a few collectors there is no market for that stamp. The problem with a huge market filled by people buying due to speculation is that as soon as something spooks the market it tanks and the value doesn't hold, because people don't actually want the thing they are holding, they just want to be able to sell it to someone else. This is why the crypto scene is very cultish -- it is all built on maintaining the belief, and the utility is secondary.
CPLX 4y ago
It’s not a stock though. Just because you can buy or trade it doesn’t mean it has a market cap. What’s the market cap of gravel? It might be $1,000 a ton but you can’t multiply that by the amount of gravel in the world and get a meaningful number. OK so how about gold? How much of that is there? Are you counting ore, how about gold a mile underground? Same problem. The point is that market cap only applies when you’re talking about a security that represents a claim on a fraction of a whole asset that exists independently of the security itself. The concept of a market cap is meaningful when adding up all of the stock yields 100% of a defined thing. In that case you can surmise that the market cap represents some kind of representation of the value of that thing. The lower limit on market cap is generally considered to have a relationship to what that asset is worth. But Bitcoin doesn’t have intrinsic value. It’s not a thing at all. If you owned all of it you literally would have absolutely nothing at all. Someone else could just start using the same code and call it bitcoin. There’s no asset there. Hence, no market cap.
- JonathanBeuys 4y ago
  "Stock" is the word used to describe the sum of an asset held by investors. Google "stock to flow" to see how "stock" is commonly used for assets in general and commodities like gold in particular. You will also find the answers to your questions about whether to count gold below ground.

themitigating 4y ago

This is what I was thinking. Anything that another person wants has value. Gold, water, btc. People make this big distinction for things like oil because it's used for something but I don't see how's thats relevant.

Eisenstein 4y ago
It is relevant because if something has a use, there is a basis for the value. If something is only valuable because people believe it to be valuable, then you must maintain that belief in order to maintain that value. For instance a used stamp that is rare is valuable to collectors even though it has no use, but aside from a few collectors there is no market for that stamp. The problem with a huge market filled by people buying due to speculation is that as soon as something spooks the market it tanks and the value doesn't hold, because people don't actually want the thing they are holding, they just want to be able to sell it to someone else. This is why the crypto scene is very cultish -- it is all built on maintaining the belief, and the utility is secondary.

CPLX 4y ago

It’s not a stock though. Just because you can buy or trade it doesn’t mean it has a market cap. What’s the market cap of gravel? It might be $1,000 a ton but you can’t multiply that by the amount of gravel in the world and get a meaningful number. OK so how about gold? How much of that is there? Are you counting ore, how about gold a mile underground? Same problem. The point is that market cap only applies when you’re talking about a security that represents a claim on a fraction of a whole asset that exists independently of the security itself. The concept of a market cap is meaningful when adding up all of the stock yields 100% of a defined thing. In that case you can surmise that the market cap represents some kind of representation of the value of that thing. The lower limit on market cap is generally considered to have a relationship to what that asset is worth. But Bitcoin doesn’t have intrinsic value. It’s not a thing at all. If you owned all of it you literally would have absolutely nothing at all. Someone else could just start using the same code and call it bitcoin. There’s no asset there. Hence, no market cap.

JonathanBeuys 4y ago
"Stock" is the word used to describe the sum of an asset held by investors. Google "stock to flow" to see how "stock" is commonly used for assets in general and commodities like gold in particular. You will also find the answers to your questions about whether to count gold below ground.