Topic: Bitcoin market cap (Read 2761 times)

Adding more coins just makes an arbitrary market cap value even more arbitrary, IMO.

Maybe I'm just out of touch with what it's like to be on internet message boards

I love when people arrogantly call for others to display humility.  If you read what I said more carefully, you wouldn't have interpreted it (as you plainly did) as some sort of attack on Bitcoins or their market value.  You have no idea what I've bought or sold, and I was plainly not making a recommendation to do either.  I'm not an investment advisor (at least not formally), and I have no interest in disclosing my personal financial positions to you.

I'm sorry if you're claiming you can't grasp simple economic language, but nothing I said was "fluffy," and what "long words" did it use?  Honestly, it wasn't even "fine sounding."    I admit I'm used to writing for an educated academic audience, but it's not hard to understand what I said and to see that it's correct on its own terms.  Making up numbers and calling them "market capitalization" is what lacks humility.  If you want to say "I think Bitcoins will rise against the US Dollar," say that instead; don't say something that's baseless, logically confused, and misleading.

Maybe if I try again we can communicate like adults.  "Market capitalization" itself -- even when it's not the figure you conjured yourself -- is sometimes a misleading figure even in its traditional contexts; it doesn't describe, for example, how much capital a company has access to.  I recently owned a stake of a company that went public and, as a result, had a market capitalization of $2 billion; however, they raised only $50 million in the IPO.  The $2 billion value is useful when calculating the value of individual shareholders' stakes; it's not useful in calculating the size of the company's "economy" in the way the term is applied to Bitcoin.  Note, in case it's still confusing, that a single trader on Mt. Gox can increase or decrease the "market capitalization" by several million dollars by committing only several thousand dollars.  You can't read into the figure properties that it won't bear, at least without making profound logical and mathematical mistakes.

If they are issued and sold with no new demand, the price will fall.  If they are issued and sold with (increasing) demand that (thus) matches demand for the current coins, the price will stay the same, and the "market capitalization" will increase.

What you're saying is like arguing that the value of "the banana economy" includes bananas that have not yet been grown yet because we know that some more are growing and will be ready soon.  If that happens but nobody new wants bananas, the price of them falls.  To say it more intuitively, if nobody wants the new bananas, they have no value, and you can't assume that because there is demand for the current bananas that there will be equivalent demand for the new ones.

The market capitalization is actually likely a significant overestimate of the Bitcoin economy because the clearing price does not reflect the value of the entire economy; the whole economy would not clear at the current price.  Of course, if all sold today, Bitcoins would have a substantially lower value than the "market capitalization" figure suggests.  It is an enticing "marketing" figure but has probably misled many people.

They are definitely priced in to some extent. Imagine what would happen if we all looked into the code and noticed that there will actually be 121M coins eventually. If that would change the current price (and it would) then future coins are influencing current prices. Otoh, it all 21M were released today it would also have an effect. So it isn't as if all coins are essentially being considered available, but they are factored in somehow.

No idea why you chose 10.5 million coins.  Those coins don't exist, they aren't "priced in".  If you think I'm wrong, at least try to explain why you chose that number instead of 21 million or whatever.

You must have missed the word conservatively .... I just chose the point where half the coins would be issued, that is 'only' 20 months away and therefore in the near time horizon. I could have used 21 million but I don't think the market is pricing that far out into the future (2030) ... so conservatively using the near time horizon and easy point to do rough back-of-envelope calc. to demonstrate it is probably much more than the current coins times market price ... i.e. $14 mill. Rough proof by demonstration.

the common way of calculating market cap underestimates the true size. Why? Because it is already known that 21 million coins will be issued and the expectation of the market out over the next few years is that there will be at least several more million in circulation than issued thus far. So conservatively, the market has already priced in total coin issuance to at least Jan 2013, i.e. 10.5 million coins.

Using current exchange rates BTC 1 = U$ 2.5 then current market cap is at least around U$25 million already.