Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

Re:Why you can’t cash out part 1: Bitcoin’s “price” is large... by scott00 on Sunday December 17, 2017 @10:04PM (#15949090)

Crypto market cap doesn't mean the same thing as the market cap of a stock, but that doesn't mean it's meaningless. It approximates the total amount of wealth currently held in the form of a particular crypto, which is interesting to know in comparison to more traditional asset classes (stocks, bonds, gold, etc) as well as to other cryptos. If you also have some knowledge or an assumption about the velocity of money in the crypto, it also gives you an indication as to the total amount of commerce that can be facilitated by the crypto at its current valuation.

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Re:Why you can’t cash out part 1: Bitcoin’s “price” is large... by icc97 on Sunday December 17, 2017 @10:13PM (#15949128)

'approximate' is the key word as it's averaged over exchanges which is a big difference to standard market prices, as mentioned in the article:

> Quoting a number like “$19699.46” to seven significant figures when your data’s got a 5% spread would get your high school physics teacher slapping you upside the head. It’s entirely deceptive. It should say something like “$19,700 plus or minus $500 depending,” and that line graph should be a thick grey bar.

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Re:Why you can’t cash out part 1: Bitcoin’s “price” is large... by baddox on Sunday December 17, 2017 @11:00PM (#15949298)

I don’t think the “average over multiple exchanges” thing really matters that much when we’re talking about the usefulness of market cap. The reason market cap isn’t a great measure of “total value at the moment” is because there certainly aren’t enough buyers willing and able to buy all Bitcoins or all Apple shares at the current market price.

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Re:Why you can’t cash out part 1: Bitcoin’s “price” is large... by njarboe on Monday December 18, 2017 @12:49AM (#15949698)

True, but if someone tried to buy all the Bitcoins or Apples shares, the price would start to go up. Getting them all would cost more than the current market cap. This is why company buyout offers are always for more than the current market cap.

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Re:Why you can’t cash out part 1: Bitcoin’s “price” is large... by davidgerard on Monday December 18, 2017 @03:35AM (#15950296)

> It approximates the total amount of wealth currently held in the form of a particular crypto,

I don't see how it does anything of the sort.

* It's not the amount that was put in to it

* It's not the amount you could get out of it

It's a number that's easy to calculate and gets headlines, but I can't see what else it's good for in practical terms.

Perhaps with a tiny altcoin it would be worth 51%ing it. But for anything larger, or for an ICO token? What does this number actually do?

Say there's a crypto asset that isn't getting headlines. Its market cap is $100 million. Just knowing that, what do you know about the crypto?

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Re:Why you can’t cash out part 1: Bitcoin’s “price” is large... by scott00 on Monday December 18, 2017 @09:49AM (#15951945)

Your criticisms about it not being the amount that came in or that can come out also apply to stocks.

If all I know about a crypto asset is that it has a market cap of $100 million, I know it's a very niche asset in comparison to bitcoin or ethereum. It's small enough it's reasonably likely to be a scam. For me personally, it's small enough that I'm not interested in learning any more, which has practical use because my time is finite.

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