The same standard is used for fiat currencies, which is why they have fluctuating values against other currencies. It is just a premined asset with infinite emissions with some recurring demand drivers, it doesnt exist in a different reality than other assets such as crypto. The market tolerates it and thats that.

The entire FX market is that reality.

The reporting and liquidity of crypto assets has become impressive and will continue to improve. I think the most useful thing would be for you to make a note of what standard or threshold you would use to find crypto growth to be impressive, make sure that standard is a standard that matches other asset classes you respect instead of a fictional higher standard exclusively for crypto, and then watch for crypto to meet those standards as it matures. You can even help improve it.

same for the "US" dollar?

Nope -- if we're comparing market-caps as priced in dollars, the USD market-cap will always be the number of dollars in circulation.

If we're comparing market-caps in gold bars or cheeseburgers, it is a different story.

But the current market cap of cryptocurrency in gold bars or cheeseburgers is higher than the current market cap of US dollars in gold bars or cheeseburgers, right?

No, because the post only counts cash in circulation, and not USD in bank accounts.

Which is comparing like with like, isn't it? The USD in bank accounts is predominantly borrowed money, i.e. fractional reserve banking. There is more in bank accounts because Alice has $100 on deposit which the bank lends to Bob and credits Bob's account with $100, so now there is $200 in bank accounts but still only $100 in the vault.

Now I want to know if there is anybody doing fractional reserve lending in Bitcoin. Because if that was allowed anywhere it would erode its status as a deflationary currency and reinstitute the power of central banks to create the currency in the form of credits denominated in it at financial institutions.

don't think so

would likely just end a run and collapse of that "lender"

most "lenders" are doing way over-collateralized loans

Models being imperfect, don't make them useless, especially when you're modelling both phenomenom the same way.

Comparing money in circulation, to the value of arbitrary tokens, most of which are held by a few small players, isn't 'comparing a phenom on the same basis'.

Since cryptos are not a currency, and have no backing either in the form of some other financial instrument (i.e. Government Bonds) or Real Estate, it's hard to compare to other things.

> "market cap" assumes infinite demand for your currency

no... infinite demand would make market cap infinite also...

The phrasing probably wasn't ideal. I think they meant something different when they said "infinite demand" than what you mean.

I think what they mean is that it assumes that the demand curve, uh, I guess goes off to infinity (or just, some extremely large number which can be practically modeled as "infinity") near the current price,

meaning, that you could sell arbitrarily large amounts of it without substantially decreasing the price that people are willing to pay for it.

Which, yeah, that assumption seems false in practically relevant ways. If you sell a whole lot of [cryptotoken X], the price is likely to go down?

> The phrasing probably wasn't ideal. I think they meant something different when they said "infinite demand" than what you mean.

I think that I understand what you meant. By infinite, they just mean that there will always be orders on both sides around the current price... but for that to happen, you need to have about the same amount of orders on both sides (the amount of orders don't matter and could be very small).

Why would there have to be equal numbers of orders on both sides? If there are more buy orders than sell orders, that doesn't pose an issue for selling at the, --

oh, because weighting the price between the lowest open sell order and the highest open buy order based on how many there are of each? If the range between them is small enough, I think the effect of this can be neglected.

> Why would there have to be equal numbers of orders on both sides?

I think that it might influence opinions, robots and future orders... and therefore the current price (in the future).