Comment by anonu | Hacker News Reader

Comment by anonu | Hacker News Reader

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From the article: “Market cap” [...] is a bogus number that’s not actually applicable to anything — it’s not money that was put into the crypto, it’s not a realisable value like a company market cap.

I am not sure what the author means by "realizable". If their intention is to say, "Ok, let's liquidate every single coin for fiat currency... and we expect to have the market-cap equivalent in that currency" Well, whats going to happen is the price is going to collapse. The same thing would happen with the value of any publicly traded company. The market cap of Apple is $900bn - but you can't just tell every shareholder to sell their stock for cash... you would never be able to realize anywhere near that amount.

Article reads a bit weird. Here are my 2 cents - markets are a voting machine. They are also about perception. If people perceive that there is value - then they will vote with their dollars. If people lose faith in the system, the market collapses. This is true in any market dynamic, including the one that fiat currency operates in.

What would you pay to own every single bitcoin? The answer should be nothing --- if you owned all of them, they'd be completely worthless.

What would someone pay for all of Apple's stock? Suffice to say, a lot --- because Apple has actual value.

> The answer should be nothing

I don't think the answer is nothing. And there's also a very different dynamic you're proposing in your comment. If I were to go in and buy every BTC out there - the price would probably double/quadruple/whatever... in a short time ('cause its bitcoin!).

If all BTC holders collectively decide to sell, however, the price would most probably collapse. The "value" of bitcoin - or any security for that matter - is determined by the marginal buyer or seller. He or she is the last person to set the price.

There is inherent value in bitcoin. Just like Apple sells phones and other things of value, bitcoin was created for some reasons that you can attach a value to ... I think those initial reasons are not what bitcoin stands for today - which is really a store of wealth. So maybe that is why people are incredulous that this thing has any value at all.

> I don't think the answer is nothing.

Seriously? Think about it. If you could pay, say, $100k to own all the bitcoin in the world, would that be smart or would that be stupid?

Why would anybody buy bitcoin from you if you owned all of it? Everyone will prefer to use a cryptocurrency that either: a) they already own some of; or b) a merchant is requesting; or c) they expect to go up in value more than an alternative. Now, in calculating c), everyone knows that everyone else is looking at a) and b) as well. The expectation of Bitcoin if you're the only holder is really bad.

If you like your chances at 100k, take the experiment out further. How about 1 million? 10 million? The ceiling here is super low relative to the "market cap" people are talking about.

So it's not just the buy/sell dynamics. Bitcoin doesn't have intrinsic value, and that's actually weird --- most other securities do. The most similar security is gold, which is like, 1% intrinsic value and 99% this type of speculative logic. The difference is that gold is unique --- bitcoin isn't.

I think there’s actually a real risk in bitcoin of a few people controlling all of the wealth which makes it a not very fun game to play for anyone else, and makes it hard to justify it as a payments platform.

That's an interesting point - but how is that not unlike our current capitalist system? There was a tweet (posted on HN the other day) that 50% of wealth in Europe is inherited...

You can’t legally walk away from dollars in the us.

Following the same logic: what would you pay to own all of a single currency? It'd be completely worthless as nowadays they're not backed by anything.

People keep saying this, and it's totally untrue. Because of tax, there's a fixed percentage of every country's GDP that must be transacted in that country's currency. It's 100% false that "fiat currencies aren't backed by anything".

If I owned all the currency of the country you reside in, you would have no choice but to trade with me. If you don't buy any currency from me, you won't be able to pay your taxes and you'll go to jail.

No, if you owned all the currency from my country, my country would just issue a new currency, which would effectively nullify any value behind the old one. Countries making new currencies is a fairly common event in the past century and that's not even counting the move to the Euro.

Except Apple would still exist as one of the world's most profitable company. That's the underlying value.

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