Bitcoin Forum

The Bitcoin market cap is now 77% of Jay-Z's net worth in Nov. 2011 [source:http://xkcd.com/980/huge]

Discuss.

I'll start.

I've never really put it in perspective but damn. Bitcoin is so small. I mean, the market cap of Bitcoin only became worth more than a single airbus A380 just earlier this month.
Putting this in perspective, along with all the newer businesses and bitpay this year... is the value increasing really a surprise?

So to sum up what this topic discussion is about:
1. What are your thoughts on Bitcoin's current and potential value?
2. Do you think Bitcoin is small?
3. What do we know about the theoretical market capitalization of "corporate/store currencies?" And what are your thoughts on them? For example, Canadian Tire money is practically cash in Canada.
4. Let's let this discussion stray wherever it wants to go. This could be interesting and maybe give some perspective.

The following are Nov. 2011 values.

Reached

Next stops:

I'll be looking for interesting stops and updating. I will also come back when these goals are reached. If you get excited and I haven't updated it yet, feel free to give me a pm.

Also, I will only be altering this thread when price goes up, not down. So whatever you see here is the top of the market at some point. I am also going strictly by whatever the largest USD exchange is at the time.

It's small, and that means we're in for a wild ride. Right now it might be "too small" for the big players to really take notice, but it might be worth it for them to take action when they notice adoption increasing.

But we don't even know what the "big players" will do.
Some of them will simply invest and try to get rich. I.E. just classic bulls trying to jump on the train.
Some of them (i.e. governments, multinationals, etc) would have more of an interest in actually sabotaging Bitcoin, i.e. pumping and dumping, etc.
Then of course there are regulations but BTC is like torrent in that there's really nothing they can do except regulate business and pass laws restricting individual use of BTC, in which case people would still use BTC to store value and sell for fiat for purchases in the same way people still use bittorrent to download movies all the time with a 0.000000001% chance of actually getting caught.

Also, it's a misnomer that there is a single set of "big players." Wealth is a continuum. At every new level of "market cap" bitcoin reaches, there is a new set of "big players" it becomes interesting to.

Bitcoin is now at the level where it becomes an interesting investment for someone who wants to put a million dollars into it. It is still probably not at the level where players who need to invest $10M or more (medium-sized hedge funds), are really interested. But with another doubling or two, it will become accessible to them.

The biggest players, aside from central banks, are pension funds, who manage tens or hundreds of billions. We will not be seeing them for a long long time. They move as a herd, and they haven't even really begun to move into gold in any significant way (my guess is under 2% of pension assets are in gold), much less the teeny tiny asset that is bitcoin.

But I think it's counterproductive to focus too much on big players. It's all about the grass roots word of mouth, spreading the word as broadly as possible. Because of the network effects of bitcoin, it is much more valuable to have 100 people who want to buy $10k worth than to have 1 person who wants to buy $1M worth. Metcalfe's law says the value of a network is proportional to the square of the number of connected nodes. That means that every new person that becomes a holder/user of bitcoin is more valuable to the ecosystem than the previous user. Not only that, a broader base of owners is much more stable. The person with a single large holding might suddenly decide to sell it all. All 100 smaller holders are very statistically unlikely to do so.

This would suggest the big players are coming

https://bitcointalk.org/index.php?topic=147336.0

1. Potential value is huge, current value is great for investing.
2. Yes, BTC is tiny. It's nothing. Just like you said, it's worth less than Jay-Z's net worth an a little bit more than a Jumbo Jet. For a currency, that's absolutely nothing and makes it impossible for any big establishments to consider adopting BTC.
3. Not interested, a different animal altogether.
4. Just want to point out that outside this little bubble of Bitcointalk.org, BTC is still completely unknown to almost everyone. That's why it's still a huge opportunity, even if we crossed the previous all time high this week. Your observations are good examples of how to get a perspective of what Bitcoin is right now.

It'll be fun when we can officially say that BTC = 1 Jay-Z

And thus, the Jay-Z index was born.

lol! +1

They also tend to have very strict rules about diversification, and allowed % in certain types of funds.  For example, a given pension isn't going to be able to invest in anything that isn't AAA rated by Moody's or S&P, that means no chance of investing in bitcoins.

as we all know this is a true shame - and also what caused the recent recession.

He got 99 problems but a Bitcoin ain't one.

What if he buys all the bitcoins and send them big amounts to his fans??

How about this for some perspective. The current bitcoin economy is somewhere between Micronesia's and Tonga's total GDP (http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal) (http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal))). We're not even talking about a tiny part of the global economy, we're talking about a tiny part of a tiny country's economy.

I'm gonna rant a little, kind of share what my imagination has been conjuring lately...

I tend to believe that the network effect of bitcoin is it's strongest and most vulnerable point. The more people use it, the more people use it - and the less people use it, the less people use it. On the one hand, if it doesn't stick well with people, it will have a very very hard time gaining traction. On the other hand, if it does start catching on significantly, it won't stop. That's why I think it will follow a classical exponential adoption rate.

I'm not going to say that I expect bitcoin to take over the world economy, but since there is a [variable] hard limit to the size of the bitcoin economy at full saturation (theoretically the global economy), we will see a very clear "log phase" in a market cap graph as seen with, e.g. bacterial growth (http://en.wikipedia.org/wiki/Bacterial_growth (http://en.wikipedia.org/wiki/Bacterial_growth)). When the bitcoin economy reaches full saturation, everything from 2009 until today will look like a straight line, because the market cap will be many, many orders of magnitude larger than today.

Edit: I will add that having more than one medium of trade is not fun. If everyone is buying and selling in bitcoin, you are more likely to sell and buy in bitcoin respectively.

I believe bitcoin's most interesting phase is most definitely not this one. I believe bitcoin will catch on in exponential fashion. That is to say, the jump from the Marshal Islands to Micronesia (roughly four weeks) will take around the same time as the jump from the UK to China. I kind of imagine adoption rate to be somewhat similar to Facebook's, except bitcoin might have a sharper exponential rate.
http://bylimedesign.com/facebook_histodical_users.png (http://bylimedesign.com/facebook_histodical_users.png)

The downside is that the transition will be harsh. And I mean dire. Governments will not take this lightly. Taxation is a bitch with bitcoin. Central banks won't either. Bitcoin is not fiat. And since both are tied to each other for survival the way things are currently run around the world, and considering both will probably use whatever means necessary to avoid competing with bitcoin directly, I believe violent means will not be passed over... Bitcoin will be fought in similar tactics as p2p file sharing was/is fought by the record label industry. Idiotically. However, as dinosaur as fiat may be in the face of bitcoin, this war will be orders of magnitude larger than that of the record label industry. And the means will be orders of magnitude more fierce.

That "log phase" will be the defining moment. That's when the public will decide if bitcoin is here to stay. If you think today the bitcoin is volatile, imagine the events that will influence bitcoin when Vietnam/Afghanistan/Iraq-scale war will be waged to keep business as usual in western civilization? On the other hand, how do you take down a Facebook with out any central servers or operators?

The war will be futile and in the end dinosaurs will die.

I am curious though. What exact means do you think governments will adopt? Do you truly believe the mere possession of Bitcoin will be a criminal offense in western (North America + Europe) countries? If so, a lot of people will be in jeopardy since proving that someone at some point owned Bitcoins is quite easy if any bank has ever been involved in the acquiring process.

They did it with drugs....mere possession....that sorta worked...not, but drugs are much harder to send around

the problem with BTC is how do you exchange large wads of cash or into bank accounts if it is illegal.....you  may have to set up some sort of offshore/swiss operation????


also how would the prove say you had BTC if you buy anon....this is what I dont like about GOX

That's a hard question. That's like guessing what the current exchange rate will be in five years. It really depends on how it unfolds, how people use it, etc. One thing I can be quite sure is that there won't be a point when the rich will just go "oh fuck it, let them have their way". They will take every last measure before giving up the old way which got them their wealth.


Easy. You don't have to transfer your current wealth stored in fiat in order to get bitcoin. Simply start working for BTC. The same way you got your fiat. When government makes it illegal to trade fiat for BTC, that's when either fiat or BTC start losing their worth (my guess is that by the time the governments realize this, fiat will already be on a steep downward slope).

Assessed value of the Mona Lisa reached.

1. There are 81,000 people in the world with over $50M in assets: http://www.economist.com/node/17929057 . You can do a bunch of estimates from there.

2. Yes.

It's a race with the FED. And BTC is losing:
http://en.wikipedia.org/wiki/Zeno%27s_paradoxes#Achilles_and_the_tortoise

3600 BTC printed daily? need to have a $500,000 per BTC to reach the printing frenzy of the FED.

But by the time we have $500,000 per BTC. The FED will have accelerated to ten-fold.

The potential future of money is worth 1 small canvas with paint on it?  Dear god, give this thing some traction please  :D .

Ben currently prints $118,000,000/hr. So that's, what, all of bitcoin every 6.5 hours?

Puts things into perspective, right?

Paintings are a bubble! Not bitcoin!


Doesn't that actually mean BTC is winning, at least in terms of buying power?

1 billion has been hit. If it will stay there is still questionable. As of writing, it has gone back down to just barely below 1 billion USD.

nope  - back up  -

Market Cap
based on latest prices
1,001,691,445 USD

(rounded to nearest dollar) $108 US needed to meet next target.

Makes you realize how much more room there is for Bitcoin to grow.

Quote this every time someone thinks Bitcoin is growing too fast, it's not growing fast enough.

^yeah eh?

We just hit enough for $10 for every US household.

Box office revenue of Star Wars, adjusted for inflation.

Its still early days.

I started following BTC in late 2010, and there were probably only a few hundred users.

If I'm reading blockchain.info right, there's only a few tens of thousands of users right now.

Give it another ten years...

Cost to fund wikipedia for 100 years reached. Maybe I should start thinking about making the targets further apart?  ::)

Now at the same level as the total annual tax breaks to the 5 largest oil companies (2011)

You do know that the paradox you linked to is a paradox because it's false?  It wasn't until the advent of Algebra that it was able to be mathematically proven false (it's obviously false in real life).  Distance = Rate x Time.  Setting a system of two equations for both racers, it's easy to calculate who wins, and at what point Achilles overtakes the tortoise.

Humor works best on false premises and exaggerations.

where'd you get that figure? there's no gold in Ft. Knox.

Virtual market cap is a virtual number, one that cannot be translated into real cash.

Say I start a great company, with 100 million shares. I get investers, make profit and after a while the company is worth $100 million.

I hold 99% of the shares and IPO the 1%. After a while they trade for $100 each. That would make my 99% be worth 9.9 billions. However, it's a purely virtual market cap. As soon as I try to cash out a few percent of those shares, it would crash the market since it only has a real market cap of $100 million. You just can't make 10 billion out of 100 million just by saying it is worth that or force it by scarcity. It will never work, any significant selling will drop the price back to its real value of $1 per share.

Bitcoin has exactly the same problem. There are 11 million coins, hoarded by many early adopters. But only 1% of coins are actively traded, maybe 20 million has flowed into the bitcoin market lately by naive gamblers buying coins for $100+ the last few weeks.

If it appears a peak is reached and the price drops a bit, everyone that hoards will try to cash in. But before even 5% of people manage to sell, the price will have dropped like a rock. It's impossible all 11 million coins are cashable, its real market cap just isn't big enough.

great post.

yes but no one who understands bitcoin cashes out of bitcoin, if they do, the coins go to stonger hands, then don't get chased out until full market penetration is reached THEN it becomes a currency for trade...

genius really

I dunno, I think most large holders would have cashed in 30-50% of their coins by now.

Try actually reading the original post. I am not responsible for any faulty information from Randall Munroe.

I will not be taking any prices from anywhere except the referenced chart.

B2 Bomber and Donald Trump reached! Almost hit 3 Billion but then we crashed to under a billion. Looks like I will have more time to find interesting things on that chart.

Things are starting to heat up again. Now I also need to decide if I should keep following the MTGOX price, which places us a mere $1.4M from the $27M we surpassed before.

On the bright side at least we beat JZ. Unfortunately, we still don't run this town.

George Lucas could now sell all his USD (from 2011) and buy all XBT in existence, if none were lost and all were being sold.

Holy shit, what a day.

I have updated the list a bit and would like to apologize for missing the moon landing on December 3rd! I'm not really active on bitcointalk anymore but we have been in recent need of an update.