XBT market cap exceeds 500 million

[dree12]

Once again, we've passed an important milestone. It won't be long until we reach one billion USD.

To put the current cap in perspective, consider the following example.

Even if all Bitcoin were liquid (which is false, as some are hoarded and others are lost), Bitcoin's network can only support transferring 500 million USD every hour (as that is how long confirmations take). This means that if just one million people tried to buy something worth $500 each, the network would crumble. This is why we need to focus on increasing the monetary base, as that is healthier for the Bitcoin economy.

Many say that Bitcoin should develop its economy before price increases. However, they miss that the economy cannot develop without significant price increases. As a result, it seems that a gradual rise in prices is healthy for Bitcoin, not unhealthy.

[speeder]

Good point

[Spaceman_Spiff]

Bitcoin's network can only support transferring 500 million USD every hour (as that is how long confirmations take). This means that if just one million people tried to buy something worth $500 each, the network would crumble. This is why we need to focus on increasing the monetary base, as that is healthier for the Bitcoin economy.

Could you explain this?

[dree12]

Bitcoin's network can only support transferring 500 million USD every hour (as that is how long confirmations take). This means that if just one million people tried to buy something worth $500 each, the network would crumble. This is why we need to focus on increasing the monetary base, as that is healthier for the Bitcoin economy.

Could you explain this?

The total number of Bitcoin ever created is worth 500 million USD. The total number that can be used is much lower. Because a single bitcoin is tied up for 6 confirmations after being sent, too many bitcoins transacted at once would actually exhaust the network—there simply is no longer the liquidity to transact so much.

To see this in action, try to buy a house with Litecoin. It's not possible, because the monetary base is too small.

[Chalkbot]

Bitcoin's network can only support transferring 500 million USD every hour (as that is how long confirmations take). This means that if just one million people tried to buy something worth $500 each, the network would crumble. This is why we need to focus on increasing the monetary base, as that is healthier for the Bitcoin economy.

Could you explain this?

I think he's saying that if everyone simultaneously spent every bitcoin they had, it would be $500M worth of transactions and no more could be spent beyond that while all of those transactions are being confirmed. So in order to do MORE than $500M in an hour (appox transaction time) bitcoin value HAS to be higher (thus fewer coins moving around).

[Spaceman_Spiff]

oh ok, yes, then I agree.  An increasing market cap will allow new services to be viable.

[piramida]

+1, that is very true, however rapid buildup of 10% per day is not good, simple because the buyers dont have enough time to adjust mindset to new prices and we see flash crashes. like in '11, like yesterday.

The previous growth, starting in Jan'13, was however slow (1% per day) and sustainable as we didn't see a single crash that wasn't immediately recovered in full. I think whoever was moving that market at a slow pace picked the right one, and it should continue as it was. Not run up in a straight line.

[crazy_rabbit]

Once again, we've passed an important milestone. It won't be long until we reach one billion USD.

To put the current cap in perspective, consider the following example.

Even if all Bitcoin were liquid (which is false, as some are hoarded and others are lost), Bitcoin's network can only support transferring 500 million USD every hour (as that is how long confirmations take). This means that if just one million people tried to buy something worth $500 each, the network would crumble. This is why we need to focus on increasing the monetary base, as that is healthier for the Bitcoin economy.

Many say that Bitcoin should develop its economy before price increases. However, they miss that the economy cannot develop without significant price increases. As a result, it seems that a gradual rise in prices is healthy for Bitcoin, not unhealthy.

I never thought about it like that. Knowing how many transactions are in a block and how long it takes for that block to confirm, you should be able to come up with a nice formula that will tell you how much bitcoin is "locked" out of the economy at any one moment. It could be interesting because potentially in the future this might be a vector for either some sort of attack or some way to disrupt the economy. Maybe we should be keeping track of how many Bitcoin are currently "locked".

[Herodes]

XBT ? Have we got ISO-recognition now ? Never seen that used much around.

[Hyena]

I don't get it. If 1 bitcoin costed more and therefore "fewer" bitcoins would be moved around then how can THAT make confirmations faster?

It's the number of transactions not the number of bitcoins in each transaction that takes time.

[FreeMoney]

While those people were preparing (obviously they don't all have the coins to spend yet) the price would rise to accommodate them. So yes, the price has to rise in order for that to happen without the universe exploding or something, but it automatically will, so it isn't something to worry about.

[MrTeal]

Maybe I missed it, but there's no hardcoded 6 transaction requirement AFAIK. You can receive a bitcoin and send it out after one confirmation just as easily as after 6 confirmations.

[Odalv]

I don't get it. If 1 bitcoin costed more and therefore "fewer" bitcoins would be moved around then how can THAT make confirmations faster?

It's the number of transactions not the number of bitcoins in each transaction that takes time.

No it is not number of transaction. There are 7,000,000,000 people. Every one need to eat (spent $10 each day  OR 0.2 BTC (if btc costs $50) ).

If BTC costs $50 then 1 BTC is for 5 people.  If there are 7,000,000,000 people then we need 1 400 000 000 BTC for breakfast :-)

(but we have only 11,000,000 now, so we must increase in price 50 * 127.3 just for breakfast)