I have been hearing again and again that bitcoin has a very small market cap in billions of dollars and this is why bitcoin is in a price discovery phase. until adoption levels off the price will continue moving up like this. According to the Daily Decrypt, all of the coins at coinmarketcap have a combined marketcap of seven billion dollars. Now, silver has a market cap of 14 billion dollars. The combined market cap is half of that of silver.
Cryptocurrencies share these defining properties of fiat. What are the properties of fiat money?
- They are created rather than found
- It does not matter which of the currency you use
- Their purpose is money. Generally speaking, people do not get a two dollar bill to use as a bookmark. Although the bitcoin blockchain can be used for other purposes than money, this is not its primary purpose.
Now bitcoin satisfies theses defining properties. What makes bitcoin as a currency different from fiat currencies is the cost of issuance approximates the cost of the currency itself. For convenience of familiarity, I will not refer to cryptocurrencies as fiat here. All of the arguments for bitcoin having no utility and thus being of no value apply to dollars.
Silver and gold are assets and probably are just used to exchange them for something else at a later time. I mean people keep them for speculation or holding value through time. There are industrial uses however. How much can we expect bitcoin to rise as people stop looking at gold and silver as a speculation engine and turn to bitcion and other cryptocurrencies? I wonder how much will an ounce of gold cost if the demand came only from its industrial uses. Some of the value of bitcoin comes from the market that was in these metals but not all of it.
sdp
sources:
https://www.silverinstitute.org/site/supply-demand/http://www.xe.com