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Author Topic: Question about BTC and other currencies  (Read 443 times)
SuperHakka
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September 10, 2012, 07:00:45 PM
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Hihi, I have a noob question. Is there an estimate of the total value of hard, real world currencies that have ever been swapped for BTC. I imagine it is a lot lower than multiplying $11 by the total number of bitcoins in circulation.

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Stephen Gornick
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September 10, 2012, 09:47:06 PM
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Hihi, I have a noob question. Is there an estimate of the total value of hard, real world currencies that have ever been swapped for BTC. I imagine it is a lot lower than multiplying $11 by the total number of bitcoins in circulation.

The volumes reported by the exchanges will give you a clue.  On an annual basis it is well more than "multiplying $11 by the total number of bitcoins in circulation", so we know the buying occurring is not just for holding coins, but actually using it as an exchange medium.

Not all currency trades occur through exchanges.  And there are bulk sellers who also have incoming coins so there is more and more trading that occurs without the exchanges to fiat being involved even.  

If Bitcoin were to be used for a billion dollars worth of currency transactions, ecommerce, commerce, gambling, investing, etc over the next year, it wouldn't surprise me (it isn't probably a third of the way there yet but growth is pointing towards that).   That's not including trading within a single exchange, such as what happens when bots flip the same funds over and over.   Of course, this cannot be measured easily but extrapolating from the trends, it looks plausible:

 - http://blockchain.info/charts/n-transactions-excluding-popular

Mt. Gox's recent transparency report shows just under $5 million deposited in about a month::
 - https://mtgox.com/press_release_20120831.html

Presuming there is also about $5 million withdrawn, that means they have $10 million of currency transactions.  While they claim to be 80% of the trading volume at all exchanges where data is reported, others are used more heavily for moving funds into and out of bitcoin rather than just speculative day trading like what is seen at Mt. Gox.  So maybe add another 50% for the other exchanges, that gives a current run rate of $15 million per month, or approaching $200 million annually just with the listed exchanges.

Here's showing where if you include buying and selling internal to an exchange, trading of a hundred million in a day might not be that far off, but that's simply changing the owner of a position within an exchange, and just a fraction of that trading results in a currency transaction once funds are withdrawn.
 - http://blockchain.info/charts/trade-volume?showDataPoints=false



SuperHakka
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September 10, 2012, 10:22:05 PM
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Wow, thanks Stephen for that comprehensive reply.

'First they ignore you. Then they laugh at you. Then they attack you. Then you win.' - Mohandas Gandhi
"Whenever I'm about to do something, I think, 'Would an idiot do this?' and if he would, I do not do that thing." - Dwight Schrute
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