the question the tweet asks should trigger peoples thoughts.. i see problems in the statement. but if you ask the deeper question
if an exchange only plays with lets say 20btc(usually 20k-200k but lets keep it simple). and only has $18,000 to get a bitcoin price of $900 each..
the market cap of say 16,100,000 btc is based on the exchange rate.
but the problem..
the exchange is only playing with smaller amounts of bitcoin.. not the whole 16.1m
so this 20btc being traded and $18,000 fiat holding..
FALSELY makes people think the entire market is worth $14.5billion
when the reality is that there is not $14.5billion sitting in bank accounts to counter the bitcoins in circulation..
hopefully that should wake people up
and then
split it to 2 networks
now there are
20 btcA on an exchange and 20btcB on an exchange
with 16,100,000btcA cap, with 16,100,000btcB cap
again price of btc WAS $900
meaning only $18,000 was ever traded
yep only $18,000 exists in an exchange... but now a total of 40 coins are held on the exchange now
after a split
that $18,000 can go anyway
$9,000 btcA $9,000 btcB or
$8,000 btcA $10,000 btcB or (pick any ratio you like)
maths would still total $18k for 40 coins... which when PROJECTED to the market caps and combining the market caps. still total $14.5bill combined cap
so splitting the coin does not make the coins more valuable or increase the cap... until........
however..
if you create a new market page
no longer just btc<->$
or just btcA<->$ and btcB<->$
but now
btcA<->$ and btcB<->$ and btcA<->btcB
no coins are withdrawn coins in this scenario
no more or less $ are deposited.
the exchange still holds 40 coins and $18,000
but now
5btcB <-> $
5btcB<-> $
and 15 btcA<-> 15 btcB
now lets concentrate on
5 btcB <-> $
5btcB<-> $
$9,000 btcA $9,000 btcB or
$8,000 btcA $10,000 btcB or (pick any ratio you like)
ill use $9,000 btcA $9,000 btcB
now ill emphasis there are still just 40 coins and $18,000 in the exchange.
but because only 5btcA are trading against $9000. that makes each btcA worth $1800 each
16.1 market cap of btcA now= $29billion
but because only 5btcB are trading against $9000. that makes each btcB worth $1800 each
16.1 market cap of btcB now= $29billion
combined market cap price of btcA+btcB now = $58billion..
yet on the exchange. before,during and after a split.. only $18,000 was ever held
...
think long and hard about how market manipulations and how the market cap.. is not true value. not even a good estimate of value and obsurdly over valued the market, based on the movements of just a few coins held actually on the market.. it will wake you up
You have a lot of formulas and logic in there, but you are not really making any profound points, as you are claiming to be making.
The fact of the matter is that when a market is not very mature, it is not going to have too many ways to liquidate, but as a market becomes more and more mature, there becomes a lot more ways in and a lot more ways out, and the price of the coin likely become closer and closer to its utility.
Also, there are going to be times in which there is a lot of pure speculation and there are going to be times of speculation based on present utility and future utility, but in the end, the market is going to fly all over the place, depending on level of interest and number of locations in which the price is determined, which over time will become more and more diverse.
Sure there is going to be price manipulation, but that price manipulation becomes more difficult when there are more exchanges and more avenues to get in and to get out. Furthermore, if you suddenly fork the coin, it may take a bit of time for the market to adjust to the whole situation, and the price of each coin may be over or undervalued depending upon what is being offered and speculation that may be going on in regards to present and/or future value (and of course public perception, whether erroneous or based in real and true factors).
So, yeah there may be a lot of absurdities and manipulation and FUD spreading, folks with insider information and folks who are lacking information, and the price is going to be set by a combination of these factors, which probably should inform anyone to be careful with his/her investment in terms of tailoring how much to put in and what kinds of buying and/or selling strategies to employ that are suitable to his/her risk profile, timeline, financial situation and view of the present and future value of the coin.
Likely it would be safe and prudent for a large number of people to invest up to 1% of his/her quasi-liquid investment assets into bitcoin; however, some people may be willing to invest a lot more - approaching 10% and sometimes young folks may be really risky and invest 70% or more with the idea that they are young and they can afford to take risks (in other words gamble).. I don't really recommend a gambling approach, but instead a more methodical plan that considers how much you are investing and what are your other investments and then what is your entry, exit and maintenance strategy.
And, even questions about forking and seg wit versus bitcoin unlimited can influence a person's decisions regarding how much to invest, if to invest and if so, when.
