Bitcoin Is Now Bigger Than Goldman Sachs and Morgan Stanley
fortune.com
fortune.com
Pretty crazy to think about for a thing I passed on buying for $20 a pop.
That's the total value of bitcoin at the moment. How is that made up and meaningless?
Curious why this statement of fact is being downvoted.
However recently its being treated more as a stock and being stockpiled so I no longer see people as willing to pay for different services etc with Bitcoin as they used to because they can gain more value by waiting which goes against Bitcoin's intent as an independent vehicle of value.
Even though one could argue that Bitcoin has the status of gold but gold is not something one commonly trades or uses to buy food etc in a normal non-disaster scenario.
EDIT: Because this comment is bringing a lot of attention, I would like to reiterate my stance on Bitcoin. I'm supportive of Bitcoin, I would like a decentralized currency that is not tied to the importance of any country or government and as well can be used to foster trade between countries simply because it is much easier to just buy foreign goods than in the current state due to import duties, etc.
Moreover, I see the world moving towards more coming together as a whole than fighting over lands and other issues that don't directly benefit humanity from using Bitcoin.
However my problem is the fast-increasing price of bitcoin is increasingly headed towards the playground of high net-worth individuals or organizations/investment banks such as Goldman Sachs and no longer being able to be traded between normal people who don't have their deep pockets or are scared away by the pricing which prevents Bitcoin from becoming a worldwide vehicle of value to be used for common transactions and sort of deviates from the original intent.
I also know one can trade decimal value Bitcoin for food and it could the volatile nature at play but it defeats the purpose if one needs to first check the Bitcoin markets before deciding on an eventual decimal value amount for the food paid.
Considering how easily people invest cryptocurrencies into quite risky ICOs, you can see that people don't have any problem spending, as long as it's something they consider valuable.
On the margin, yes. It doesn't stop me from ever doing it, but it does mean I put off upgrading as long as possible.
Plus it's quite clear to me that people are willing to spend their deflationary currency on the things that they believe in - the whole ICO market demonstrates it.
As well as waiting for it, I only pointed this out after reading the fb comments about an article: https://www.google.ca/url?sa=t&source=web&rct=j&url=https://... where they basically did not want to pay because of Bitcoin's worth, again this could be because that they were asking for 60 bitcoins.
To clarify, computer markets emulate the deflationary nature of something like bitcoin. Yet they sell just fine.
If you believe that bitcoin is going to be successful then you should absolutely pay in fiat.
There's also a bigger question, I may need a computer today so I'll buy one instead of waiting. But what about the money that I don't need to spend, my retirement fund or something like that? With inflationary currency I have an incentive to invest that money, fueling the economy. With bitcoin I can just let the money sleep in my cold wallet and I know that it'll keep getting more and more valuable by virtue of being in ever more limited supply. The rich get richer and the poor can't get a loan.
Of course you might say that if the economy is unhealthy it'll cause a recession which will end up devaluing my bitcoins, but then you have a prisoner's dilemma: you want people to invest bitcoins into the economy but you sure as hell don't want to be the one doing it.
But remember kids, bitcoin is about killing the greedy banks and helping the poor farmers in Africa or something so fight the good fight and buy those coins.
It's amusing to me how the bitcoin community rejoices every time a business starts accepting bitcoin but at the same time the rallying cry is always "HOLD", as in do not ever spend your bitcoins because they're going to increase in value. There's an amusing dissonance here.
HODL doesn't mean never sell nothing, it means don't try to trade in and out of bitcoin to time the market.
Nothing wrong with spending some bitcoin, that's not opposed to holding, just better to spend less bitcoin than you're earning from your salary each month.
>63% Of Americans Don't Have Enough Savings To Cover A $500 Emergency
Most people simply can't afford to invest a significant amount of money in bitcoin, especially with the high volatility we're having at the moment.
That's actually the point the parent was trying to make, except it backfires here. People won't stop buying food, clothes and paying rent to invest in bitcoin for later returns. They have to spend that money. Rich people on the other hand can do whatever they want.
If poor people want to become rich they'll probably need some initial investment, but bitcoin's deflation removes some of the incentives for rich people to invest money.
One way to solve this issue would be to tax bitcoins savings to force the rich to "spend" their money by paying taxes, but at the same time bitcoin makes it easier than ever to hide and launder your money and even if the state manages to track your account they can't cease it without having access to your private key. Forget the panama papers, forget the lux-leaks. All you need is a computer running the bitcoin client and you can move millions anonymously without any intermediary.
The not saving part is a cultural and habitual issue. People were addicted to credit in the past 20 years and this is due to a lot of forces, mostly government driven that benefit a fiat currency system.
Bitcoin not being fiat is quite different and it will take decades for habits to change, this is true.
That said, my facebook is overrun with non-technical, random people who are buying Bitcoin and Ethereum.
I don't see how bitcoins very low inflation rate (which produces price appreciation as adoption increases) disincentives investment.... instead it's an incentive because you can see the change month to month.
Taxing bitcoin and making the rich spend their bitcoins makes no sense... there are bitcoin whales with 100 times as many bitcoin as I have... doesn't affect me. IT's not a disincentive in the least.
>Taxing bitcoin and making the rich spend their bitcoins makes no sense... there are bitcoin whales with 100 times as many bitcoin as I have... doesn't affect me. IT's not a disincentive in the least.
That's the kind of short sightedness that worries me about the bitcoin ecosystem. It does affect you if you ever need a loan to buy a house or start a business because those "whales" which will be the new 1percenters won't have any incentive to lend you money. The rich gets richer, the poor remains where they are. We end up with all the problems and inequalities we have today, except worse.
We killed the banks and replaced them with other banks except these new banks are even more opaque and will be even more stingy about lending you money. And on top of that we waste an ungodly amount of energy securing the blockchain. How is that an improvement again?
In fact, my car loan's interest rate is below the rate of real inflation--- glad I bought bitcoin instead of paying cash!
You can't provide any evidence that we waste any energy on securing the block chain, in fact, the market value of bitcoin makes mining profitable, proving you wrong.... further, you ignore the cost of fiat currencies which are several orders of magnitude higher, including in energy usage.
It does in practice, actually. But there is always some portion of the market that needs the better system now. That is much less true of Bitcoin, which is mostly held for speculation rather than as a currency. People who are forced to "spend" Bitcoin are people who want to realize their speculative gain and exchange it for dollars, which they then use as currency because it's still vastly more convenient than Bitcoin.
bitcoin is functioning at the same standard of any existing currency, so no need to make a new higher standard for it. The M1 supply is a tiny fraction of the asset and used for buying things. The M2 and M3 supply is a larger stockpiled group which is also being used for investing in things inside of its own economy.
Thats not controversial.
Bitcoin volumes increase month over month, Bitcoin transactions onchain still increase month over month, or at least year over year so far, you can try to extrapolate days destroyed to see how much of the supply moves
But you will never know the purpose behind the transactions.
Payment processors releasing data wouldn't even give a picture of peer to peer purchases happening, and they aren't even releasing data.
People investing in mining cooperatives, mining hardware, and token sales for all manner of organizations, are all part of the picture. And this will be in the billions this year.
Many people have their only income in Bitcoin. I do.
I am forced to spend (or, at minimum, sell) Bitcoin because if I don't, I don't have any food or housing.
The technology adoption cycle-- what the internet and smart phones went thru-- is when increasingly large waves of population accept the new technology.
Bitcoin still has some UI issues and a steep learning curve, and as a new form of money has to overcome massive societal inertia as to "what money is".
That said, so long as it is going thru this process, it will operate more as a store of value and speculative investment than as a currency.
Bitcoins volatility has been declining over the years, as it gets closer, though it's a long way off.
So the currency use case is less dominant now and will be as it is distributed to wider and wider numbers of people.
One thing we have to overcome is the idea you deal in "bitcoins".... bitcoin is divisible to 1/100,000,000th of a coin-- a satoshi.
When people get in the habit and comfortable with owning partial bitcoins, it will go much wider.
There will only be 21 million bitcoins in existence, there are 11 million millionaires in the USA alone.
That means that even american millionaires will never be able to own 2 bitcoins.
I'd sell it tomorrow and make about $1bn in profit and move on with my life.
EDIT: I'm editing this because people are missing the point. My point wasn't about how when 1 owner has absolute control BTC is worthless like this guy[1] seems to think or about the liquidity of BTC, like this guy[2] seems to think. My point was about the fact that the difference between BTC is that the only use it has is holding and hoping it moves up, whereas owning a company actually brings in earnings.
Happy? Do you miss the forest for the trees a lot, or only when you're on HN?
In my mind, it's conceptually similar to elastic/inelastic demand curves.
This is why institutional traders have to break up buys or sells over many transactions. If you put up a huge block saying "I want to buy/sell $X million / Y million units of instrument Z" it is going to strongly drive the market away from your bid/ask. In a market like BTC, it might drive the price down 50% within minutes.
In other words, who is going to be on the other side of your market? If you are selling 1000 BTC, and if the top bid price has a quantity of 0.1 BTC, you will blow through the first level, then the second, thrid, etc, through dozens of decreasing price levels, if you are doing market orders. You will take out the ENTIRE BUY SIDE OF THE MARKET, and the price of your last transaction will be thousands of dollars lower than the first price. If you are doing a limit order, then you provide the lowest price you are willing to go, so you might only be able to sell a few coins.
I would also invest into $10B companies with the Bitcoin balance.
This is what you do with illiquid float you control, in any asset class. Whats the real question?
What is unclear to me is how many of these financial services (e.g., assisting with stock transfer, IPOs, raising capital, etc.) will continue to thrive in the same way that they have been, mostly unchanged for the past several years, when they can be executed in cheaper, more efficient, decentralized marketplace.
I'd love to expand my understand and be proven wrong though so I welcome feedback on this line of thinking.
Or trading derivatives? Derivatives are either traded on extremely efficient exchanges already (the automation of which put a squeeze on IB profits) or are for very bespoke products. I suppose in this area you can come up with a process for making the bespoke products more efficient via the blockchain but the actual ledger on those things isn't the hard part, its the contracts and risk pricing. Even then, the banks customers seem likely to continue to go to them for the expertise in the bespoke products.
For underwriting securities its not clear how the blockchain makes transactions less risky? Again the mechanics of the ledger are fairly easy and efficient already. I suppose there is room for improvement, but the thing people are going to the IB for, and what generates their profits in this area is actually taking on the risk, which the blockchain does not mitigate.
What a blockchain is useful for is eliminating the need for a centralized, trusted third party. Where I could see this being very helpful, and a potentially disruptive force is in areas like IPOs, mitigating counterparty risk, reducing conflict of interests, etc.
For example, if companies can raise capital and create liquidity for themselves with ICOs, the demand for IPOs will decrease. If investment banks break the "Chinese" wall and engage in market manipulation, then having public companies put their accounting on a public ledger will reduce the dependence on quarterly earnings reports. If more players are able to access the financial systems because they are on public ledgers rather than private ones, it will make it harder to banks to engage in oligopolistic behavior.
None of these things are guaranteed to happen, and certainly they won't all happen overnight. I do see though, the potential for these types of changes to slowly chip away at some of the revenue streams that banks have enjoyed for a long time.
Given that, If your question is altered to somehow own all of it while keeping its value, i'd rather the 100B easily liquidated assets over 10B revenue yoy.
Anyway, just a very interesting thing, because if you divide the total number of dollars by the total number of bitcoins, you get the figures above ($50 - $100 per coin) Which means, using my super simple maths, that bitcoin, as an international bank, is currently performing at 1/10th the cost :)
I think your math is off. Bitcoin is approaching a $100B market cap, and there are only 21 million bitcoins that will ever be in existence.
To match the dollars $20T total supply (a low end number depending on which money supply number you use it could be a multiple of that) then each bitcoin would be worth about $1M.
To match gold in market cap, would be $380,000 per bitcoin.
Truth is, though, when bitcoin comes into its own, the value of the dollar will drop (well, its true value will be realized) so prices would likely be much higher... assuming bitcoin succeeds and becomes a common world currency.
I was attempting to link USD in circulation to BTC, not paying attention to BTC market price. With your updated figures $21T USD in circulation makes each Bitcoin $1M yes, your math checks out. ($1M x $1M is $1T ... were we to somehow make BTC our new Cryptographic "Gold standard")
With each bitcoin worth $1M, that makes each Satoshi about ... a penny?
I don't really know what the ultimate value of bitcoin will be-- really determines on how well it resists attacks, and what level of services are built on top of it.
It's still the very early days.
Bitcoin is really a new currency, and comparing it to company market caps and banks sizes is not really fundamentally useful, but it is useful for giving an idea of the size of the bitcoin economy.
Gold has a market cap of $8T. If that's the use case bitcoin ever has, it will still ultimately be worth $380k each if it grows to bitcoins size... and it has several advantages over gold.
Is gold worthless because its "merely speculative"??
Put differently, are there any circumstances where people would buy GBP expecting it to go down? What about BTC? That right there tells you the difference between the two.
An interesting question to ponder though is what is the potential in the future. What is the probability that GBP becomes used for something beyond a medium of exchange in the UK?
vs.
What is the probability that BTC becomes a unified international medium of exchange?
Also, we are in the early stages of bitcoin today, so yes, you need to have some tech understanding. This will all be abstracted away soon. Do people need to understand TCP/IP to use the internet? Understand the internal combustion engine to drive a car? The same will happen for cryptocurrency.
[0] https://www.strategyanalytics.com/strategy-analytics/blogs/s... [1] https://techcrunch.com/2015/06/02/6-1b-smartphone-users-glob...
There are a great many people building businesses on the unique features of BTC.
This "nobody uses BTC" meme needs to die-- yes, it is still the early days, it's a new technology. We're still in the "hey I got a personal home page on the information super highway!" stage of adoption-- but that didn't mean the internet was useless.... and we haven't even gotten to the bull market and pets.com era. It would be silly to say the web was useless since nobody needs their own homepage.
It is a bit of a challenge.
Out of curiosity: Do you get paid x BTC per month/week or do you get x $/€/£/etc. in BTC?
A lot of the speculative buyers don't really understand how volatile BTC can be and that it is a usable currency.
The reason I say its in a deflationary period (while demonstrably false as more BTC are being produced by miners) is because its BTC / person interested in BTC seems to be decreasing.
It may turn out that bitcoin is not used for buying daily necessities for awhile, but there are a great number of potential new businesses that will be built on and around bitcoin.
Just like the internet gave us Amazon and Facebook, bitcoin will give us next generation companies that are quite different from the current economy.
"Bitcoin is the internet of money" is really applicable slogan.
People don't seem to get this. Unlike Berkeshire Hathaway or any other stock, you don't have to buy a whole unit. BRKA shares at 6 figures are out of range for most people because you have to buy at least one whole share.
Bitcoin is divisible down to the satoshi-- 100,000,000th of a bitcoin. That's too small to transact in currently, but there's nothing stopping you from buying 0.1 or 0.01 bitcoin.
In what ways does Bitcoin recreate the status quo problems of (1) the central bank being able to print arbitrary amounts of money, and (2) all individual-to-individual payments subject to censorship by a very small number of third-parties?
(2) There are a very small number of third parties that control the vast majority of hashing power
But here are your answers:
1) You live and take advantage of many things you might take for granted in a society that has a certain framework that must be maintained by service providers and it is maintained implicitly by the hordes of people on earth, when greed occurs or kinks in the system happen, printing money or not printing money are just tools to deal with issues.
2) Last time i bought something on craigslist, ebay, alibaba, amazon or from Sandy down the street i don't remember any censorship. I could be mistaken though. Maybe i did not think about something. I would like to see an example of this payment censorship you say largely affected your personal life.
Now definitely if you are trying to buy armored tanks, automatic weapons, drugs, women, censored dildos, yeah i could definitely see censorship. I just don't try to buy those things. :)
Don't get mad now, my sense of humor is an acquired taste :)
There are a lot of people who got rich because they got into bitcoin early... well, here's the secret-- it's still early. Very early.
Bitcoin solves the censorship issue-- nobody can stop you from transacting your bitcoin. It's not perfectly private, but things like z.cash and other technologies are enabling the anonymous own and control of bitcoin.
Printing money is a form of theft. People will pay for services they want. There's no problem for Amazon or Walmart or any of hundreds of service providers getting people to pay for their services. They don't have the ability to just print money to pay themselves (and give to the well connected-- it's ironic you call this a tool when we have seen $10T in new money issuance since 2008 that has mostly gone to politically connected %1 to enrich themselves at our expense.)
Censorship happens all the time-- government prevents you from buying insurance under Obamacare, for example. (literally, obamacare plans have no underwriting and thus are not insurance) that's a whole category of goods that are moral yet illegal to sell, and you are forced to buy an inferior product to replace it that doesn't deliver on the same promise.
Further, censorship is present in the form of border controls-- there were reports of agents stopping people on jetways as they were boarding jets to search to see if they were taking gold out of the country. From 1915-1975 approximately it was illegal to own gold in the USA and smuggling was occurring.... that's literal financial censorship and it ended not that long ago. There are a great deal of controls on USD movement, FINCEN wants to track your assets internationally, and ultimately restrict what you can move and when... that's censorship.
The censorship issues you describe are describing people that already have money, so i don't know how these people don't follow in the above category. It sounds like these people don't want to pay any gov tax, well those are the kind of people that should stop using any of the services that society pays for using tax. They wouldn't go very far if that was to happen would they. I don't feel bad for them. If gov tax is such a big issue, why even live in society, money surely came to your pocket from society in the first place, you had to make it somehow, whether legally or illegally. So you definitely benefited. Essentially you are stealing from everyone in society when you are attempting to avoid tax or tariffs when moving your money out of the country. How much money do you really need man? The people that are investing in bitcoin are not living on a dollar a day.
Bitcoin is not for everyone and it does not make it easier for wealth to be distributed or aids upward mobility unless you count the early adopters which a lot of them just so happen to be insiders in the first place. Similar to insider traders.
Borders aren't going anywhere for a while. The real question is if these people have this money that are scared that it might be taxed or prevented from going out of the country. How did they make it in the first place?
The points you bring up have to do with people which do not want to support the society in which they live. They want to take more of the pie and bitcoin is an avenue for that at a larger scale than before.
I'm not looking for moral high ground here, but i just don't see how it benefits the regular population.
Ladies and gentleman, time to buy, it has been noted that suddenly bitcoin will solve the US health insurance problem. Right...
Smuggling will always occur before and after bitcoin.
People are happy to pay for internet service. If government was delivering value, then people would be happy to pay for it... alas, most of your tax money goes to blowing up brown people and paying off political allies than actually providing any services.
I always love the "if you aren't robbed as much as I think you should, you are stealing from me" argument.
Everyone who buys bitcoin today is an early adopter. We have not crossed the chasm. but we are getting close.
How people make their money is none of your business. And you legitimately cannot move large amounts of money outside the country without being spied upon. It's not a question of the source of the funds, but the government trying to control the flow of resources out of the jurisdiction as a result of their terrible management of the economy. That's what exchange controls are all about. Delaying the collapse of a hyper inflationary currency.
Yeah, you think people wanting to avoid theft are greedy, you're wrong.
You're not even responding to the healthcare point, misrepresentation isn't impressive.
Really sounds like you have a major axe grind, but I gotta tell you, buddy, so long as you go around thinking other people are your property to enslave you're going to have a bad time.
Bitcoin is liberating us from authoritarians like you.
For the record, i have no axe to grind, i could care less because i am not involved in trading bitcoin. Just want to understand it better and clear the smoke a bit.
However, Bitcoin generally has rallies whenever government tries to control markets in a crisis-- for example Cypress forcing everyone to take a haircut -- a lot of people moved to bitcoin to protect their assets.
As governments continue to mismanage their economies and their currencies, this is bullish for bitcoin because it was designed to solve these problems once and for all, or at least try to.
Hope that makes it clearer.
Thanks for clarifying, I believe I caught your gist.
Bitcoin is literally a response to the 2008 crisis-- the genesis block has a quote about bank bailouts.