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Comment by reefoctopus | Hacker News Reader

Why do you think it would have any effect? It’s still a comparatively tiny market.

It is small, but has an indeterminate reach throughout the international economy. Nobody knows where the exposures to its collapse would be. A market panic could ensue from such a collapse, followed by other vulnerabilities becoming magnified in importance to the minds of investors.

This of course is a guess, and it could well have little impact. But it seems that the risk is larger than the size of this market would otherwise be in more mature sectors.

It will have almost no impact at this point. It's not highly levered or used as collateral in the financial industry. There's no coupling between BTC and the rest of the financial industry.

> There's no coupling between BTC and the rest of the financial industry.

Maybe not right now, but the way things are going I wouldn't be too surprised if it actually ends up happening. I'm also sure plenty of people in the finance industry see this as a good profit opportunity; They might not find the gold themselves, but they will make plenty of money selling shovels to the people looking to find gold.

We don't know they're not used as collateral, and it doesn't have to be in the lit markets where this happens. It could be in dark markets in Asia, having knock-on effects on demand or other investments in the real economy. There is also hedging, which automatically couples correlation into other markets.

> half a trillion USD is a tiny market What?

Apple, Google, Microsoft and Amazon all have market cap larger than 500bn.

Pretty much any 5 of the Fortune 100 has a market cap greater than 500bn, 500bn is a fuck tonne of money but compared to the aggregate size of the market it's pretty much bugger all.

BTC market size is the $$/Yen/GBP/Euros exchanged into BTC a day and backwards, not Max(SomeOnePaidForBtc) * BTCs outstanding.

Interesting. Why is it this and not daily volume?

I trade you my dog for your cat. We both say that they are worth a million dollars.

What is the market cap of our two-animal store-of-value ecosystem?

(Unless you're an economist, the answer is not "Two million dollars.")

On the other hand, if I then went ahead and sold your cat to some outside party for $600, and you sold my dog for $400, we could reasonably say that the market cap is ~$1000.

The same could have been asked about the Tulip and Bulb craze.

The tulip boom and bust didn't have much of an effect on the overall Dutch economy. According to this Smithsonian article, the story has been overblown significantly:

https://www.smithsonianmag.com/history/there-never-was-real-...

I don't think anyone is saying the crypto bubble bust will have much of an effect on the economy either.

On its own definitely not, but the same could be said about the assassinstion of Archduke Ferdinand. When the world is a powder keg, it pays to keep track of the matches.

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