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All the cryptocurrency shenanigans suddenly made sense when I read someone’s HN comment last year who said something like ‘ e-coin is stock you can buy to invest in a company that has no assets and produces nothing.’ In that sense, it makes complete sense why some people intentionally use the term “market cap”, so you’re absolutely right.

You’re buying the right to make changes to an extremely secure ledger.

Not only that, it's non-voting stock in a company that has no assets and produces nothing.

That's useful!

Reminds me of a joke:

Q. What do you call a dog without legs?

A. Doesn't matter, it won't come when you call.

Whether or not the token explicitly defines governance, the owner of a token does have some authority over any governance action involving a hard fork, because the success of the fork depends on the buy in from the economic actors.

You do get meaningful voting rights, but the governance process is quite a bit different from a traditional company.

The main claim is it's almost as bad a fiat currencies; in which case you're buying stock in a company that produces nothing, has no assets, is being constantly inflated, and has a bunch of rules about who you can give it to and how.

Just because you can't hoard the entire market cap doesn't mean it is ridiculous or not a useful measure. If you have a very liquid currency or commodity then it is very useful.

But "very liquid" is relative to the amount of the entire commodity you could theoretically sell.

Stocks are "very liquid" because, outside of some share classes, you could theoretically buy nearly all the stocks. Even more importantly, you could almost always sell your entire portfolio in a single day if you wanted to, for the vast majority of stocks.

BitCoin, is that "very liquid?" There are thousands of trades every day, but what would actually happen if someone tried to unload "all" of the coins? If Satoshi popped up and tried to sell their coins, which are nominally worth over $8 billion, could they do it? Almost certainly not.

The same applies to stocks, you definitely could not unload (or buy) the entire float in a day. I don't think crypto is too different in this respect.

Something like $50-$100B in bitcoin is traded every day. It's not the NYSE but that is pretty liquid in my opinion.

The bulk of that is stablecoins though, of dubious backing. You couldn’t cash out billions in dollars.

I agree with your point, also worth remembering that much of crypto trading is wash trading, but the point stands that if you bought crypto in the past 10 years you almost certainly can sell it all today at the market price.

My down payment on the new mortgage I'm taking out at the bank is not wash trading.

Whether you believe something has value or not doesn't matter. Velocity and liquidity matter.

No Satoshi can't sell his billions in a day but he can milk the market for millions daily. The market is that mature _today_

> because you can't hoard the entire market cap doesn't mean it is ridiculous or not a useful measure

It sort of does. We can talk about the monetary base, but it's not a great way to understand the value of an individual dollar because the whole isn't really meaningful in a precise way. A whole company can be purchased and still have value. That gives market cap, as a metric, grounding.

Ok. I'll bite, just to see where this goes. Please name 3 productive uses for the number. Then apply the same methods to show how they're useful with both USD and gold. Thanks!

I can make the same statement you made about stock price about commodities and coins, in that I have to pay at least shares_outstanding * current_price to acquire all of a commodity or a coin.

The metric works, it's just that people keep making false claims from it.

> I can make the same statement you made about stock price about commodities and coins, in that I have to pay at least shares_outstanding * current_price to acquire all of a commodity or a coin.

You don't, though. The price would change if you attempted to do so. You can buy a company because you offer the company a value for all their shares; if enough of their shareholders approve the deal, it's done.

You can't do the same with Bitcoin, or copper. Each requires reaching out to individual owners/producers, and the sales affect the price for the next purchase. If you tried to buy all BTC in existence, the price would go up. If you tried to offload a bunch, it'd crash.

It's highly unlikely you could sell $1T worth of BTC without driving the price massively downwards.

Exactly. You can't buy all the gold in the world at the imaginary "market cap". Or all of a currency. And if you did buy all of a currency, it would be worthless, because the whole point of a currency is as a medium for exchange. Indeed, that's how they take a currency out of service, as they did when they launched the Euro.

> Exactly. You can't buy all the gold in the world at the imaginary "market cap"

Nobody said that. We clearly acknowledge that it is at least market cap.

No. They decreed that the respective currencies stopped being legal tender (against the will of the people in many cases, btw) and so the people had no choice but to swap their money for Euros. The exchange rate was fixed and the currency was never bought on a free market. They couldn't have because many people would not have sold and then you'd have ended up with multiple competing currencies. The government has a monopoly on national currency, it's very different from gold and cryptocurrencies that are properly decentralized and freely traded.

The name cryptocurrency is a misnomer for many of the new generation blockchains. They are not just currencies and they're also not a commodity like gold. You can think of a currency like Ethereum more like a decentralized company offering infrastructure services. It also has aspects of a currency and of a commodity. It's a bit of everything.

People could and did hold onto them. I should know; I have a small collection of defunct notes. But they were in negligible amounts, because a currency isn't intrinsically valuable. What's the market cap of the Italian Lira? It was a meaningless question both before and after the Euro cutover.

If I choose to buy a company the price will adjust upwards as well. The centralization of shares in a system does not change the fact that coins and commodities underlie the same market principles.

> It's highly unlikely you could sell $1T worth of BTC without driving the price massively downwards.

Same goes for any stock.