The market capitalization of Bitcoin - a Benchmark

Bitcoin's market capitalization is $ 125.2 billion on September 3. The Bitcoin price is currently $ 7,262, with a total supply of just under 17.25 million Bitcoin. But what does this value say about the Bitcoin ecosystem and the Bitcoin price? Some thoughts on market capitalization.

The term "market capitalization" is - like so much in the Bitcoin ecosystem - borrowed from the financial world. In principle, it is simply explained: It refers to the value of the equity of a stock corporation on the stock exchange. The following formula is used:

Number of shares x share price = market capitalization.

The stock price, in turn, is calculated based on supply and demand.

A feature of the market capitalization is that only those shares are considered, which are in circulation. For example, stocks that a company withholds are not included. The total market capitalization ultimately serves as a guide - the different companies can be compared on the basis of market capitalization.

From the stock market to Bitcoin: Market capitalization transmission problems

In the transfer of the term to the crypto world now arise some inconsistencies. First of all (especially Bitcoin) it is not a company but much more a currency. Consequently, the traded objects are not shares, but digital coins - at least in theory. Also, the market capitalization is based on the total number of coins - not just those that can be bought on the market. Consider the large number of unrecorded bitcoins that are actually in circulation. First and foremost, this is the assets of Satoshi Nakamoto - no one knows exactly how high this last is and whether it (and if yes, when) will ever be rinsed on the market again.

To make matters worse, the large number of lost private keys - also here there is an uncertain number of coins that are not accessible to the market. Only the Bitcoin price is calculated as on the stock exchange in the interaction of supply and demand. This also shows that this is nowhere firmly written - and can fluctuate greatly, for example, from one exchange to another.

So the bitcoin price remains what anyone asks for his coins and anyone else is willing to pay. In its entirety, it can be roughly compared to how much a currency is "worth". It is and remains a benchmark - market capitalization does not match the amount of money invested.