Amid increasing hype about blockchains and distributed ledgers, the value of global cryptocurrency markets has risen rapidly so far in 2016. As of mid-June, the value of all blockchain-based currencies in circulation was $14.37tn , and the price of bitcoin was, as it has been historically, a leading driver of this growth. At June’s highs of $700 , the price of bitcoin had risen almost $300 since the end of May.
As the value of bitcoin continues to surge, many have looked at bitcoin’s market capitalization as an indication of bitcoin’s value. With a total value of all bitcoins in existence at $10bn , the bitcoin market is currently more valuable than one of the largest social media companies in the world, Twitter.
Some have argued, however, that it’s unclear exactly where exactly the bitcoin market cap stands now, asserting it’s impossible to determine with any sense of accuracy the value of all usable or spendable bitcoins.
Due to factors – including the notion of "zombie" bitcoins and the number of bitcoins stored by long-term, buy-and-hold investors – these market observers believe it’s difficult to make summary statements about the vitality of the market or its current trajectory.
While this may be a minor thing, this difficulty in profiling the size and character of the bitcoin market is telling of the challenges the digital currency has in defining itself to the broader public. In addition, it points to pitfalls bitcoin will likely have to clear in its near-future.
More importantly, the discussion of how to capitalize a finite, virtual currency speaks to the debate of what the future of digital commerce may look like. Defining capitalization
To understand the significance of a capitalization to a market, one must understand what a market capitalization is and how it is calculated.
Market capitalization is defined traditionally as […]
