I’d measure it as “materially affected by it.” Of course we all “noticed” it - it’s a sharp collapse of a sector with some degree of notoriety. But there was no broader effect of the collapse. $2 trillion globally is big in absolute terms, but not all that big compared to the broader financial markets. The U.S. stock market is more than 20x that - the financial system and broader asset classes generally are even huger. When you start looking at the global economy, crypto is basically a rounding error. Bitcoin is smaller than Berkshire Hathaway - and while BRK is a big important company, no one thinks the global economy would be materially affected if that single U.S. company were to disappear.
It’s barely a blip in their economies. They could easily ban it, and never look back. I agree that it will be politically difficult for them to do it. There’s just too many people that are sitting on huge stacks of these coins that will be incredibly wealthy if crypto ever were to become something important. Those folks have every motivation to invest all the resources at their disposal to fighting efforts to restrict crypto.
But I think crypto will wither eventually, because it appears to be (to borrow Matt Yglesias’ metaphor) the Segway of financial innovation - a really impressive technological achievement that has very little utility (other than illicit uses). At least, in any economy with a healthy banking system. Not every country has a healthy banking system, of course - but once it dies down in the places that do have a healthy banking system, there’s almost certainly not enough market left to be anything important on a global scale.
Actually, no. To an individual or a business or even a single country, that is a lot. But to a significantly large world economy, it is not really a major amount.
3 Trillion is the size of the Great Britain Economy, so you are saying that if Great Britain were to collapse we wouldn’t even notice it? That seems illogical. Bitcoin was larger than the biggest companies in the world, and it has seems these draw downs many times in the past. I suspect it will see new highs in the future.
3 trillion is not a blip in any economy, that is why everyone is talking about it. 3 trillion is more than a lot of the worlds economies. As long as people have the need to move money Crypto will be around.
I need you to back up this statement. It is not helpful to make statements that do not have a link attached to them because I do not believe that Bitcoin can be transferred without mining.
Right but you said bitcoin could be transferred without mining. You need to supply a link that backs up that statement. The link you provided backs up what I said.
But Bitcoin (or even crypto writ large) isn’t $3 trillion in annual economic activity. At its peak, the total of all crypto (including stablecoins) was $3 trillion in asset value. The economy of the UK is a GDP of about $3 trillion - an annual figure. The asset value of the UK is vastly higher.
To get a sense of how big Bitcoin actually is, look at the transaction flows. The value of transactions varies greatly with the price of BTC (it spiked a lot during the crypto peak), but right now Bitcoin runs about $2 billion in daily volume. Which is roughly equivalent to…Zelle:
…which did about $155 billion in transactions in Q2 2022. We would notice if Zelle suddenly disappeared, but Zelle disappearing would have virtually zero effect on the global economy.
As of time of writing, all of Bitcoin has a market cap of about $325 billion. Tesla’s lost about that much value in the last six months, and the global economy marches on. It’s just not that big. It’s not too big to fail, and it’s not too big to ban, if governments were so inclined.
We are going through a recession where the whole economy is slowing down. On the other side of the recession we should see Bitcoin and the other Crypto’s take off and seek new highs.
Zelle is meaningless. If you asked me or most people what Zelle was they would have a hard time even telling you about it. In fact I had to read your article to even know what Zelle was. So comparing BTC to Zelle is not a very good comparison. Everyone has heard of BTC.
Companies already hold Bitcoin on their balance sheets and countries are already implementing it into their economies. So yes it is to big to ban and is why the United States is holding hearing on it instead of out right banning it. The time has passed and now they have to figure how they will commingle with Bitcoin and the rest of Crypto.
Exactly. Bitcoin looks like it’s big and important because everyone has heard of it. But it’s not big or important. It’s actually a relatively tiny endeavor. Roughly the size of Zelle, or two Venmos, or the Discover Card, or a host of other economic services that do about $700B of annual transaction volume. It’s not big enough to be integral to the global economy - and since it’s little used in western economies (which have good banking systems), it’s especially too small to be immune from regulation even to the point of abolition.
Not to any great degree. Again, Bitcoin is small and infrequently used for transactions (and all the others are much smaller). Sure, some companies have them on their balance sheets - but if the government wants to get rid of them, that’s not going to be an obstacle.
You might just see something that “rhymes” with what the U.S. government did to bearer bonds. Like crypto, ownership of bearer bonds (like those featured in Die Hard) went along with possession - whoever had actual possession of the certificates was the owner. This made them really great for transactions outside of institutional channels (as opposed to registered bonds), but also great for money laundering and criminals. So in 1982, the US passed TEFRA - which among other things, basically eliminated bearer bonds. Lots of companies owned them, they were used for a lot of things - but they were more trouble than they were worth to the U.S. government, so they were de facto eliminated. Not prohibited - TEFRA just imposed a lot of unfavorable economic and tax treatments on bearer bonds, making them uneconomical compared to registered bonds.
Just as with crypto, there used to be very large amounts - billions and billions of dollars - in bearer bonds (both federal and munis) in circulation before TEFRA. But they were a problem, so the feds made them go away.
It is big and important because of all the business’s built around it. With ETF’s being built with only Bitcoin in them, and Fidelity getting involved in the trading of bitcoin, all of this is said and done. Also with many companies building a business around crypto and holding crypto on their balance sheet is very hard to unwind that, especially when other countries are also holding and trading in crypto. Not to mention all the crypto atm’s out there that allow people to buy and sell crypto. We were never talking about regulation, because of course it will be regulated, but it can never be abolished. It most likely will be regulated and become more common in the years to come.
Actually Ethereum is used for transactions in an every increasing manner, every single day of the year. It’s a common occurrence but you would have to understand the platform to understand how it is being used. And yes Bitcoin is being used every day also.
This can’t be compared to Bearer bonds, with crypto you do not need to go to a bank, Bearer bonds also didn’t have the same network effect as crypto has. That is what makes banning crypto so hard, anyone with a wallet can trade it to another person with a wallet. There really is no need for an intermediary. The only hope the government has is that they “try” to regulate it and people that have the coins accept the regulation. Because if they don’t they can just work around the government.
Econ is based on dynamics so no that is not true. That is like comparing the surfaces of 2 inches cubed to a two feet cubed to a two yards cubed. And then saying the filling is not exponential but additive.
2140 will be the end of Bitcoin mining but 2140 will not be the end of Bitcoin. How will they do transfers since there will be no mining which you say is needed to make transfers happen?
With the number of new bitcoins issued per block decreasing by half approximately every four years, the final bitcoin is not expected to be generated until the year 2140.
If the Bitcoin blockchain in 2140 processes many transactions, then Bitcoin miners may still be able to generate profits from only transaction processing fees.
The end of mining in 2140 is the evidence I provided. Here it is again.