[kobeya]

The first is rediculous. Market cap is meaningless, especially in bitcoin where it isn’t even known well how much coin is accessible, and velocity of those coins in circulation is so low and order books so thin by comparison.

The effect is exactly comparable to how much value will disappear. That’s how many lives will be affected, people disillusioned, etc.

I honestly don’t know what you’re trying to argue in the last paragraph.

[fastball]

You're right, market cap is not the best indicator. But the point is that it's not an equivalent comparison, and that point stands.

Let's do some math:

In Feb 2014, ~12,400,000 BTC had been mined. In the case of BTC, that's not really equivalent to "being in circulation", as many of those were probably forever lost in various unrecoverable wallets, but we'll pretend it was 12.4 million anyway(^1). 850,000 BTC ($450 mil) were stolen in the MTGOX day parade. That equated to nearly 7% of BTC in circulation.

This whole Tether thing, though also valued at around $500 mil, is not equivalent.

$500 mil right now is 61,000 BTC. There are currently 16,700,000 BTC in circulation. Making the Tether stuff only equate to 0.3% of all Bitcoin. I'm assuming that is what OP meant, and they are right - 7% is very different from 0.3%.

[1] - this actually makes my estimates more conservative than they could be, because I can almost guarantee that the BTC mined from 2014-2017 are more accessible than BTC mined from 2009-2014.

[heptathorp]

> $500 mil right now is 61,000 BTC. There are currently 16,700,000 BTC in circulation. Making the Tether stuff only equate to 0.3% of all Bitcoin.

That's also not the correct way to look at it. The price hasn't been a constant $8200 during the issuance of those tethers, it was lower earlier. So way more than 61,000 BTC could have been bought with that money.

Besides, to figure out what effect tether has had on the price you need to factor in liquidity, not the total supply of BTC. If the real value of tethers is much lower than their nominal value (because they are not actually backed by dollars), and they were used to take a significant percent of BTC off the market, then the price of BTC is significantly higher than it ought to be.

[dmichulke]

> The price hasn't been a constant $8200 during the issuance of those tethers, it was lower earlier.

The same holds for the bitcoins bought with dollars at Mtgox.

But to end the discussion:

  Dec 31, 2013: Marketcap 10  bn, Vol 34 mn
  Today       : Marketcap 240 bn, Vol  8 bn

So 600 mn had a much bigger impact (20x daily volume back then) than they'd have today (0.075x daily volume).

[fastball]

What exactly do you mean by "take a significant percent of BTC off the market"?

If this is some sort of Ponzi/exit scheme like many people are thinking, and all that BTC is effectively stolen by Bitfinex, I'm sure they'll spend it eventually. It's not like they're taking Bitcoin, giving people Tether, and then burning the Bitcoin.

[dmichulke]

> The first is rediculous

So you're saying the same amount of money in 2013 will have the same impact today? I don't think so, market cap is a proxy for this. It's not a good one but it is one.

> The effect is exactly comparable to how much value will disappear.

Yes but it will be shouldered by many more coins and many more dollars.

> I honestly don’t know what you’re trying to argue in the last paragraph.

You can compare the 600 mn mtgox impact using either of the two proxies, liquidity will give you a view of what will happen in the short-term, market cap will give you a glimpse of what will happen after the initial shockwave went through the orderbooks.

PS: It's "ridiculous" not rediculous.