[copenja]

That's an interesting question. Bernie Madoff’s Ponzi scheme is estimated to have lost clients $65 billion. The Bitcoin market cap is nearly double at $107 billion.

But Bernie Madoff's $65 billion is all real dollars paid into the scheme. Bitcoin market cap doesn't track the amount of the money that has been paid into the current Bitcoin market. It simply estimates the current market price, then multiplies that number by the total of number of Bitcoins.

So the amount currently paid into the current Bitcoin market is going to be much, much lower. Experts estimate that nearly 30% of current bitcoins are 'lost' forever in non-recoverable wallets. Also, the gal who bought 1000 bitcoin at 5 dollars hasn't re-paid another $6 million into the system. But, if Bitcoin crashed to zero today, would you also need to account for dollars lost by investors who built mining stations and gear?

I guess we will never know. But, I think it is fair to say that the Madoff scheme is in the same ballpark of Bitcoin.

[latchkey]

Thank you. More people need to realize that market cap is meaningless in the context of crypto. It is just a multiplier of two numbers which makes it sound like a big number and thus interesting (which it is not). You explained it perfectly.

[achompas]

This horse has been beaten, but it trivializes the amount of money that entered late last year. I don't think it's all late money, but the money in BTC is not all "early" either.

[tuesdayrain]

It's not meaningless. It's still the only way to roughly compare the size of assets with different supplies.

[latchkey]

"Market capitalization is just a fancy name for a straightforward concept: it is the market value of a company's outstanding shares. This figure is found by taking the stock price and multiplying it by the total number of shares outstanding."

At least with bitcoin, there is no company. So, all it is is price * shares outstanding (held shares).

Given that there is some portion of btc that is 'lost' as well as the fact that we don't know what people paid for what is held, I don't see how anyone can come to a conclusion about the "the size of assets with different supplies."

In fact, the definition of market cap says nothing about that conclusion. The description says that it was just a way of grouping companies of various sizes. So, we are back at square zero, bitcoin is not a company.

Maybe I'm totally wrong in my feelings about MC, but at the end of the day, this is not an indicator I would use for TA or popularity of a cryptocurrency. For example, Volume is a much more interesting high level number.

[nostrademons]

24h trading volume for BTC/USD (excluding BTC/USDT and all non-USD fiat currencies) is over $500M [1], and has been at that rate or higher since last December. That's over $90B in real money that has exchanged hands for Bitcoin.

It's not quite the same as the Madoff Ponzi scheme, because in that, all the money went into Madoff's firm, and relatively little came out as redemptions. In a trading market, every dollar that comes in from a buyer goes out to a seller (minus exchange fees, which reportedly have netted Coinbase close to $1B this year, again supporting a >$100B trade volume). They can then be used to purchase more crypto later, and show up in the volume statistics again.

But this alone indicates that Bitcoin may be a bit more resilient than Madoff's ponzi scheme; when multiple people get rich off it, there's much less of a single point of failure for the scheme to collapse.

[1] https://coinmarketcap.com/currencies/bitcoin/#markets

[headsoup]

That would assume that it is 'different' money changing hands would it not?

I.e. that %500M and $90B is unique dollars being transacted and not just promises being passed back and forth.

[nostrademons]

It does, and that's an assumption that probably doesn't hold.

Most things in the economy work that way though - the total supply of hard currency in the economy is only $3.6T, so when you speak of the $18T US GDP or the $20T US national debt or the $524T value of the derivatives market, it necessarily accounts for the same dollar changing hands multiple times. That's what makes it a currency, that it can circulate and change hands while holding its value.

[sserrot]

Saying the 'value' of the derivatives market is $524T is disingenuous. The notional value - sure, but that's like saying the value of the lottery 'market' is the jackpot times all the outstanding tickets - http://www.newsweek.com/600-trillion-derivatives-market-9227...

[nostrademons]

That's my point though - that there are a lot of things in the economy where the total dollar value may be high but it's largely the same participants trading amongst themselves, and the contracts net out to some much smaller value. Bitcoin volume and Bitcoin market cap are not unique in this regard.

[solotronics]

No exchanges are collapsing so its about as real as you can get. You might ask 'What if everyone withdraws to fiat at once?' I think if you posit that of any stock market the answer would be the same. Cryptos are a pretty pure free market, if it didnt have real utility or value for people the markets would collapse.

[jayd16]

As others have pointed out Madoff might not be a solid example as it was a single firm committing fraud vs the possibility of multiple actors abusing a bubble (and possibly committing fraud as well).

It might be closer to the abuse of sub-prime mortgages and mortgage-backed securities. Is feeding a bubble the same as pumping and dumping? Sure can be.

[achompas]

> But, I think it is fair to say that the Madoff scheme is in the same ballpark of Bitcoin.

I was going to comment on this, but I was blocked by my time manager. :(

Current market cap of BTC, at $111M, puts Madoff's scheme at about half of BTC. Compared to BTC's peak in 2017, Madoff's $$ is about a quarter. (supply * rough BTC price of $20,000).

Additionally, Madoff's scheme affected 4800 clients. [0] The amount of users on Coinbase as of late 2017 is about 2400x that amount [1]. So while amount "paid in" is lower, market cap is much higher. The affected userbase is also many multiples higher than Madoff's clientele.

So, my point: the difference in $$ is higher, and the difference in userbase is far higher.

More practically, note: we are comparing BTC to the largest grift in history. That's a lot of money.

[0] https://en.wikipedia.org/wiki/Bernard_Madoff

[1] https://www.cnbc.com/2017/11/27/bitcoin-exchange-coinbase-ha...

[bduerst]

The apples:apples comparison would be a total of amount of currency converted into Bitcoin.