image courtesy of howmuch.net: TheBitcoin Economy, in Perspective

howmuch.net

Bitcoin, in particular, and cryptocurrencies more generally, are a hot topic right now. With all this talk of Bitcoin, you'd think it was everywhere; but how much of the world's money is actually in the form of this cryptocurrency? Earlier this week, howmuch.net released a graph visualizing the total amount of money in the world - roughly $84 trillion - in order to locate the Bitcoin economy in the context of the global economy. (Related: Is Ethereum About to Topple Bitcoin?) 

Currently, the value of all the Bitcoin in the world is $41 billion, roughly the net worth of Google co-founder Larry Page. This makes the market cap of Bitcoin about 0.5% of gold ($8.2 trillion), though the cryptocurrency has had periods in the past year of superior price stability, and did surpass the precious metal in valuation per unit last year.

Bitcoin is, of course, the most well-known and highly valued cryptocurrency in the the global economy, but it is far from the only one. If we combine the net worth of Bitcoin with that of Litecoin​, Monero​, Ethereum and all other cryptocurrencies, it comes out close to $100 billion. According to howmuch.net, this is “about as much as the current GDP of Morocco - the 60th-largest economy in the world.” This is staggering, given the relatively recent advent of digital currency.

The author of “The Bitcoin Economy, in Perspective”, reminds us that money and gold are fiduciary, meaning they “only [have] as much value as the trust we place in [them].” The $66.8 trillion worth of publicly traded shares at stock exchanges are highly fiduciary, too, and “a run towards or away from stocks would thoroughly deregulate the economy, and nothing more dramatic than a minus sign in front of this [$66.8 trillion] would lead to the collapse of global civilization.” The rise in the value of cryptocurrencies, and Bitcoin in particular, is seen here, as in reference exclusively to trust lost in money, and other more traditional measures of wealth.(See also: Bitcoin Mining?)

These are dramatic, and perhaps alarmist claims. While it might be true that a run toward or away from the stock market would be destabilizing, do we have reason to believe this is imminent, or even probable? And there are of course, other reasons that one might buy up or invest in Bitcoin, besides the inevitable erosion and devaluation of traditional forms of currency and measures of wealth. It is, after all, in and of itself, a form of currency with some practical applications. Still, they say, “Let’s talk when the total value of cryptocurrencies surpasses that of the world’s gold…” Who knows, maybe that day will come sooner than we think. (If you like this, check out: Risks & Rewards of Investing in Bitcoin)