Bitcoin does not have a “market capitalization”

28 March 2013 by Mike Gogulski
Posted in economics, technology | No Comments »

Great news today via Bitcoin Magazine:

Bitcoin Market Capitalization Hits $1 Billion: The New Era of Institutional Investors

Of course, I’m happy with this news, but the terminology being employed in so many places is simply incorrect.

Market capitalization is defined as the market price of a publicly-traded company’s outstanding shares of stock multiplied by the number of outstanding shares.

Bitcoin is not a publicly-traded company, and has no “shares”. Therefore, by definition, Bitcoin cannot have a “market capitalization”.

Better terminology might be: “Market value of all Bitcoins in circulation hits US$1 billion”.

The distinction is important because the use of the term “market capitalization” reinforces the erroneous notion that Bitcoin has some kind of central issuing authority, which it does not.


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