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How does Bitcoin compare to fiat currencies in volume?

Photo of: Nathan VDH
by Nathan VDH

Bitcoin was the first cryptocurrency to be created, and Bitcoin has become a household name around the world. Its ever-increasing notoriety brings a significant spotlight on the world of cryptocurrency. But how much does Bitcoin really weigh in world finance?

Bitcoin was created just over ten years ago now. After a boom in 2017, the course of Bitcoin has become calmer. For several months now, it has fluctuated between $9,000 and $11,000. It is estimated that 18,500,000 units are currently on the market.

To calculate the “weight” of Bitcoin, it is interesting to calculate its capitalization. It is obtained by multiplying the number of units in the circuit by the current price of Bitcoin. A quick calculation would therefore give a capitalization of Bitcoin around 200 billion dollars (at the current price). This places Bitcoin in the first place of cryptos in terms of capitalization, ahead of Ethereum. But apart from making you dizzy, what does such a sum really represent?

Bitcoin, a heavyweight in terms of monetary capitalization

The problem with fiat money is that there is more money in circulation than there really is in bank vaults. However, if we consider only the so-called “central” currency, issued by central banks, it is possible to calculate the capitalization of fiat currencies.

Currently, the following five fiat currencies have a more significant capitalization than Bitcoin :

The U.S. dollar with 1.95 trillion dollars;

The Euro with 1.38 trillion Euros;

The Chinese yuan with 1.150 billion dollars;

The yen with $1 trillion;

The rupee with $1 trillion.

Bitcoin thus comes in sixth position! To be precise, we could add gold to this ranking. With about 10,500 billion dollars, gold would take sixth place from Bitcoin, which would then end up in seventh place.

As you will have understood, this ranking has more symbolic value than anything else. For a finer analysis, we should focus on the distribution of money. Indeed, most cryptos are held by whales, i.e. big investors. Moreover, it happens that some significant quantities of crypto disappear from circulation only to reappear later. To be precise, one should therefore take these phenomena into account.

In any case, this classification is edifying if we take a step back. At the time Bitcoin was created, who could have imagined that it would climb into the top 10 largest money market capitalizations? Certainly, these figures are a tribute to Bitcoin’s technological and commercial success over the last 10 years. Moreover, they are encouraging for the future of Bitcoin. With Bitcoin production continuing until 2140 and a price that could soar, Bitcoin could continue to climb up in this ranking.