Understanding what market cap is would help.
Market capitalization (market cap) is the total market value of the shares outstanding of a publicly traded company; it is equal to the share price times the number of shares outstanding. As outstanding stock is bought and sold in public markets, capitalization could be used as a proxy for the public opinion of a company's net worth and is a determining factor in some forms of stock valuation.
If bitcoins price is $1 per btc and there are 16 million of them the market cap is 16 million. If Bitcoin price is $1000 per btc and there are 16 million of them the market cap is 16 billion.
Bitcoin currently costs $1,230 the market cap is $20 billion.
correct
if sh*tcoinX was $1 per sh*tcoinx and there are 5 trillion sh*tcoinx's then the market cap is $5trillion
the market cap is meaningless..
a better metric would be:
how many coins are on the market
how many coins per order line between $0 and current value
to show how much resistance there is to prevent the price going to $0
It's strange, market cap is mostly used to measure stock valuations, not currencies. Wiki says, "market capitalization could be used as an indicator of public opinion of a company's net worth and is a determining factor in some forms of stock valuation". Others will argue that bitcoin is a commodity, and complicate things further.
Measuring daily volume is also a useful metric. Blockchain.info reports around $50 million per day. Much of this volume could be price propping.
An interesting development has been the rise of JPY in global exchange volume. At this point, EUR, CNY, JPY, and USD are all represented equally. I suspect bitcoin may already be a small scale hedge against currency fluctuations. Of course, bitcoin price fluctuations are much larger than forex.
It's mainly because when people started playing around with Bitcoin it was much too experimental to be viewed like a currency and market cap was the closest thing to a good fit. Unfortunately market cap no longer makes sense when comparing it to fiat or even to gold, so we're left with this great big oversimplified remnant of the past with no better way of measuring Bitcoin's overall value.