Float: Bitcoin’s little Problem


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A cashless society, a true alternative money, an asset backed currency as opposed to fiat money. That and other hopes filled the jackpot expectations of many. But what is the true value of a crypto currency from a fundamental point of view. Yes, blockchain technology is useful, an elegant solution to securely verify a transaction on decentralized ledgers.
So, using Bitcoin as an example, does it really matter if Bitcoin is traded at $0.1 or $1000’000? Does that momentary perception of market capitalization bear any real meaning? Let’s ask the question differently; what was Bitcoin made for? One might argue it was created to be a currency, indeed to purchase goods and services, to sell goods and services. Is that really taking place? Fact is that it’s real free trading ‘float’, the actual amount of bitcoin that is truly performing it’s function as a currency, is almost insignificant. Most of Bitcoin is locked and bolted in investor wallets. So even the amount available to investors, the amount that is actively traded is formidably thin. This very limited supply in circulation, the limited active float is the basis for this dramatic volatility over the last months.



Going back to the initial statement, does it really matter what Bitcoin is traded at? Not really, what really matters is if Bitcoin is fulfilling it’s true function, namely that of a currency. So far, that part is negligible.
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Crypto Jargon – HODL, ALTCOIN, WHALE


jargonHODL

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In 2013 a message was posted on the Bitcoin Forum. It was meant to express a buy and hold strategy, a strategy that many see as superior to constant flipping as in daytrading.
The HOLD misspelt (allegedly after one too many drinks) and the typo resulting into HODL, now a doctrine of Bitcoin holders and one of the most famous crypto slang memes in coin investment culture.

jargonALTCOIN

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All coins other than BITCOIN are referred to as ALTCOIN. These can include Lightcoin, Ethereum, Ripple and many more. Standing for an alternative to bitcoin, most based on blockchain technology and generally have less market cap than Bitcoin. Altcoins are often forks of Bitcoin and have suffered after the sell off the current ‘Airdrop’ (another jargon describing the distribution of tokens to addresses).

 

jargonWHALE

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This meme is often used to describe the big money Bitcoin investors. Small traders are always on the lookout for whale buying or selling. Wrong judgment by ‘small fish’ could lead to heavy losses, so now whale detector algos are on the watch for whales. Bearwhales can be dangerous since they can cause a significant sell-off.