Bitcoin has continued its stratospheric rise by smashing through yet another milestone — the circulation of the cryptocurrency is now worth more than the supply of the Australian dollar.
On Monday evening, a pro-Bitcoin account Documenting Bitcoin tweeted that the cryptocurrency that bitcoin’s market cap had overtaken the Aussie currency.
— Documenting Bitcoin ???? (@DocumentingBTC) March 29, 2021
“#Bitcoin is now larger than the Australian Dollar (M1),” the account shared.
What exactly does Bitcoin being ‘larger’ than the Australian dollar (M1) mean?
Let’s start with basics. At any one time, there’s a finite amount of money out there. With both state-based currencies and cryptocurrencies, there are factors that increase (like mining Bitcoin or printing currency) and decrease (currency being destroyed) this amount.
Over the past 24 hours, Bitcoin’s price increased more than 3 per cent. This meant that it’s market cap — which comprises the value of the total number of Bitcoins — is currently sitting at US$1,074,814,630,383.
This is more than the ‘M1’ of the Australian dollar, which currently sits at US$1,079,217,330 according to global finance data firm CEIC.
M1 is a financial term meaning the amount of liquid money that’s currently available, including currency, travellers checks etc. Essentially, it’s the money that you could use right now. It doesn’t include things like savings accounts or bonds.
What does this actually mean? Is Bitcoin about to replace the Australian dollar? Will the Bitcoin symbol become our national emblem? Not much, no and probably not.
However, this is probably little more than a milestone. M1 specifically doesn’t mean that much to economists any more. And market cap numbers don’t mean much compared to how much money is actually circulating around the economy.
But it does provide a sense for just how big Bitcoin and other cryptocurrencies have become. It’s so big that you could now replace every Australian dollar with equivalent Bitcoin value and still have some money left over.