It is not fair to compare the prices of Gold and Bitcoin: It’s all about market capitalization

Many are comparing the price of Bitcoin to the price of a Gold ounce and conclude that Bitcoin’s price has exceeded the Gold price. But comparing the price of Bitcoin to Gold is entirely misleading. If we would try to give Gold an estimated market capitalization, based on all the Gold that has been mined up to today, we would end up with a total value of about 6.8 trillion EUR or 7.6 trillion USD. Bitcoin’s market capitalization was recently about 38.8 billion EUR (as of June 1, 2017) showing a very clear difference. Comparing Bitcoin’s price to the Gold price underestimates the value (and importance) of Gold by a factor of around 175. So very simply spoken one could argue that, given current market prices, Gold is by factor 175 more important than Bitcoin. Autor: Sergej Stein, Philipp Sandner

The trend of comparing physical commodities to crypto currencies

Possible explanations for this understanding

Let us further briefly try to understand, why the media and many other participants tend to compare Bitcoin to Gold. What are similarities? Both are scarce. With Bitcoin, there only exist 21 million coins that are predicted to be fully mined by the year 2140. Also, creating Bitcoin requires “miners”. We are talking about a digital process of solving mathematical problems and using computational power. With Gold, you use an excavator and literally mine a physical substance from the soil. An important similarity of Bitcoin and Gold is the scarcity; but all other comparisons are misleading and are not a good reason for simply comparing prices.

What matters is the market capitalization of a financial asset and not the price

A better comparison for Bitcoin or any other crypto currency could be related to established metrics:

market capitalization = price per share x shares outstanding

For crypto currencies, we simply multiply the circulating supply of coins with the current market price. Such metrics can also obtained by existing websites providing market overviews. With this measurement, Bitcoin’s market capitalization of 38.8 billion EUR is for example higher than the market capitalization of Deutsche Bank AG (22.7 billion EUR) or higher than Volkswagen (28.2 billion EUR). Given the German stock market index DAX, Bitcoin for a short time had a market capitalization that would allow it to be in the top 10 companies on the list of the 30 DAX companies. Ethereum has a market capitalization of 21.5 billion EUR which is higher than the market capitalization of Commerzbank (11.8 billion EUR) and also higher than Deutsche Börse AG (17.5 billion EUR). Finally, Ripple currently having a market capitalization of 11.5 billion. Therefore, it would rank on position 26 in the German stock index DAX if simply ranked by size of market capitalization.

To summarize, three crypto currencies have a market capitalization that is so significant that it would allow them to be ranked in the German stock market index DAX30 (if simply ordered by market capitalization). Clearly, this shows the significance of Bitcoin, Ethereum and Ripple — but also the hype going on. Can it really be reasonably explained that — by market capitalization — Bitcoin ranks higher than Deutsche Bank? And Ethereum ranks higher than a successful company like Merck KGaA having a solid business, valuable brands and thousands of highly skilled employees?


Do you want to learn more about how blockchain will change our world?

  • Blockchain knowledge: We wrote a Medium article on how to acquire the necessary blockchain knowledge within a workload of 10 working days.
  • Our two blockchain books: We have edited two books on how blockchain will change our society (Amazon link) in general and the everything related to finance (Amazon link) in particular. Both books are available in print and for Kindle — currently in German and soon in English. The authors have been more than 20 well-known blockchain experts in startups, corporations and the government from Germany, Austria, Switzerland and Liechtenstein — all contributing their expertise to these two books.
Our two books: the first one on blockchain and the society and the second one on blockchain and finance


Prof. Dr. Philipp Sandner has founded the Frankfurt School Blockchain Center (FSBC). In 2018 and in 2019, he was ranked as one of the “top 30” economists by the Frankfurter Allgemeine Zeitung (FAZ), a major newspaper in Germany. Further, he belonged to the “Top 40 under 40” — a ranking by the German business magazine Capital. Since 2017, he is member of the FinTech Council of the Federal Ministry of Finance in Germany. The expertise of Prof. Sandner includes blockchain technology in general, crypto assets such as Bitcoin and Ethereum, the digital programmable Euro, tokenization of assets and rights and digital identity. You can contact him via mail ( via LinkedIn or follow him on Twitter (@philippsandner).

Professor | Lecturer | Author | Investor | Frankfurt School Blockchain Center