For most of us, $5 billion might already seem like a fairly huge–and abstract–amount of money. But that number, which happens to be roughly the value of all the Bitcoins in the world today, is a tiny fraction of other markets.
A recent chart from The Money Project attempts to visualize all of the money in the world, from Bitcoin to the mind-bogglingly massive derivatives market, and compares them by size. Each small square on the chart represents $100 billion.
“I think the most interesting aspect of this visualization is the exponential difference in size between these different markets,” says Jeff Desjardins, president of Visual Capitalist, which produces the Money Project. “It really helps to put things into perspective.”
“The size of the whole Bitcoin market ($5 billion) is a blip on the radar compared to the gold market, which is worth 1560 times as much–at $7.8 trillion,” he says. “Yet, the gold market is insignificant when compared to total global debt, which is equal to $199 trillion.”
The chart is designed to help make abstract figures a little more concrete.
“We wanted to create better context for people to understand the amount of money that exists in contrast to other markets they may be more familiar with,” he says. “The numbers that we deal with when we are talking about large amounts of money always sound similar–millions, billions, trillions–but in reality these numbers are orders of magnitude in difference. This juxtaposition isn’t really obvious until we are able to visualize this data in an intuitive way. Then the data speaks for itself.”
The biggest surprise, for anyone not in the financial world, might be the size of the derivatives market. At the low end, it’s estimated at $630 trillion. At the high end, $1.2 quadrillion. (Put another way, that’s more than 1,000 million million, or $1,200,000,000,000,000.)
Derivatives fly under the radar, Desjardins says, because they’ve only been around since the 1970s, and they’re mostly traded by people at hedge funds or investment banks, not individual investors. They’re also hard to understand–they take different forms, but basically, they always get their value from something else, like an option to buy stock or a futures contract for a commodity like corn.
They might be little known, but they played a key role in the last financial crisis. And it’s a little scary to see that on the chart, derivatives dwarf everything else.