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Economy => Economics => Topic started by: fillippone on October 08, 2019, 09:55:08 AM



Title: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 08, 2019, 09:55:08 AM
Few articles have been so impactful on Bitcoin environment as the one from PlanB.
He tried to model Bitcoin valuation using Stock to Flow approach.
Stock to flow approach is nothing new to financial world, it has long been used in physical commodities; it also was first applied to Bitcoin into his book "The bitcoin Standard", as he used this approach to describe why Bitcoin is a "superior, harder money" when compared to commodities and FIAT money.
PlanB article, has been published later than Saifedean book, but had a major impact: it was specifically oriented to determine Bitcoin Price and had a tremendous effect underlying the importance of halvings for bitcoin.

At the time of publication BItcoin Price was around USD 3,400.

In this thread I will provide an explanation to some of misconceptions about this article, answering a few often posed question, studying criticism to this model and some further development.


Link to original article:

Modeling Bitcoin's Value with Scarcity (https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25)


https://pbs.twimg.com/media/EGMqpGpXUAETacO?format=png&name=4096x4096

Quote
Introduction
Satoshi Nakamoto published the bitcoin white paper 31/Oct 2008, created the bitcoin genesis block 03/Jan 2009, and released the bitcoin code 08/Jan 2009. So begins a journey that leads to a $70bn bitcoin (BTC) market today.
Bitcoin is the first scarce digital object the world has ever seen. It is scarce like silver & gold, and can be sent over the internet, radio, satellite etc.
" As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties: boring grey in colour, not a good conductor of electricity, not particularly strong [..], not useful for any practical or ornamental purpose .. and one special, magical property: can be transported over a communications channel" — Nakamoto

Surely this digital scarcity has value. But how much? In this article I quantify scarcity using stock-to-flow, and use stock-to-flow to model bitcoin’s value.

21 Translations are already available, more will follow (I will add them here).

Chinese  (https://mp.weixin.qq.com/s/Lj1313ND96unxcq98SNlMg)
Croatian  (https://medium.com/@LuxBTC/modeliranje-vrijednosti-bitcoina-na-temelju-njegove-rijetkosti-6538e31080c3)
Czech  (https://medium.com/@figyfaldaa/ur%C4%8Den%C3%AD-hodnoty-bitcoinu-na-z%C3%A1klad%C4%9B-jeho-vz%C3%A1cnosti-7c7a82a41f38)
Dutch (https://medium.com/@lekkercryptisch/modelleren-van-de-waarde-van-bitcoin-met-schaarste-e9a7418b5f3c)
French  (https://medium.com/@PaulAdW/mod%C3%A9liser-la-valeur-de-bitcoin-gr%C3%A2ce-%C3%A0-la-raret%C3%A9-version-fran%C3%A7aise-dccfcb076839)
Frisian  (https://medium.com/@MyLegacyKit/de-wearde-fan-bitcoin-modellen-mei-knapperheid-41cafea7b06e)
German (https://medium.com/@david.andlinger.privat/modellierung-von-bitcoins-wert-mit-stock-to-flow-fe706e7eeac9)
Greek  (https://medium.com/@GeorgeTProfit/ypologizontas-tin-axia-tou-bitcoin-vasei-spaniotitas-528ef80d7bf)
Gujarati (https://medium.com/translation-of-modeling-bitcoins-value-with/%E0%AA%85%E0%AA%9B%E0%AA%A4-%E0%AA%B8%E0%AA%BE%E0%AA%A5%E0%AB%87-%E0%AA%AC%E0%AA%BF%E0%AA%9F%E0%AA%95%E0%AB%8B%E0%AA%87%E0%AA%A8%E0%AA%A8%E0%AB%81%E0%AA%82-%E0%AA%AE%E0%AB%82%E0%AA%B2%E0%AB%8D%E0%AA%AF-%E0%AA%AE%E0%AB%8B%E0%AA%A1%E0%AB%87%E0%AA%B2%E0%AA%BF%E0%AA%82%E0%AA%97-fce5cf53bebf)
Indonesian  (https://medium.com/cryptowatchasia/menghitung-nilai-bitcoin-berdasarkan-sifat-kelangkaannya-cd00d8c6c59f)
Italian  (https://medium.com/@carloclerici/il-concetto-di-scarsita-nella-determinazione-del-valore-di-bitcoin-c716c0ad3fff)
Japanese  (https://medium.com/@leriansfield/%E5%B8%8C%E5%B0%91%E6%80%A7%E3%81%AB%E5%9F%BA%E3%81%A5%E3%81%84%E3%81%9F%E3%83%93%E3%83%83%E3%83%88%E3%82%B3%E3%82%A4%E3%83%B3%E4%BE%A1%E5%80%A4%E3%81%AE%E3%83%A2%E3%83%87%E3%83%AB%E5%8C%96-f060486f2508)
Korean  (https://medium.com/@soulbitcoin1209/%ED%9D%AC%EC%86%8C%EC%84%B1%EC%9D%84-%ED%86%B5%ED%95%9C-%EB%B9%84%ED%8A%B8%EC%BD%94%EC%9D%B8-%EB%AA%A8%EB%8D%B8%EB%A7%81-modeling-bitcoins-value-with-scarcity-942ceb287d5b)
Norwegian  (https://kryptografen.no/2019/07/16/knapphet-bestemmer-verdien-pa-bitcoin/)
Polish  (https://medium.com/@ztzawislak/modelowanie-warto%C5%9Bci-bitcoina-za-pomoc%C4%85-rzadko%C5%9Bci-739316b6e18a)
Portuguese (https://medium.com/@mmouta/modelo-matem%C3%A1tico-do-valor-da-bitcoin-com-base-na-escassez-4846c5d3f3f1)
Romanian  (https://medium.com/@AndreiStroescu1/evalu%C3%A2nd-bitcoin-bazat-pe-raritatea-sa-2ff052d7c44a)
Russian  (https://medium.com/@Tony_B/%D0%BC%D0%BE%D0%B4%D0%B5%D0%BB%D0%B8%D1%80%D0%BE%D0%B2%D0%B0%D0%BD%D0%B8%D0%B5-%D1%86%D0%B5%D0%BD%D0%BD%D0%BE%D1%81%D1%82%D0%B8-%D0%B1%D0%B8%D1%82%D0%BA%D0%BE%D0%B8%D0%BD%D0%B0-%D1%81-%D1%83%D1%87%D0%B5%D1%82%D0%BE%D0%BC-%D0%B4%D0%B5%D1%84%D0%B8%D1%86%D0%B8%D1%82%D0%B0-3fcb10890999)
Slovenian (https://medium.com/@thepkbadger/modeliranje-vrednosti-bitcoina-na-osnovi-redkosti-7197ccdaf36c)
Spanish (https://medium.com/@jsanzsz/valorando-bitcoin-en-funci%C3%B3n-de-su-escasez-9828dd9c197)
Turkish (https://medium.com/@oguzhu12/bitcoin-de%C4%9Ferinin-nadirlik-ile-modellenmesi-965d07b0fcda)


Live Stock to Flow Price:
Bitcoin stock to flow model live chart (https://digitalik.net/btc/)

https://i.imgur.com/O4RrHHF.jpg

Live Stock to Flow dashboard:
Bitcoin SF Analysis (https://public.tableau.com/profile/hansolar#!/vizhome/BitcoinSFAnalysis/BTCValueSFModel?publish=yes) by @hansolar21

https://i.imgur.com/UeYw0T7.jpg

F.A.Q.

there are a lot of question about the Stock to Flow Model. Many of those have already been answered in the many podcast (reference after the answer). I will copy there the most recurring ones, I will use PlanB words to descrive the answer, adding some considerations of mine in case it's required.


Q1.
Quote
Stephan Livera: I guess the other factor here to think about is that in practice what happens is markets can swing, or it can overshoot and then undershoot. Can you discuss that a little bit?

A1.
Quote
PlanB: Absolutely. Maybe when we talk later about the model itself, you’ll see it doesn’t have an accuracy of 100%, of course, because it’s a model; so all those FOMO actions and bull markets and bear fear, it’s all not in there, and you see that in the chart as well. So, the model price is very simple, based on stock-to-flow; but the actual market, of course, where fear and greed are playing out, so it overshoots and undershoots. Usually, what you see… “usually,” I mean the last two times… is that the market overshoots 3-10x the model value, but undershoots 50% maximum, so that’s one of the reasons why I thought, “Okay, if we’re at a model value today of a little above $6000, 50% of that $3000 should be the bottom of current bear market. But, yeah, that’s how I see it.
SLP67


Q2.
Quote
Oh, is the halving priced in?” and I think this does speak on where you stand on other debates; for example, the efficient market hypothesis. So, as an Austrian, and even Saifedean himself I think has made a similar comment on this saying, “Look, knowledge is not given to everyone equally, and so we should not anticipate that what might be called the strong form of the EMH, or even perhaps the weak form of the EMH, is not a good way to think about things,” but then there are others from the Chicago School and other schools of thought that may believe in that more. Where do you side on that?

Quote
PlanB: That’s a very interesting point. Actually, that’s one of my first charts, the halving chart with the color overlay; it shows the Bitcoin price with the months until the next halving; and you can clearly see from that chart that the halving is not priced in, or at least was not priced in the last two times. So, my best guess would be it is not priced in now, next halving May 2020, but the efficient market hypothesis. It’s kind of weird. It should be priced in, of course. In fact, I’m a big believer of the efficient market hypothesis, or at least it should be used as a first starting point for most people that don’t have inside information, or specialized knowledge, or a big trading room available. The efficient market price is the best price there is, they can rely on that, and that’s especially true if markets are really big and liquid and efficient, and I think that’s true for the Bitcoin, in a sense. It’s like an $80 billion market.
SLP67



Q3.

Quote
Stephan Livera:[...]“Oh, can you apply the stock-to-flow analysis or modeling to Altcoins?” [...]"

Quote
PlanB: Right, yeah. That’s the most frequently asked question that I got, can you make a stock-to-flow model for Litecoin or B Cash or Ethereum. So let’s dive a little a little bit deeper there. The thing with a stock-to-flow analysis indeed is it’s based on unforgeable costliness. So maybe go one step back for our first-time listeners. Stock-to-flow is stock or the reserves or something like Bitcoin 17 million, almost 18 million in stock, and that’s divided by flow, so stock-to-flow, and flow is the protection. And that’s about 0.7 million bitcoins per year at the moment. And if you divide those two, you get the number 25, and 25 is the stock-to-flow number for Bitcoin.

PlanB: And it’s not just a number, I mean I called it scarcity, a quantitative measure of scarcity in the article, but really the key of stock-to-flow is the inability of production to inflate the stock. If the stock is large enough and the production is kept or restricted somehow then the production and the producers are enabled to inflate the stock. And we know what kind of problems you get when certain individuals or companies, or governments can inflate stock. Look at Zimbabwe for example where Mugabe can print, and did print as many Zimbabwe dollars as he wanted, and with disastrous effects for the economy. And the same with Maduro in Venezuela. And you could say the same from the dollar, and the Euro at the moment as well with quantitative easing. They’re printing… I’m not allowed to say printing, but creating electronic dollars, and Euros, and Yens to bail out banks, and whole economies.

PlanB: So the inability of production to inflate the stock that’s what stock-to-flow really is about to prevent things that we see in fiat currencies in Zimbabwe and Venezuela, and currently in quantitative easing. So if we apply that to crypto, if you like, then the thing like decentralization becomes very important. If one person, one company or a country can decide to change the monetary policy, it’s not decentralized. The producer, this person or government, or company can, it will be able to make more coins and inflate the stock.

PlanB: For example, take Ripple. The CEO of Ripple can premine another hundred billion ripples if he wanted that. And if you look at Ethereum as well, there was no cap on the supply of Ethereum, and now they changed that. So they’re changing the money supply. It’s not what it was or what it will be, the money supply, but the fact that they can change it is… Well, that’s the thing I would be worried about as an investor. And that’s totally different in Bitcoin. Bitcoin, you have this truly peer-to-peer network with many nodes, and you can verify the money supply yourself. You’re not dependent on a third-party like a bank or company, or a data center to tell you how much the money supply is.

PlanB: You cannot change the money supply or change that magic 21 million coins number, and if you do you’re basically hard-forking away from Bitcoin. And, yeah, I guess nobody will follow you. A bit like Bitcoin Cash with the big blocks. Yeah, but you can do it, but don’t expect people to follow you. Maybe a last thing to mention is that that on the theoretical side of stock-to-flow on Altcoins, money has to be hard to produce, expensive like gold. So there’s lots of gold in the oceans, and I even read this article about the asteroid, the golden asteroid recently.

PlanB: It would be very expensive to mine that gold in the ocean or asteroids, and that prevents it from happening, I guess. And the same for Bitcoin. It has a hash-based proof-of-work with a very high hash rate. So it costs a lot of electricity to mine bitcoins, and that’s totally different for a lot of Altcoins of course. So for example, Ripple again has no proof-of-work or Bitcoin Cash has almost no hash rate, so no security. Again, that would make me a little bit nervous as an investor, and people who’d like to know more about this, it was Nick Szabo who invented the term, and described the unforgeable costliness in great lengths. So make sure you read that all.

PlanB: On top of this theoretical argument of unforgeable costliness, I decided a bit against my will, but because there was so much demand to model Altcoin’s with stock-to-flow. Just to see if practically it would be possible to do it. And that’s in fact one of the strains of research I’m working on right now with a team of quants. And I can tell you a little bit already what the result is, and I tweeted a little bit about that as well. They all have very low R-squares, so the models don’t really fit very well. For example, Litecoin which is very interesting because the halving is very soon. Litecoin has an R-squared of 32%. That’s versus Bitcoin 95%. 32 is really low. It basically says there is no relationship there. The same with Ethereum around 50% R-squared. Coins like DCR, Decred. I don’t know how you pronounce it properly, but 0% R-squared.

PlanB: So the theoretical argument of unforgeable costliness already makes you expect that it is not possible, but if you actually do the work and make the stock-to-flow models the outcomes are not very good. [...]
SLP86

A few SF graph for altcoins: clearly there's a lack of correlation (and cointegration) between SF and value:

https://pbs.twimg.com/media/D8itSoMXYAA3tNw?format=png&name=900x900https://pbs.twimg.com/media/D8itUJBXkAAmtT_?format=png&name=900x900

Q4

Quote
Stephan Livera: Yeah, it’s fascinating stuff. And this table that you’ve got, so you think, so just for the listeners, it’s showing the year, the halving, and the model predicted price. So as you said 50,000, 400,000, and then 3.2 million for the 2028 halving. Now, to the extent that stock-to-flow modeling works, so again caveat, this is not economic law, it’s some sort of modeling, but to the extent that the modeling works. Do you have any reflections on how many cycles we could anticipate this working for?

Quote
PlanB: Yeah, that’s also a discussion on Twitter, lots of questions about exactly this infinite value if you wish. If you follow the table, we could go all the way to 2140 when the flow is zero, when there’s no more new bitcoins, only fees. And the theoretical value how to stock to flow model would be infinite. So how can that be? And basically I think this is a very theoretical argument. And I’m a very practical guy. So if I look at the next three halvings alone. So we’re now at, say, 100, $200 billion market. Every halving this market goes 10X. So after 2020, we go to one trillion, after ‘24 we go to 10 trillion. And after ’28, so the third halving we go to a 100 trillion US dollars, hence my name, my Twitter handle.

PlanB: I think that we don’t have to wait until 2140 before the model breaks or before something breaks. I think we’ll be there sooner than we think. I think we’ll be there well, maybe 24. Somewhere between 24 and 2028 because 10 to $100 trillion Bitcoin market that’s enormous if you compare it to the US dollar for example. It has a monetary base of three trillion, and I think an M2 of about 12 or 14 trillion. So then that means that somewhere between 2024 and 2028, bitcoin is bigger than the US dollar. It basically means the US dollar will die, and we’ll be measuring things in Bitcoin.

Stephan Livera: Very bullish.
SLP86

Here the image detailing what they were referring to:

https://pbs.twimg.com/media/EAjO7XrXUAAwh-u?format=png&name=small
 Twitter link (https://twitter.com/100trillionUSD/status/1155400826002771968?s=20)


When Satoshi picked the 21 millions as the total cap to BTC supply made some assumptions on the total money supply, and figured out that if this limit was equalled by Bitcoin, then a satoshi, the minimum unit of bitcoin, a would have been worth  a singe cent, the minimum practical unit of account. This backwardly
then a single bitcoin would have been worth one million.
For Bitcoin to appreciate beyond this limit of course we need the dollar to lose value: beyond a certain level it is not bitcoin appreciating, it's dollar losing value in real term. When bitcoin will be at 3,200,000 USD maybe a liter of milk will be at 50 USD: we will be measuring the prices with a shorter and shorter meter.

Stock to Flow model independent review:

  • Quantifying Uncertainty In The Bitcoin Stock To Flow Model (https://e-string.com/articles/bitcoin-stock-to-flow-uncertainty/)
    Quote
    The linear regression of the log of the values seems reasonable but the uncertainty (variability / error) large enough, especially when brought back to a linear scale, that it makes it difficult to make useful specific predictions. Then again, that alone is useful information.

  • Falsifying Stock-to-Flow As a Model of Bitcoin Value (https://medium.com/@phraudsta/falsifying-stock-to-flow-as-a-model-of-bitcoin-value-b2d9e61f68af)

    Quote
    This article explores if there is a stock-to-flow relationship to Bitcoin value. The proposed log-log model is tested for statistical validity against the least squares assumptions, for stationarity in each variable and for potential spurious relationships. A Vector Error Correction Model (VECM) is built and tested against the original stock-to-flow model. Whilst some of these models out-compete the original model in terms of Akaike Information Criteria, all of them fail to reject the hypothesis that stock-to-flow is an important non-spurious predictor for the value of Bitcoin.


Podcasts where PlanB discusses his article:

  • What Bitcoin Did: Plan₿ on Bitcoin’s Stock to Flow (https://www.whatbitcoindid.com/podcast/plan-on-bitcoins-stock-to-flow)
  • Stephan Livera Podcast #86 PlanB – Frontrunning the Bitcoin Halvening? (https://stephanlivera.com/episode/86/)
  • Stephan Livera Podcast #67 PlanB – Modelling Bitcoin digital scarcity through Stock-to-flow Techniques (https://stephanlivera.com/episode/67/)

Stock to Flow appearances in other contexts:

  • State-Backed German Bank Says Bitcoin Will Leap to $90,000 in 2020 (https://cointelegraph.com/news/state-backed-german-bank-says-bitcoin-will-leap-to-90-000-in-2020)

    Quote
    The German bank BayernLB has published a report on Bitcoin (BTC) versus gold, in which it predicts a big leap for the cryptocurrency in 2020.

    Bitcoin outshining gold?
    On Oct. 1 the Munich-based, state-owned bank published its latest research report that seems to suggest that the forthcoming Bitcoin halving effect is yet to be factored into its current price of about $8,300.

    The financial institution explained that gold had to earn its high stock-to-flow ratio “the hard way over the course of millennia.” Bitcoin on the other hand will most likely succeed to obtain a similar stock-to-flow ratio to that of gold in the coming year, the report predicts.



Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Gyrsur on October 08, 2019, 10:00:22 AM
beautiful! out of sMerit currently.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: buwaytress on October 08, 2019, 10:19:12 AM
Wasn't a German bank last week also using a stock to flow model to relate the hardness of Bitcoin (in comparison to the hardness of gold). Saw the piece of news trawling the usual sites a few days ago, but it headlined with a $90k valuation by May 2020, so yeah, maybe needed a lot of tweaking. The researchers did admit they hadn't priced in halving though, but I fear to see what 6-figure digit that would have brought up to surface!


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Gyrsur on October 08, 2019, 10:52:30 AM
Wasn't a German bank last week also using a stock to flow model to relate the hardness of Bitcoin (in comparison to the hardness of gold). Saw the piece of news trawling the usual sites a few days ago, but it headlined with a $90k valuation by May 2020, so yeah, maybe needed a lot of tweaking. The researchers did admit they hadn't priced in halving though, but I fear to see what 6-figure digit that would have brought up to surface!

this news here? --> https://cointelegraph.com/news/state-backed-german-bank-says-bitcoin-will-leap-to-90-000-in-2020


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: teosanru on October 08, 2019, 11:31:59 AM
Well this is excellent! I never thought this modelling value of Bitcoin. Anyone not interested in the text here and want's to understand this video can watch this youtube video right here
https://www.youtube.com/watch?v=1VSqBxPi4Ww (https://www.youtube.com/watch?v=1VSqBxPi4Ww)

It beautifully explains that article from where OP got the idea of this modelling. So basically if we look upon this ideology Bitcoin currently is overpriced but the current prices also include the effect of the forces of demand and supply so price seems genuine to me. But more importantly soon it can be much more expensive than Gold as an asset.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: mu_enrico on October 08, 2019, 03:34:32 PM
Finally something new and worth to read. I'm not familiar with this "stock to flow" in Finance. Let's see what this is about:

Oh, it's basically a measure of scarcity, by looking at the "world inventory" and the amount produced annually.
https://monetary-metals.com/gold-economics/lexicon/?mmdesc=stock-to-flow-ratio#stock-to-flow-ratio

This model should suffice for an academics paper (at least in my country). However, it might not get an accurate result for forecasting. It still utilizes historical data, right?
For forecasting purposes, however, this model can be used as one out of many models and assumptions.

The good news is, as Satoshi said, if you can get enough people to believe this model, it will be a self-fulfilling prophecy.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 08, 2019, 03:36:53 PM
<snip>
This model should suffice for an academics paper (at least in my country). However, it might not get an accurate result for forecasting. It still utilizes historical data, right?
For forecasting purposes, however, this model can be used as one out of many models and assumptions.

The good news is, as Satoshi said, if you can get enough people to believe this model, it will be a self-fulfilling prophecy.


Good news is: somebody already thought of it, and tested.

Actually the author himself did it.

What if, instead of using all the available data to fit the model, we use only the Oct yearly Data on 2009-2012 (4 points), so before the first halving? We use those 4 points  we fit the model and then we compare it with the actual data 7 out of sample data points (Oct 2012- Oct 2019).

The result is the following:

https://pbs.twimg.com/media/ED3ha7oXoAAg6pJ?format=png&name=4096x4096

Quote
The main model is fit on 111 monthly data points: $55K 95% R2.

This simple model is fit on only 4 Oct month data points: $100K 99.5% R2 and great out of sample fit.

https://twitter.com/100trillionUSD/status/1151952837607342080?s=20


99.5% means there's no chance the model is wrong about the correlation.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: bkbirge on October 08, 2019, 05:58:00 PM
Another great fillippone thread, would sMerit but out, so a 1000 virtual merits to you sir.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: scambust on October 08, 2019, 06:38:45 PM
And I thought there is nothing new to learn about trading cryptocurrencies. Thanks, I bookmarked 100trillionUSD's medium post for further study. It was always in the back of my mind that stocks/securities have price to earning ratio while cryptocurrencies obviously doesn't have one and what metric could be  applied to coins in a similar fashion.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: mu_enrico on October 08, 2019, 07:34:24 PM
@fillippone thanks for the serious response.

In the time series analysis, you can divide the period into (1) in-sample period and (2) post-sample or out-of-sample period. I have no problem with the (1) in-sample period if the model is statistically significant. In this case, the Stock To Flow Model can be presented and discussed to underline the scarcity, halvings, as you said, but only for 2009 - present (up to the model generated).

This post https://bitcointalk.org/index.php?topic=5191012.msg52693516#msg52693516 also about the in-sample period or in-sample forecast.

For forecasting (let's say 2020 or 2025), we deal with (2) the post-sample period. This is when "uncertainties" come to play. If every relationship stays the same, we can expect that this model can accurately predict future BTC prices. However, in economics, that's not possible since the world is continuously changing.

Suggested reading:
https://stats.stackexchange.com/questions/260899/what-is-difference-between-in-sample-and-out-of-sample-forecasts
https://people.duke.edu/~rnau/three.htm


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 08, 2019, 07:45:57 PM


This post https://bitcointalk.org/index.php?topic=5191012.msg52693516#msg52693516 also about the in-sample period or in-sample forecast.



In the attached post:
In-sample size is 4 (yearly October Data 2009-2012 - before first halving).
Out of sample size is 7 (yearly October Data 2013-2019 ).

This model was only deemed to show that with only 4 data you already get the stock to flow dynamics and you can correctly predict 2019 prices using only 2009-2012 data!

It is a different model from the full model that took in account I believe 111 monthly data points between 2009 and 2019 (r2 is also different).




Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: mu_enrico on October 08, 2019, 07:54:09 PM
It is a different model from the full model that took in account I believe 111 monthly data points between 2009 and 2019 (r2 is also different).
Okay, then you have a good case about this model's ability to forecast.
However, careful about "overfitting" and let's see about it in the next few years :)


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 10, 2019, 09:31:51 AM
It is a different model from the full model that took in account I believe 111 monthly data points between 2009 and 2019 (r2 is also different).
Okay, then you have a good case about this model's ability to forecast.
However, careful about "overfitting" and let's see about it in the next few years :)

Again, the author explored this possibility, and found some nice evidence:

Quote
I am aware of the potential dangers of backward fitting and over fitting. However, the #bitcoin S2F model doesn't seem to have that problem.

https://pbs.twimg.com/media/D-9sLXCXYAAcmt1?format=png&name=large

https://twitter.com/100trillionUSD/status/1148255654051794944?s=20


As you can see, taking different subset of sample points, doesn't change dramatically the model: hence overfitting hypothesis can be safely discarded.
This is very important, imho, you were right pointing to this as a potential invalidating point for the model, but this can be safely dismissed.





Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: mu_enrico on October 10, 2019, 10:06:21 AM
Thanks! I have put your findings here on my local board.
https://bitcointalk.org/index.php?topic=903836.msg52711931#msg52711931

You did an excellent job presenting the proof and discuss humanely. I like it when people don't get triggered or rude when challenged. I don't have a problem with the model, but at the same time, not saying that the reality will conform to the model. That's what skeptics do ;D


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 10, 2019, 10:26:47 AM
Thanks! I have put your findings here on my local board.
https://bitcointalk.org/index.php?topic=903836.msg52711931#msg52711931

You did an excellent job presenting the proof and discuss humanely. I like it when people don't get triggered or rude when challenged. I don't have a problem with the model, but at the same time, not saying that the reality will conform to the model. That's what skeptics do ;D

Thank you.
I like to discuss this model, because I am desperately trying to find a reason why it fails.
Because otherwise it's too easy to make money on the back of this!
So any doubt is welcome, as allows me to better understand the model itself.
The consequences of this models are imho, beyond our understanding (getting to a BTC valuation of millions is going to break many things).


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: hatshepsut93 on October 10, 2019, 09:20:10 PM
I like to discuss this model, because I am desperately trying to find a reason why it fails.
Because otherwise it's too easy to make money on the back of this!
So any doubt is welcome, as allows me to better understand the model itself.
The consequences of this models are imho, beyond our understanding (getting to a BTC valuation of millions is going to break many things).


The last time I saw this model, I noticed that it just approaches infinity as Bitcoin's stock flow  approaches zero, so obviously it will break at some point - https://bitcointalk.org/index.php?topic=5183373.msg52414987#msg52414987

The author also realizes it, judging from his Q4 in your OP, so really it's just a question of how soon this model will break - in a few years, in 4-8 years, or maybe it has already failed?

https://imgs.xkcd.com/comics/extrapolating.png


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 10, 2019, 10:22:00 PM
I like to discuss this model, because I am desperately trying to find a reason why it fails.
Because otherwise it's too easy to make money on the back of this!
So any doubt is welcome, as allows me to better understand the model itself.
The consequences of this models are imho, beyond our understanding (getting to a BTC valuation of millions is going to break many things).


The last time I saw this model, I noticed that it just approaches infinity as Bitcoin's stock approaches zero, so obviously it will break at some point - https://bitcointalk.org/index.php?topic=5183373.msg52414987#msg52414987

The author also realizes it, judging from his Q4 in your OP, so really it's just a question of how soon this model will break - in a few years, in 4-8 years, or maybe it has already failed?

https://imgs.xkcd.com/comics/extrapolating.png
This is a very interesting question.

First of all, also thank you for letting me know that someone already opened a thread on the same article, I searched on the forum, but I wasn’t able to find it, so I will write a comment also there.

Then a little typo you made: SF go to infinity because the FLOW goes to zero, not the stock, which instead goes asintotically to 21 millions.

Lastly, the author recognise that BTC cannot go to the millions without something breaking. But the point is it’s not the model to break, but the numeraire of the model, the unit of measure of the model, I.e. the dollar!
As I wrote above it’s not the BTC gaining value versus the dollar, it will be the dollar losing value versus everything.

Regarding the possibility the mode has already failed: negative. Actual BTC  price is still well in line with the model price, so it still working.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: hatshepsut93 on October 10, 2019, 10:51:43 PM
This is a very interesting question.
First of all, also thank you for letting me know that someone already opened a thread on the same article, I searched on the forum, but I wasn’t able to find it, so I will write a comment also there.

Don't worry, your thread is much deeper, so it shouldn't count as a duplicate.

infinity because the FLOW goes to zero, not the stock, which instead goes asintotically to 21 millions.

Lastly, the author recognise that BTC cannot go to the millions without something breaking. But the point is it’s not the model to break, but the numeraire of the model, the unit of measure of the model, I.e. the dollar!
As I wrote above it’s not the BTC gaining value versus the dollar, it will be the dollar losing value versus everything.

Regarding the possibility the mode has already failed: negative. Actual BTC  price is still well in line with the model price, so it still working.

I don't get how a model based on Bitcoin's supply can predict that the US dollar would lose so much value that it would actually spiral into a Zimbabwe-like inflation. Despite Bitcoin being a huge part of my savings, I would actually hate to see it happen, as it would mean a disaster for global economy.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: BigBoy89 on October 10, 2019, 11:38:51 PM
I'm always wondered why people are applying some mathematical models, stocks signals and so on on a very very speculative active like Bitcoin?!
It was interesting to read... as fiction. It's pointless. People see a 100M transaction and the price is dropping 10%. By pure speculations.

IMO articles like OP are irrelevant to the Bitcoin and other altcoins where prices are driven by specula and specula only.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: mu_enrico on October 11, 2019, 03:24:20 AM
I like to discuss this model, because I am desperately trying to find a reason why it fails.
Because otherwise it's too easy to make money on the back of this!
Very well, mate.
I don't see economics-related discussion on this thread, the question is, do tech enthusiast here learn economics?

1. The Assumption
Let's see about the equation
Price = 0.4*SF^3 translate: constant*SF^constant, the author is saying that the only variable matters in price/value discovery is Stock-to-flow. This is conceptually wrong since many things affect the price/value discovery. What if the world economy is in a recession? Is it a coincidence that there is no global recession in the past ten years.

Is it make sense to include: economic growth, inflation rate, risk-free rate?

2. Model fit data or Data fit model?
Ideally, the researcher changes the models to fit the data. However, it's often difficult without "data treatment." Thus, in my limited observation, researchers tend to do the opposite, transforming the data to fit the model.

I'm one of the "don't transform your data" kind of guy.

3. Real-world problem
The data capture real-world dynamics up to 2019 (assumed that the market is efficient). Therefore, if the researcher creates a model about it, he will find a model that captures the dynamics, well... up to 2019. The dynamics will certainly change in the future, thus making the model invalid for forecasting.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 11, 2019, 09:54:40 AM
I will try to answer all your question, limited to my understanding of the model.

IMO articles like OP are irrelevant to the Bitcoin and other altcoins where prices are driven by specula and specula only.

1. The Assumption
Let's see about the equation
Price = 0.4*SF^3 translate: constant*SF^constant, the author is saying that the only variable matters in price/value discovery is Stock-to-flow. This is conceptually wrong since many things affect the price/value discovery. What if the world economy is in a recession? Is it a coincidence that there is no global recession in the past ten years.

Is it make sense to include: economic growth, inflation rate, risk-free rate?

Model R^2 is 95%: the model has a correlation of 95% with actual data. All other factors than SF, speculation included have an impact on the BTC valuation, but they account only for the residual 5% of the value. So, including them in this model (how?) only increases the forecasting capabilities of 5%. I think we can agree it's not worth the effort.
Regarding BigBoy89 observation I would add that the above consideration is for Bitcoin only. For altcoins I don't knwo what is driving the price, not SF for sure.

 
2. Model fit data or Data fit model?
Ideally, the researcher changes the models to fit the data. However, it's often difficult without "data treatment." Thus, in my limited observation, researchers tend to do the opposite, transforming the data to fit the model.

I'm one of the "don't transform your data" kind of guy.
All the data are publicly available and open to scrutiny on PlanB github (https://github.com/100trillionUSD/bitcoin). material errors have been found in the past, and author has been ready to adjust his model accordingly 8e.g. Silver stock to flow).
 

3. Real-world problem
The data capture real-world dynamics up to 2019 (assumed that the market is efficient). Therefore, if the researcher creates a model about it, he will find a model that captures the dynamics, well... up to 2019. The dynamics will certainly change in the future, thus making the model invalid for forecasting.

As I showed above, analysing data before the first halving , data collected in 2009-2012, correctly predicts price in 2019. Of course dynamics can change after 2019, but I guess that if it held during the wild ride from zero to 10K, it is probably going to stay strong in the future.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 15, 2019, 04:55:30 AM
Another tweet by PlanB detailing the Power Law Relationship:


Quote
A stock-to-flow 100 asset, being worth less than gold ... is like a planet 100 astro units from the sun, rotating faster around the sun than Pluto

https://pbs.twimg.com/media/EGyiGtOX0AE2kZv.pnghttps://pbs.twimg.com/media/EGyiGtvXYAUTIye.png

https://twitter.com/100trillionusd/status/1183499046935322624?s=21


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 17, 2019, 02:56:42 PM

Quote
We are at about 6 months before May 2020 #bitcoin halving.

In 2012 btc jumped from $5 to $12 (2.3x) in those 6 months before the halving. In 2016 btc jumped from $350 to $650 (1.7x).

https://pbs.twimg.com/media/EG_ig7mW4AAk_JG?format=png&name=900x900

https://twitter.com/100trillionusd/status/1184414286292160513?s=21

I think 2020 halvening will unfold differently from the pas ones, so I think it is hard to expect price to follow exactely the same part of 4 years ago.
The thing is that given the fact that PlanB published his work, a lot more people is looking at halvening, and the impact it is having on price via the SF ratio.
Lot of more professional investors are now in the arena, compared to 4 years ago.
So I would expect more people actually buying before the halvening, hence the post halvening bull run should be front run with a pre halvening bull run.
So, next months are critical!

Positive way of thinking: halving is not priced in yet: you can bargain BTC now!
Negative way of thinking: halving is priced in and there won’t be any rally for four years. Model has failed.

This is the big bet for 2020: if we will not have a very strong bull run, at later 12 months after the halvining thane the model will have failed. And this is going to push the price lower almost forever.
Otherwise brace yourself for moon.



Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Dabs on October 17, 2019, 03:48:18 PM
So. Um. TL;DR = 2023 $100k, 2028 $1m ? And some numbers in between. More or less.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: bustedsynx on October 17, 2019, 04:00:19 PM
fillippone, I've been looking everywhere on the posts of PlanB - his tweets, his Medium posts. There was a prediction that sometime before or after the halving in May next year, he predicted the BTC price will be $50,000. Could you explain in layman's terms how he arrived with that number?


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 17, 2019, 04:03:55 PM
So. Um. TL;DR = 2023 $100k, 2028 $1m ? And some numbers in between. More or less.

An image is worth a thousand words.

https://pbs.twimg.com/media/EAjO7XrXUAAwh-u?format=png&name=small
 Twitter link (https://twitter.com/100trillionUSD/status/1155400826002771968?s=20)

Every halving multiplies BTCUSD by a factor of 8.

fillippone, I've been looking everywhere on the posts of PlanB - his tweets, his Medium posts. There was a prediction that sometime before or after the halving in May next year, he predicted the BTC price will be $50,000. Could you explain in layman's terms how he arrived with that number?

He noted that there is a correlation, a very high correlation, between the Stock to flow ratio and price. Stock is the total of Bitcoin ever mined, flow is the Bitcoin production via flow. This relationship holds since 2009-2012(even before first halving, and still valid today), and never overshoot price of more than 100% (price was neve below 50% of model value) and never underestimated more than 300% (price was never 3 time bigger than model price). So it was a little bit conservative.
If you put model parameters into the SF at halving in May 2020 you get a price of 50,000 BTCUSD. As simple as that.
 


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: bkbirge on October 17, 2019, 05:15:40 PM
So. Um. TL;DR = 2023 $100k, 2028 $1m ? And some numbers in between. More or less.

An image is worth a thousand words.

https://pbs.twimg.com/media/EAjO7XrXUAAwh-u?format=png&name=small
 Twitter link (https://twitter.com/100trillionUSD/status/1155400826002771968?s=20)

Every halving multiplies BTCUSD by a factor of 8.

fillippone, I've been looking everywhere on the posts of PlanB - his tweets, his Medium posts. There was a prediction that sometime before or after the halving in May next year, he predicted the BTC price will be $50,000. Could you explain in layman's terms how he arrived with that number?

He noted that there is a correlation, a very high correlation, between the Stock to flow ratio and price. Stock is the total of Bitcoin ever mined, flow is the Bitcoin production via flow. This relationship holds since 2009-2012(even before first halving, and still valid today), and never overshoot price of more than 100% (price was neve below 50% of model value) and never underestimated more than 300% (price was never 3 time bigger than model price). So it was a little bit conservative.
If you put model parameters into the SF at halving in May 2020 you get a price of 50,000 BTCUSD. As simple as that.
 

So if I understand that correctly then we can bound the table s.t. next halving could see price as low as $25,000 and not quite as high as $150,000?


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 17, 2019, 05:21:24 PM
Correct.
Of course all due and usual disclaimers apply.
Not financial advice, DYOR....etc.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: bkbirge on October 17, 2019, 05:25:32 PM
Correct.
Of course all due and usual disclaimers apply.
Not financial advice, DYOR....etc.


Sure, no worries, not planning buys or sells based on this, just trying to understand the model assumptions and bounds.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Dabs on October 17, 2019, 05:39:55 PM
No need to over think it. Just buy and buy until you can't. In 10 years, BTC is worth $3.2m... If it's less, that's still not so bad, but it will probably be higher than what ever price you buy today.

So, did some napkin math and it looks like, more or less, doubling every year.

2020    $50,000.00
2021~2022    $100,000.00
2022~2023    $200,000.00
2024    $400,000.00
2025~2026    $800,000.00
2026~2027    $1,600,000.00
2028    $3,200,000.00


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: exstasie on October 17, 2019, 05:54:10 PM
He noted that there is a correlation, a very high correlation, between the Stock to flow ratio and price. Stock is the total of Bitcoin ever mined, flow is the Bitcoin production via flow. This relationship holds since 2009-2012(even before first halving, and still valid today), and never overshoot price of more than 100% (price was neve below 50% of model value) and never underestimated more than 300% (price was never 3 time bigger than model price). So it was a little bit conservative.
If you put model parameters into the SF at halving in May 2020 you get a price of 50,000 BTCUSD. As simple as that.

The model definitely leans to the conservative side. It's limiting in the same way the historic logarithmic trend is. BTC may end up bucking both trends for that reason because they don't account for the possibility that adoption will follow an S curve. (https://en.wikipedia.org/wiki/Diffusion_of_innovations)

Chances are that price won't keep neatly following these patterns. Once patterns become too obvious, markets begin front running them, so these price dynamics may accelerate over time ahead of the stock-to-flow ratio.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: JayJuanGee on October 17, 2019, 06:28:09 PM
No need to over think it. Just buy and buy until you can't.

I agree with concepts of not to overthink, and to just buy.. in a kind of dollar cost averaging way.. but frequently there does take some thinking to figure out how much you can buy without gambling or overextending yourself.


In 10 years, BTC is worth $3.2m... If it's less, that's still not so bad, but it will probably be higher than what ever price you buy today.


That is pretty optimistic, and it could happen.  However, the beginning portions of an exponential curve (if we are in one) might look different than later portions.  Furthermore, it is probably a lot more prudent to have a conservative range, including both starting from current price, and even if you are projecting up to also have some conservative numbers.  

By the way, your starting point seems to be both high numbers and using ATH from 2017 as your starting point, so even your numbers should be more conservative if they go from a more reasonable starting point, such as current price, but I will note that if you count every year, a 2x every year still does get us much above $3.2 million in 10 years.

So, did some napkin math and it looks like, more or less, doubling every year.

2020    $50,000.00
2021~2022    $100,000.00
2022~2023    $200,000.00
2024    $400,000.00
2025~2026    $800,000.00
2026~2027    $1,600,000.00
2028    $3,200,000.00

Here's an illustration of a few differing scenarios of varying steady appreciation:


yearly/%  6%      50%      100%        150%
2019      $8,000   $8,000     $8,000        $8,000
2020      $8,480   $12,000     $16,000        $20,000
2021      $8,989   $18,000     $32,000        $50,000
2022      $9,528   $27,000     $64,000        $125,000
2023      $10,100   $40,500     $128,000     $312,500
2024      $10,706   $60,750     $256,000     $781,250
2025      $11,348   $91,125     $512,000     $1,953,125
2026      $12,029   $136,688     $1,024,000  $4,882,813
2027      $12,751   $205,031     $2,048,000  $12,207,0 31
2028      $13,516   $307,547     $4,096,000  $30,517,578

You can see from these charts that even conservative estimates gives you decent returns, and probably more realistic prediction tables would show a tapering off of the amount of the annual return rather than keeping the annual return as a constant through the next 10-year period.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Dabs on October 17, 2019, 07:22:41 PM
I followed the picture and the other numbers from this thread and just extrapolated the years in between. In any case, the next ten years is going to be interesting. Anyone who gets anything between 0.1 to 10 BTC is going to experience some changes if he HODLs until the end.

Now, if only I can accelerate acquiring bitcoins ... that's another story.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 17, 2019, 08:39:31 PM
<snip>
 In any case, the next ten years is going to be interesting. Anyone who gets anything between 0.1 to 10 BTC is going to experience some changes if he HODLs until the end.


This is exactly the reason why I am putting so much effort into studying this model and spreading it: it’s a low hanging fruit, if only you can see it!


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 18, 2019, 06:43:16 PM
This interview Might be very interesting.
It’s behind a paywall, but they give 14 days trial free of charge.

Quote
This very special Gold vs Bitcoin guest would ONLY agree to be interviewed if @RaoulGMI was asking the questions… and he could remain anonymous.

This is an absolute coup for Real Vision. Please welcome Plan₿ @100trillionUSD: rvtv.io/2BqGAO1 (http://rvtv.io/2BqGAO1)

#gold #bitcoin

https://twitter.com/realvision/status/1185245355061010437
 

https://i.imgur.com/dFsH3fv.jpg


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Dabs on October 18, 2019, 07:48:46 PM
I was just reading an old post from Hal Finney, and even at bitcoin's inception (version 0.1) he already thought that bitcoin could be worth $10 million. Per coin. That was 10 years ago.

So $3m or $4m, might be possible in the next few decades (hopefully sooner, but I don't mind if it takes longer.)


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 18, 2019, 08:25:41 PM
I was just reading an old post from Hal Finney, and even at bitcoin's inception (version 0.1) he already thought that bitcoin could be worth $10 million. Per coin. That was 10 years ago.

So $3m or $4m, might be possible in the next few decades (hopefully sooner, but I don't mind if it takes longer.)
Actually you know the total amount of bitcoin (21,000,000) was engineered regarding the total world M2: if the bitcoin was successful 21 million bitcoin would equal the total capitalisation of major fiat money, with a Satoshi worth 1 cent of usd (minimal practical unit of account).
You had to have great minds to think about this 10 years ago.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Last of the V8s on October 18, 2019, 08:50:39 PM
No it was arbitrary and coincidental. eg https://thenextweb.com/hardfork/2019/07/08/heres-why-satoshi-nakamoto-set-bitcoin-supply-limit-to-21-million/


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 18, 2019, 09:07:29 PM
Regarding the stack exchange expalination, I see a circular reference: he could have adjusted block reward to get different total amounts. What if started with 100 BTC as first reward? Or 60? We would end up having different maximum number of bitcoins. So it might be a miscalculation, or a little bit of luck, or a mi tire of the two, but I don’t buy the stack exchange post as an explanation on WHY 21 millions, rather than HOW...
So


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Dabs on October 19, 2019, 10:16:36 PM
Satoshi had time to calculate the genesis block and mine. Some say there were even testnets before the mainnet and before the testnets we have now. So there was probably time before the launch of version 0.1 to crunch some numbers and arrive at 21 million coins. You could run simulations for any number of coins per block, and when block rewards cut in half (or cut in thirds, or percents, or any other reduction.)

With alts, we see devs experimenting with different reward reduction schemes, different block times, and as we are all aware even different maximum block size limits. Litecoin has 2.5 minute blocks ... some coins reduces every month by 3% until it's 3 coins after 3 years (or something like that, that was the old tagcoin, which started at 30 coins reward per block.) We've seen different supplies from 1 million to 100 million, to even 10 billion coins. I even heard of a coin called 42, which would have only 42 coins as its max supply, so everything would practically be a decimal or fraction, probably with the idea that the smallest unit 0.0000 0001 (which would be called a satoshi in bitcoin) would have some higher value, if it's only pair was BTC.

But then exchanges started pairing other alts with other alts as well, not just BTC, so there is the LTC market and the DOGE market. Once your coin dropped below 1 sat, you ended up in the LTC or DOGE markets and your coin would never recover no matter what kind of alt-season happened.

Anyway, at least four variables could have been manipulated (or calculated): average block time, when halving (how many blocks), what reduction, and what genesis block and first reward era started with. It's very possible to have started with 100 BTC as first reward, but then halving happens more often (like every 2 years) and adjust all the others to still end up with 21 million or close to it.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: noobieone on October 21, 2019, 09:00:17 PM
I believe in the model. Plan B laid out some great work and his first round of numbers had inaccuracies and he has since corrected them. i.e. His Silver above ground numbers came from Wikipedia and were incorrect. He is looking for inaccuracies just like those of us in this thread. I can't find any fault with his paper on Medium. Sure, there are some tiny nit picks but taken as a whole, and I do mean 99% of what he published, is on the money (as best one can tell from today).

When the halving occurs, the reward is cut in half. The price of one bitcoin must increase for current margins to remain the same.

I think the questions we need to answer are:

  • What BTC price point can any mining farm continue to operate at a profit when the reward is cut in half?
  • How fast will the price of bitcoin rise after the halving? <- I'm optimistic. ;)

I see miner equipment having to last longer to pay for itself. Margins can't take too big a hit without companies deciding not to mine. Thinking through these problems using common sense tells us unless everyone shuts off their miner, the price is going up and Plan B's model is the best model I've seen to date.

Good work to the OP for bringing this up. I thought it was telling about the price of a liter of milk if bitcoin goes moon. A good way to think about this problem in tangible terms. Inflation of currencies will continue to happen.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on October 29, 2019, 03:20:37 PM
New addition to real time Stock to Flow graphics:

 Daily updated charts of Bitcoin's stock-to-flow vs price (https://s2f.hamal.nl/s2fcharts.html)


https://i.imgur.com/3VXzWyb.png

Pretty standard implementation at first:

Quote
This page contains a chart showing the relation between the average US$ price of bitcoin (available from blockchain.com and Bitcoin's stock-to-flow ratio. The stock at a specified date is the number of bitcoins that are mined at that date and the flow is the number of coins in a year that lead to that stock. The division between both is the stock-to-flow ratio. There is a strong correlation between the logarithm of the stock-to-flow ratio and the logarithm of the price (see third graph).

These charts are updated daily.

There is a nice addition:

Quote
The dark blue area represents one standard error (2D version of standard deviation) from the predicted price and the light blue area represents two standard errors. The predicted price is extended into the future based on the parameters until Jan 1st 2027.


So IF the error of the price is distributed as a normal around the model price, it should be inside the dark blue band for the 68% of the time, inside the light blue area for the 95% of the time (learn more here) (https://en.wikipedia.org/wiki/68%E2%80%9395%E2%80%9399.7_rule#targetText=For%20an%20approximately%20normal%20data,deviations%20account%20for%20about%2099.7%25.).



Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on November 02, 2019, 12:14:01 PM
Very nice thread found on Twitter:

Quote
🌊 A “stock-to-flow debacle” has taken crypto-twitter by storm.

The meme achieved superior performance in nocoiner conversion…

…and flooded your timeline with 🔢math, 💎minerals and 🔥heated opinions you may not understand.

Time to slash FUD and review some of the #stats:

https://twitter.com/felipether/status/1188814540802318337?s=21


Lot of elaboration and mumblings  SF model, clarifying many things: do you know the difference between correlation and cointegration?


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on November 05, 2019, 01:49:15 PM
New Pocast is out:

https://stephanlivera.com/episode/122/

Quote
PlanB (Pseudonymous Bitcoin Quant) rejoins me in this episode to talk about the response to his seminal work, Modeling Bitcoin’s Value with Scarcity. There have been some responses to his Stock to Flow (S2F) modelling work, so we talk:

  • The response to his articles and translations
  • What cointegration is and why it matters
  • Responses to PlanB’s modelling work
  • Cash and carry trade
  • Where to from here

Listening to this pearl.
Will provide transcript of any relevant part.

EDIT: too many good parts. This post is going to be kilometric.


Quote
Stephan Livera: That’s awesome. That sounds great. I’m really looking forward to hearing about what you’ve got coming up next. I suppose just as a final comment for the listeners, can you just let them know what should they be watching and thinking about just to understand if the model has broken down or is there anything else there? Any other people who you would like to hear from?

PlanB: Yeah, the model is it’s very simple. So ifthe cointegration is gone, if it doesn’t show in the next one or two years, if it’s gone, then the model breaks down. And so my point is a bit conservative. I’d like to see it earlier than that. But if a Bitcoin is not above a hundred thousand or the 55,000 depending on the model you’d like to use, if it’s not above that number before Christmas 2021, then yeah, the model is in real trouble. And I’m probably so am I because I made it, but yeah, it is a possibility. Of course. Let me finish with that. It’s just a model. It’s not a guarantee for quick profits. And it can be wrong, so yeah, please watch that.




Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: anon241469 on November 06, 2019, 03:06:53 AM
Somebody on this forum suggested that I post my recent paper on this thread. Here it is in three formats, jpeg, pdf, and Medium.com. To summarize what the paper is about: make plan B's market value vs S/F regression but with daily data instead of monthly data, then express the market value as a multiple of that regression over time, view it on logarithmic scale, notice some patterns, do some math, apply some critical thinking, figure out the implications...

read the paper:

https://i.redd.it/erghlcv7lqw31.jpg (https://i.redd.it/erghlcv7lqw31.jpg)

https://pdfhost.io/v/ym3kQ9QDy_On_the_Convergence_of_Bitcoinpdf.pdf (https://pdfhost.io/v/ym3kQ9QDy_On_the_Convergence_of_Bitcoinpdf.pdf)

https://medium.com/@AJC241469/on-the-apparent-convergence-of-bitcoins-usd-market-value-toward-the-stock-to-flow-valuation-model-7a9275ac2206 (https://medium.com/@AJC241469/on-the-apparent-convergence-of-bitcoins-usd-market-value-toward-the-stock-to-flow-valuation-model-7a9275ac2206)


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: anon241469 on November 06, 2019, 03:24:12 AM
Everybody likes pictures, so here are the pictures from my paper:

https://i.imgur.com/ILuCNFj.jpg

https://i.imgur.com/VEomSf7.jpg

https://i.imgur.com/PNXor1c.jpg

https://i.imgur.com/6BeHWrI.jpg

https://i.imgur.com/FbJniPY.jpg


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on November 06, 2019, 01:10:34 PM
R^2=99% is impressive.
We know Bitcoin is digital gold, now we have the mathematical proof of it.

Quote
“Cyber-money will no longer be denominated only in national units like the paper money of the industrial period. It probably will be defined in terms of ounces of gold.”

-The Sovereign Individual (1997) Davidson & Rees-Mogg
#bitcoin

https://pbs.twimg.com/media/EIrzfXCXUAAiRl2?format=jpg&name=large

https://twitter.com/100trillionUSD/status/1192032782912040960?s=20



Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: anon241469 on November 06, 2019, 01:12:59 PM
R^2=99% is impressive.
We know Bitcoin is digital gold, now we have the mathematical proof of it.

Quote
“Cyber-money will no longer be denominated only in national units like the paper money of the industrial period. It probably will be defined in terms of ounces of gold.”

-The Sovereign Individual (1997) Davidson & Rees-Mogg
#bitcoin

https://pbs.twimg.com/media/EIrzfXCXUAAiRl2?format=jpg&name=large

https://twitter.com/100trillionUSD/status/1192032782912040960?s=20



 - that's hardly proof. Why does Plan B use so few data points? A high R^2 is quite useless if you only pick the points that fit on the line. there are thousands of other points! Just read my paper, he could have found what I found!


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on November 06, 2019, 01:25:41 PM
<....>
 - that's hardly proof. Why does Plan B use so few data points? A high R^2 is quite useless if you only pick the points that fit on the line. there are thousands of other points! Just read my paper, he could have found what I found!

He demonstrated that high stability in the parameters indipendently of the sample you use.
I only diagonally read your paper, for the moment, sorry.
You could better point out in the post what your conclusion are because they aren't clear reading abstract and conclusion paragraph, actually.




Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: anon241469 on November 06, 2019, 02:00:15 PM
<....>
 - that's hardly proof. Why does Plan B use so few data points? A high R^2 is quite useless if you only pick the points that fit on the line. there are thousands of other points! Just read my paper, he could have found what I found!

He demonstrated that high stability in the parameters indipendently of the sample you use.
I only diagonally read your paper, for the moment, sorry.
You could better point out in the post what your conclusion are because they aren't clear reading abstract and conclusion paragraph, actually.




Yes, I know. But there is really no way to summarize it because it is difficult to explain, even in 4 pages. There is one reddit user who still doesn’t get it, even after I’ve tried to explain it further.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Last of the V8s on November 06, 2019, 10:18:00 PM
Regarding the stack exchange expalination, I see a circular reference: he could have adjusted block reward to get different total amounts. What if started with 100 BTC as first reward? Or 60? We would end up having different maximum number of bitcoins. So it might be a miscalculation, or a little bit of luck, or a mi tire of the two, but I don’t buy the stack exchange post as an explanation on WHY 21 millions, rather than HOW...
So
quite right and I apologise for doubting you. Here's the real infos, showing the history:
I remember this discussion, actually. 

Finney, Satoshi, and I discussed how divisible a Bitcoin ought to be.  Satoshi had already more or less decided on a 50-coin per block payout with halving every so often to add up to a 21M coin supply.  Finney made the point that people should never need any currency division smaller than a US penny, and then somebody (I forget who) consulted some oracle somewhere like maybe Wikipedia and figured out what the entire world's M1 money supply at that time was. 

We debated for a while about which measure of money Bitcoin most closely approximated; but M2, M3, and so on are all for debt-based currencies, so I agreed with Finney that M1 was probably the best measure. 

21Million, times 10^8 subdivisions, meant that even if the whole word's money supply were replaced by the 21 million bitcoins the smallest unit (we weren't calling them Satoshis yet)  would still be worth a bit less than a penny, so no matter what happened -- even if the entire economy of planet earth were measured in Bitcoin -- it would never inconvenience people by being too large a unit for convenience.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Saint-loup on November 12, 2019, 06:10:37 PM
Interesting article :
Why Bitcoin’s Next ‘Halving’ May Not Pump the Price Like Last Time
https://www.coindesk.com/why-bitcoins-next-halving-may-not-pump-the-price-like-last-time

Also, in traditional markets, price is rarely a function of supply. It’s more influenced by demand, which the S2F model does not take into account. In the absence of an established and widespread fundamental use case (for now), demand in crypto markets is narrative-driven.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: exstasie on November 12, 2019, 06:41:06 PM
Interesting article :
Why Bitcoin’s Next ‘Halving’ May Not Pump the Price Like Last Time
https://www.coindesk.com/why-bitcoins-next-halving-may-not-pump-the-price-like-last-time

Thanks for posting. It's an interesting analysis and I'm glad to see some counterpoints to the bullish halving narrative.

Quote
While this model has its critics, it has undergone rigorous cross-examination, and it seems that the regression holds up. It also makes intuitive sense: a reduction in supply should enhance value, all else being equal. So why isn’t the price already heading up to that lofty level?

The reduction in new supply hasn't even occurred yet. It's impossible to predict when the reduction would be "priced in" by market demand.

Quote
Also, in traditional markets, price is rarely a function of supply. It’s more influenced by demand, which the S2F model does not take into account. In the absence of an established and widespread fundamental use case (for now), demand in crypto markets is narrative-driven.

Constant demand (all else being equal) would lead to a price increase, so the author is implying there is or will be a decrease in demand. I'm not sure that's a well-founded assumption, given that the numbers of crypto users continue to swell:

https://cointelegraph.com/news/number-of-crypto-users-nearly-doubled-in-2018-study-says
https://news.bitcoin.com/the-number-of-cryptocurrency-wallet-users-keeps-rising/


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Saint-loup on November 12, 2019, 09:09:58 PM
Quote
Also, in traditional markets, price is rarely a function of supply. It’s more influenced by demand, which the S2F model does not take into account. In the absence of an established and widespread fundamental use case (for now), demand in crypto markets is narrative-driven.

Constant demand (all else being equal) would lead to a price increase, so the author is implying there is or will be a decrease in demand. I'm not sure that's a well-founded assumption, given that the numbers of crypto users continue to swell:
Why constant demand would lead to a price increase? The supply won't decrease like for a token burn for example, it will just increase less quickly...


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: exstasie on November 12, 2019, 10:21:02 PM
Quote
Also, in traditional markets, price is rarely a function of supply. It’s more influenced by demand, which the S2F model does not take into account. In the absence of an established and widespread fundamental use case (for now), demand in crypto markets is narrative-driven.

Constant demand (all else being equal) would lead to a price increase, so the author is implying there is or will be a decrease in demand. I'm not sure that's a well-founded assumption, given that the numbers of crypto users continue to swell:
Why constant demand would lead to a price increase? The supply won't decrease like for a token burn for example, it will just increase less quickly...

Price is not determined by the total supply, but rather the supply available for sale.

Inflation = new available supply. If inflation is lowered, there will be less coins available for sale because some portion of mining rewards will always be sold (covering mining overheads/liabilities and profit taking).

Constant demand + decreased supply = price increase. It's simple economics.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Saint-loup on November 13, 2019, 12:06:15 AM
Quote
Also, in traditional markets, price is rarely a function of supply. It’s more influenced by demand, which the S2F model does not take into account. In the absence of an established and widespread fundamental use case (for now), demand in crypto markets is narrative-driven.

Constant demand (all else being equal) would lead to a price increase, so the author is implying there is or will be a decrease in demand. I'm not sure that's a well-founded assumption, given that the numbers of crypto users continue to swell:
Why constant demand would lead to a price increase? The supply won't decrease like for a token burn for example, it will just increase less quickly...

Price is not determined by the total supply, but rather the supply available for sale.

Inflation = new available supply. If inflation is lowered, there will be less coins available for sale because some portion of mining rewards will always be sold (covering mining overheads/liabilities and profit taking).

Constant demand + decreased supply = price increase. It's simple economics.
I don't think it's really as "simple" as you say. Many people sell btc to buy altcoins for example, 300btc a day it's important but it's not the largest part of the sales. If it's as simple as that why we are at the same price as 2 years ago while we are only 5 months before the halving now?
How do you explain that futures prices for the next year are so low?


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: meanwords on November 13, 2019, 03:06:34 AM
This thread itself is so deep. I never knew 2020 (which is next year) would have a great impact on the price flow of Bitcoin for the upcoming years. Merit to you sir. I don't understand some of the things since I'm not a native speaker and my knowledge of economics is not that deep but I do have questions.

I think the past halving was successful due to the fact that Bitcoin is still an infant. There's not much invested in it compared today and it isn't advertised as extensive as today. The last bull run was successful because of many factors like altcoins, ICO, even the scam Bitconnect, airdrops which is so extensive that even people without knowledge about Bitcoin gets to invest in it, and many more.

What if those factors didn't happen this year? does that mean the price of Bitcoin would decline significantly for the upcoming years? Why would more people buy Bitcoin just because it is halving? Well if we did get a Bull run up to 25k, will the model still continue or it's a fail?


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: exstasie on November 13, 2019, 07:25:06 AM
Price is not determined by the total supply, but rather the supply available for sale.

Inflation = new available supply. If inflation is lowered, there will be less coins available for sale because some portion of mining rewards will always be sold (covering mining overheads/liabilities and profit taking).

Constant demand + decreased supply = price increase. It's simple economics.
I don't think it's really as "simple" as you say. Many people sell btc to buy altcoins for example, 300btc a day it's important but it's not the largest part of the sales.

Selling BTC for altcoins doesn't hurt BTCUSD prices.

In fact, the altcoin markets are very bullish for BTC. Instead of selling for fiat, BTC traders move their supply to altcoin exchanges instead. This makes for less available BTC supply on fiat exchanges. Altcoin investors also buy BTC off fiat exchanges to send to altcoin exchanges. Both these dynamics drive BTCUSD prices up.

If it's as simple as that why we are at the same price as 2 years ago while we are only 5 months before the halving now?
How do you explain that futures prices for the next year are so low?

Because markets take time to reverse from bear market to bull market. Bitcoin in particular moves in exaggerated boom-and-bust type cycles.

We are 6 months out from the halving. At this point in 2015, the market was trading at a 60% loss from the ATH. The market is currently down 55% from the ATH. Everything looks pretty normal to me.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Saint-loup on November 13, 2019, 10:19:30 AM
Price is not determined by the total supply, but rather the supply available for sale.

Inflation = new available supply. If inflation is lowered, there will be less coins available for sale because some portion of mining rewards will always be sold (covering mining overheads/liabilities and profit taking).

Constant demand + decreased supply = price increase. It's simple economics.
I don't think it's really as "simple" as you say. Many people sell btc to buy altcoins for example, 300btc a day it's important but it's not the largest part of the sales.

Selling BTC for altcoins doesn't hurt BTCUSD prices.

In fact, the altcoin markets are very bullish for BTC. Instead of selling for fiat, BTC traders move their supply to altcoin exchanges instead. This makes for less available BTC supply on fiat exchanges. Altcoin investors also buy BTC off fiat exchanges to send to altcoin exchanges. Both these dynamics drive BTCUSD prices up.
But Coinmarketcap uses altcoin markets to calculate the BTC price
Quote
(1) Price (Market Pair)
The price for each individual market pair is calculated by taking the unconverted price reported directly from the exchange and converting it to USD using CoinMarketCap’s existing reference prices. Let’s take LTC/BTC market as an example:

Let (E) be the price of LTC/BTC reported directly from the exchange.
Let (C) be the last known reference price of BTC from CoinMarketCap in USD.
Let (D) be the derived price reported on CoinMarketCap for the market pair.

For this example, let (E) = 0.01 BTC / 1 LTC and let (C) = 10,000 USD / 1 BTC.

D = E * C
D = (0.01 BTC / 1 LTC) * (10,000 USD / 1 BTC) = 100 USD / 1 LTC

Therefore, the derived price for LTC/BTC on this specific market pair is $100 USD.
https://support.coinmarketcap.com/hc/en-us/articles/360034116491-Market-Data-Cryptoasset-Rank
https://coinmarketcap.com/currencies/bitcoin/markets/

If people sell btc for potatoes and potatoes worth 1$, of course it will affect the price discovery process.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: aardvark15 on November 18, 2019, 02:27:49 PM
Price is not determined by the total supply, but rather the supply available for sale.

Inflation = new available supply. If inflation is lowered, there will be less coins available for sale because some portion of mining rewards will always be sold (covering mining overheads/liabilities and profit taking).

Constant demand + decreased supply = price increase. It's simple economics.
I don't think it's really as "simple" as you say. Many people sell btc to buy altcoins for example, 300btc a day it's important but it's not the largest part of the sales.

Selling BTC for altcoins doesn't hurt BTCUSD prices.

In fact, the altcoin markets are very bullish for BTC. Instead of selling for fiat, BTC traders move their supply to altcoin exchanges instead. This makes for less available BTC supply on fiat exchanges. Altcoin investors also buy BTC off fiat exchanges to send to altcoin exchanges. Both these dynamics drive BTCUSD prices up.

If it's as simple as that why we are at the same price as 2 years ago while we are only 5 months before the halving now?
How do you explain that futures prices for the next year are so low?

Because markets take time to reverse from bear market to bull market. Bitcoin in particular moves in exaggerated boom-and-bust type cycles.

We are 6 months out from the halving. At this point in 2015, the market was trading at a 60% loss from the ATH. The market is currently down 55% from the ATH. Everything looks pretty normal to me.

The current price could basically be the bottom of the next exponential bull run that will start right before the halving and potentially peak 12-18 months after the halving with a price bubble.  That is what we saw in the last 2 halvings.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: Webetcoins on November 19, 2019, 01:04:46 PM
Price is not determined by the total supply, but rather the supply available for sale.

Inflation = new available supply. If inflation is lowered, there will be less coins available for sale because some portion of mining rewards will always be sold (covering mining overheads/liabilities and profit taking).

Constant demand + decreased supply = price increase. It's simple economics.
I don't think it's really as "simple" as you say. Many people sell btc to buy altcoins for example, 300btc a day it's important but it's not the largest part of the sales.

Selling BTC for altcoins doesn't hurt BTCUSD prices.

In fact, the altcoin markets are very bullish for BTC. Instead of selling for fiat, BTC traders move their supply to altcoin exchanges instead. This makes for less available BTC supply on fiat exchanges. Altcoin investors also buy BTC off fiat exchanges to send to altcoin exchanges. Both these dynamics drive BTCUSD prices up.

If it's as simple as that why we are at the same price as 2 years ago while we are only 5 months before the halving now?
How do you explain that futures prices for the next year are so low?

Because markets take time to reverse from bear market to bull market. Bitcoin in particular moves in exaggerated boom-and-bust type cycles.

We are 6 months out from the halving. At this point in 2015, the market was trading at a 60% loss from the ATH. The market is currently down 55% from the ATH. Everything looks pretty normal to me.

The current price could basically be the bottom of the next exponential bull run that will start right before the halving and potentially peak 12-18 months after the halving with a price bubble.  That is what we saw in the last 2 halvings.
So saying that investing in bitcoin at present moment is right thing to do, won’t be wrong at all. Better would be to say that this is the last chance to buy world’s most expensive asset at low value. We wont have same opportunity ever again. Halving brings good changes to all crypto currencies. This time will be the same also. So finally investors can stop waiting and complaining, and focus on getting more coins.


Title: Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
Post by: fillippone on November 24, 2019, 12:19:58 PM
R^2=99% is impressive.
We know Bitcoin is digital gold, now we have the mathematical proof of it.

Quote
“Cyber-money will no longer be denominated only in national units like the paper money of the industrial period. It probably will be defined in terms of ounces of gold.”

-The Sovereign Individual (1997) Davidson & Rees-Mogg
#bitcoin

https://pbs.twimg.com/media/EIrzfXCXUAAiRl2?format=jpg&name=large

https://twitter.com/100trillionUSD/status/1192032782912040960?s=20



Very interesting reflection came out from this tweet:


https://twitter.com/cclerici/status/1192548291797569536
Quote
1/..@100trillionUSD  applied the SF on the BTC price measured in gold. This model has a mind blowing 99% r^2. One thing anyway puzzles me: I can think BTCUSD going parabolic because USD breaks down... but BTCXAU? Is BTC going to break gold too? Digital gold breaking physical gold?

Quote
2/... Gold has worked in real terms for centuries because it was the only SoV around. If another (better) SoV is found, then Gold would drop to his intrinsic (industrial) value. This can trigger some steep BTCXAU appreciation. This is my only explanation, but still I am puzzled.

PlanB replied:

Quote
Puzzles me too. It could be that btc will extract monetary premium from gold, and then stocks, real estate etc, but that is just my first thought. Very interesting!
https://twitter.com/100trillionUSD/status/1192553080207945729

This means that when/if Bitcoin will succeed as a SoV, all other inferior SoV will be stripped of that function, returning to their "industrial value". This is a real paradigm shift.