Giovanni Santostasi - The Bitcoin Power Law Theory

[franky1]

let me guess.. people dont know that this is not a power law but will now scream with glazed eyes and dreams of finding a new idol "OMG SOMEONE WROTE IN MSWord A DOCUMENT AND CALLED IT A SCIENTIFIC PAPER. IT MUST MEAN HE IS A GOD I SHOULD BLINDLY IDOLISE AND NOT QUESTION"

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[hatshepsut93]

Adoption is important because it brings new people and new capital in the market. With time, bigger adoption, the market will have more people, from investors to speculators and traders, they all contribute to bigger trading volume in the market. With bigger trading volume, big investors have one more reason to join it because they will have less trouble to enter and exit the market with big capital.

Trading and investment is also speculation, because Bitcoin is a speculative asset. The difference is only in time preferences.

And I wasn't talking about market adoption, I was talking about other use case adoption, like payments or store of value. Those other uses are so low that they don't have influence on the price.

I agree about zero-sum game. It is true for traditional markets like stock market too.

Stock market is not a zero sum, because companies manufacture goods and provide services - they create something valuable for society and a lot of people benefit from it. So with stocks you can get dividends, but with Bitcoin you can only get profit if someone buys it.

[MusaMohamed]

Trading and investment is also speculation, because Bitcoin is a speculative asset. The difference is only in time preferences.

And I wasn't talking about market adoption, I was talking about other use case adoption, like payments or store of value. Those other uses are so low that they don't have influence on the price.

I disagree to say Investment is Speculation. At a tip of meaning, investment, trading, speculation look to be similar because people do it with purpose to get profit but if we look deeper, under the tip, they are different.

Trading and Speculation are more similar than Investment and I would like to put Investment in a different category than Trading and Speculation. With Trading and Speculation, they focus more on short term profit and don't care too much about value creation of what they spend money in.

Like in stock market, people buy stocks to speculate its price will rise and give them profit but they are not investors, they are traders or speculators.

With investors, they invest in value of the company and plan to go with the company for a long term.

Traders and Speculators focus on Price. Investors focus on Value.

[fillippone]

let me guess.. people dont know that this is not a power law but will now scream with glazed eyes and dreams of finding a new idol "OMG SOMEONE WROTE IN MSWord A DOCUMENT AND CALLED IT A SCIENTIFIC PAPER. IT MUST MEAN HE IS A GOD I SHOULD BLINDLY IDOLISE AND NOT QUESTION"

Franky1, he said he would send his paper to a peer review.
I think this is a novelty in this field of research, and Santostasi should be credited for this.
He’s stepping up the game and accepting a scientific method when nobody first was willing to do the same.
When he publishes, we will see.

[franky1]

let me guess.. people dont know that this is not a power law but will now scream with glazed eyes and dreams of finding a new idol "OMG SOMEONE WROTE IN MSWord A DOCUMENT AND CALLED IT A SCIENTIFIC PAPER. IT MUST MEAN HE IS A GOD I SHOULD BLINDLY IDOLISE AND NOT QUESTION"

Franky1, he said he would send his paper to a peer review.
I think this is a novelty in this field of research, and Santostasi should be credited for this.
He’s stepping up the game and accepting a scientific method when nobody first was willing to do the same.
When he publishes, we will see.

he is not interested in peer review, look at his reaction when someone looked deep at his numbers ran scenarios and noticed the obvious.. his numbers dont last long and require updating.. thus not a law
his numbers are not constants, they are variables.. thus not a law

he just wants the "publish" part
notice his years of creating different accounts trying to get noticed trying to win a fanbase trying to get people to blindly believe he made a power law by fighting off those that actually reviewed him and then suck up and befriend people that dont check his work long term but just idolise him

as for "he  doing X when nobody was willing to do the same"
loads of people create whitepapers hoping people simply believe they are educated because they call a MSWord doc a "whitepaper" look at all the ICO scams..
thousands of idiots think they can become famous and treated as geniuses just by saying they made a white paper
but they keep failing the test of actual peer review..
they just think "i made a white paper, adore me and trust me, but dont critique, review or scrutinise me as ill claim that as defamation and ill sue you"

[stompix]

Trading and investment is also speculation, because Bitcoin is a speculative asset. The difference is only in time preferences.

I disagree to say Investment is Speculation. At a tip of meaning, investment, trading, speculation look to be similar because people do it with purpose to get profit but if we look deeper, under the tip, they are different.

It's still speculation by definition:

investment in stocks, property, etc. in the hope of gain but with the risk of loss.

Just because you think there is no risk that there's something fundamentally different between Bitcoin and other investments it doesn't change what it is, you buy now in the hope of selling at a higher price!

With Trading and Speculation, they focus more on short term profit and don't care too much about value creation of what they spend money in.

And you think investors in Bitcoin care about what value they create? Common!
Besides, there is no money "in", the money you invest doesn't go in Bitcoin, it goes into the pocket of the guy who sold you the coins, that's why the zero-sum theory, because you can pay 70k for a coin, but if nobody else is willing to pay more than 7 cents, that's the value of it, the 70k "invested" are long gone!

[franky1]

but if nobody else is willing to pay more than 7 cents, that's the value of it, the 70k "invested" are long gone!

you got things wrong way round
when no one wants to sell coin for less than 7cents. then 7cents becomes the supported value as thats the stop and non-zero bottom
value is set by no one wanting to sell below 7cent.. not when no one wants to pay more then 7 cents

the premium is the highest amount a community is willing to pay before everyone says and agree's its too much
its the PREMIUM that would be YOUR SCENARIO where no one wants to pay more then 7 cents..

so if everyone on a certain date in the future lost confidence in bitcoin and it dropped to say 3 cents and no one wanted to pay above 7cents. then the premium is 7 cents.. and the value would be somewhere below 3 cents

in the 2022-2024 tests of tops and bottoms..
$70k was premium and $15k was value.. the price then speculated inbetween

remember this..
value is bottom premium is top
buy low(value) sell high(premium)

as for terms of trader, investor speculator. they can be categorised

a trader knows the underlying cost value and the premium...
take grocery stores and fruit stall traders. they know the wholesale cost of the produce and they know te RRP(recommended retail price) and they trade the goods

a speculator tests the boundaries and guesses. which is a precursor to setting the value/premium they either push the boundaries to create new bottoms/tops or they hit the limits and that reinforces the limits
in a grocery store they would be the retailers purchasing team. trying to find the cheapest wholesale and looking at competition to find the RRP and testing the sales of goods to see how effectively they can buy and sell produce

an investor is the grocery store owner/stocks&share holders that front the money for the retailers teams to then trade and speculate.. where the investor then just takes their profits after a long term via the work of others
investors are different to day-traders and speculators

now in the context of assets, commodity and forex markets

a investor just throws funds into a portfolio/asset and lets it ride. hoarding long term and letting the market play out
a speculator tries to find the bottoms and tops
a trader then knows the bottoms and tops and day trades the differences/swings inbetween

bitcoin doesnt have unknown factors.. it actually does have limits periodically.. so its not so much speculative. we all know that in the last 2 years bitcoin has multiple times tested the $15k bottom and ~$70k tops
its a tradable asset mostly. more so than a speculating asset.. the speculative layer of trying to find new premiums of new highs isnt moving much
above the previous limits so speculation is low right now

i personally see value above the 2022 test of $15k value and slowly moving up in a range of $25k based on mining cost movements.. where speculation is currently trying to test the new highs that are trying to push above the $70k previous tested premium to find new tops. and will probably at some point try to test a new bottoms(after a 2025 ATH correction) where the new bottom will be more than the 2022 value bottom, but most of the time is trading within the range we have all experienced in the last 2 years
we will see the more exciting arena of speculation in the next year when we move far above the $70k range.. but we are not much in the speculative stage much right now. we are still in the safer trading zone of the $15k ~$70k with a small bit of speculation trying to push the $70k limits

[JayJuanGee]

franky1,
I am not sure about the reporting harassment policies here.
If you continue to do ad hominem, attacking my professional background, my integrity, or other personal attacks I will report you. it is obvious to anybody that you are a troll and have zero understanding or knowledge about these subjects. It is not even worth answering you or addressing any of the things you are saying besides telling you that I would not tolerate personal attacks so if this forum allows me to report this behavior I will.
You even follow me from post to post just to harass me. If you want to have a scientific discussion or you want to ask questions I will answer them but again stop the personal attacks. This is the last time I ask nicely. Thank you.

Yeah franky1 can be a bit of a jerk sometimes, but I did not see any personal attacks that go beyond mostly attempting to beat you up substantively, and yeah maybe franky1 is wrong or he goes overboard from time to time, but he had raised some decent arguments as well.. 

You (BTCdragosfera) did not even chime into the thread until after franky had already posted a couple of times, and fillippone posted the OP in the first place, so it is not even your thread... not that it matters very much when this had been established as a regular thread rather than a self-moderated thread.

If you want your own thread that is not open to debate (or at least you can delete anyone who you believe is perverting your message), then maybe this should have been authored by you as a self-moderated topic. 

Yeah, sure Fillippone could have created this as a self-moderated thread, and then as the owner of this thread, he could have deleted whatever responsive posts that he wants.. .. but he did not... .. and I suspect that fillipponne had made this as an open topic... so that members could chime in and express their opinions. 

Surely when it comes to markets, there is likely more going on than just pure math... so there is going to be a bit of a problem for anyone trying to model out bitcoin's price performance and/or adoption in pure mathematical ways.. even if you might be able to model out past performance to show how we get to the present, then what about the future? I doubt that bitcoin's price performance is going to fall into a pure mathematically predicted curve even if you think you got all the numbers correct, and even though sure your numbers and your curves might well work for a while, but it is going to need to be coordinated from time to time to real world data, too.

Adoption is important because it brings new people and new capital in the market. With time, bigger adoption, the market will have more people, from investors to speculators and traders, they all contribute to bigger trading volume in the market. With bigger trading volume, big investors have one more reason to join it because they will have less trouble to enter and exit the market with big capital.

Trading and investment is also speculation, because Bitcoin is a speculative asset. The difference is only in time preferences.

And I wasn't talking about market adoption, I was talking about other use case adoption, like payments or store of value. Those other uses are so low that they don't have influence on the price.

I agree about zero-sum game. It is true for traditional markets like stock market too.

Stock market is not a zero sum, because companies manufacture goods and provide services - they create something valuable for society and a lot of people benefit from it. So with stocks you can get dividends, but with Bitcoin you can only get profit if someone buys it.

Bitcoin is a paradigm shifting technology that brings a lot of new innovations to the world, so it would be problematic to be attempting to overly-simplify bitcoin as if it were not adding additional value to the world. 

Sure, from time to time, bitcoin is going to appear as if it is nothing more than a speculative stock, yet you seem to be missing something if you are pigeonholing bitcoin in that kind of a way.

I could not exactly figure out what BIG beef there is with Plan B's model which has some similar dynamics as the Powerlaw theories, and yeah, I don't claim to know the math exactly, yet I still would say fuck the math to the extent to which there are attempts to try to be precise in regards to how fast various aspects of bitcoin's growth is taking place.  Yeah, sure, no problem some of that can be attempted to be modeled out and captured in math, but it also ONLY goes so far, even if we might be considering the [ur=https://nakamotoinstitute.org/mempool/the-seven-network-effects-of-bitcoin/l]seven network effects that Trace Mayer outlined in 2014/2015-ish[/url].

[Dump3er]

Adoption is important because it brings new people and new capital in the market. With time, bigger adoption, the market will have more people, from investors to speculators and traders, they all contribute to bigger trading volume in the market. With bigger trading volume, big investors have one more reason to join it because they will have less trouble to enter and exit the market with big capital.

Trading and investment is also speculation, because Bitcoin is a speculative asset. The difference is only in time preferences.

And I wasn't talking about market adoption, I was talking about other use case adoption, like payments or store of value. Those other uses are so low that they don't have influence on the price.

I agree about zero-sum game. It is true for traditional markets like stock market too.

Stock market is not a zero sum, because companies manufacture goods and provide services - they create something valuable for society and a lot of people benefit from it. So with stocks you can get dividends, but with Bitcoin you can only get profit if someone buys it.

Bitcoin is a paradigm shifting technology that brings a lot of new innovations to the world, so it would be problematic to be attempting to overly-simplify bitcoin as if it were not adding additional value to the world. 

Sure, from time to time, bitcoin is going to appear as if it is nothing more than a speculative stock, yet you seem to be missing something if you are pigeonholing bitcoin in that kind of a way.

I could not exactly figure out what BIG beef there is with Plan B's model which has some similar dynamics as the Powerlaw theories, and yeah, I don't claim to know the math exactly, yet I still would say fuck the math to the extent to which there are attempts to try to be precise in regards to how fast various aspects of bitcoin's growth is taking place.  Yeah, sure, no problem some of that can be attempted to be modeled out and captured in math, but it also ONLY goes so far, even if we might be considering the [ur=https://nakamotoinstitute.org/mempool/the-seven-network-effects-of-bitcoin/l]seven network effects that Trace Mayer outlined in 2014/2015-ish[/url].

@hatshepsut93, I often times see the discussion about how the stock market is not a zero sum game as there is production and dividends involved, but BTC represents a zero sum game for investors. Let me give you another example and you can see for yourself what you think about it:

There is option pricing theory because values can be calculated and assigned to so called options in the stock/options market. But the functionality of options is far more sophisticated than you might think at first glance. It supports price discovery, meaning it can give the average Joe an idea of how the market collectively assesses the risk-opportunity ratio of a certain asset/debt instrument. Then there is the subjective value of an option as investors, traders or any other actors (I will explain that in a second) can have different views on the objectively calculated value of an option. Risk exposure can vary even if the numerical value at risk is objectively the same.

If someone wants to escape from their home country because they are afraid of political persecution, what options do they have to take with them any of their assets without seeing it getting frozen or themselves getting stopped at the national boarder? What option does the average Joe have to anonymously store wealth (not talking about illegal strategies) like the rich guys do in Panama and the Virgin Islands without paying a fortune for tax advisers and lawyers to not make any easy and costly mistakes? What option does someone have to donate to a cause they consider worthy of support without getting politically/socially/financially cancelled (truckers protesting against Corona measures in Canada, Wikileaks etc)? What about escaping an inflationary financial system? And how does anyone make sure whether the published numbers about money supply measures M1, M2, M3 etc. (depending on where you live, definitions can differ) are true?

BTC has a very high and real time price discovery mechanism. You could argue that you own a piece of art or antique thing that is worth a lot and you could take it with you anywhere in the world and sell it there, but you'd probably never know what you get. Markets differ for illiquid things or collector's items. In arts some people pay a premium because they "love" a piece. This doesn't apply to BTC. We have seen premiums being paid in countries with high inflation. There is a reason for that.

The range of possibilities is big here as individuals can have different causes they think can be well served by BTC. Options carry value without paying dividends.

There are a few things that I don't get when it is said that the BTC price follows Power Laws. There are plenty of examples for natural systems and how they follow Power Laws, like cancer - a tumor. But the difference is that the cancer cells don't listen to mathematicians calculating Power Law distributions and then react to those calculations. Predicting the size of a tumor with no exogenous interventions (aka treatments) does make sense to me. But when we look at economic entities, they do listen to what is propagated publicly and adjust their actions according to their expectations. Assuming that Santostasi's prediction about the price of BTC being at $1 million in 2033 and $10 million in 2045 is now pushed as a public agenda, wouldn't the result be that in anticipation of the law holding true, people would act faster than initially anticipated and buy BTC? What if nobody came up with the Power Law theory and Santostasi kept it secret? Can it still be considered "organic growth according to Power Laws" when now we'd see the biggest financial players sophisticatedly push the Power Law agenda through media that they partially control? What about some dictator going nuts, bombing the world with nuclear rockets, destroying wealth everywhere, good or bad for the price of BTC?

Cancer is already very complex, but I think that the microscopic analysis allows to feed in data into models at every second and then let AI calculate correlation and - where possible - causation. But I think that the world as a whole is probably a more complex organism than a tumor (at least I think so). As I read in some article, there can be viruses and what not and that is why these predictions like BTC price follows Power Laws can backfire tremendously for people who base their decisions on (perhaps) false hopes coming from fancy formulas.

There are so many ifs in terms of what has to hold true over such a long time in order for the Power Law BTC price theory
to be valid that I am doubtful this prediction makes fully sense. If someone asked me what this world will be looking like in six months from now, I have no idea. Could be insane logistic chaos because three more wars broke out by the time or other wars intensified to a level where global logistics collapse with unpredictable consequences.