Don't have enough time to sit down and read all the best Bitcoin articles. Well, let us read them for you. This is a crypto Konami quick read. What's up crew? Welcome back to the crypto Kana me with guys Swan the guy who is read more about Bitcoin than anybody else, you know, and guess what we're going to do today. We're going to read about Bitcoin and I'm actually going to be getting into a couple of longer pieces soon. And I think they're going to be really really good and they're a little bit one of them in particular is About the open source environment and I'm kind of excited about really digging into that particularly from a historical standpoint. But just so you know that's coming and we've got Aaron van Aaron van Werdum on the show that will probably be dropping next Monday. I think is we're going to put that episode out. I had a really great conversation with him. Literally a lot of fun and went into a bunch of crazy. Stuff, so I'm excited to drop that one. Don't forget to subscribe at the crypto economy, or of course in whatever podcast app you've got and leave me a review to if you've been enjoying the show and have if you're a new listener, you know, and I love feedback of all kinds so it would I would really appreciate it if you would do that. So today, however, we are going to be jumping into Plan B. The guy who has Really just exploded with his stock to flow ratio analysis of the Bitcoin price. He's gone from in like nine months. He went from like a hundred fifty followers to what does he act like twenty-five thousand followers now, it's at 100 actual number trillion USD, and that's the tag that he's under And this is just a really fascinating like model for analyzing the Bitcoin price and it's a little bit. There's a lot of numbers in this and a number of charts that I'm going to sort of explain but really you just kind of need to see him and I'm sure most of you listeners probably have but the article itself is just really really good and I think it will be fun to talk about this model afterward. So I'm going to To I'm going to dig into it anyway, and hopefully a still is still really good piece. Even if you even if it's a little bit hard, I'm sure an audio to follow the numbers and charts. So I'll do my best but it's also not incredibly long. So without further Ado, let's go ahead and jump into. Oh one more one more Ado. I do not forget tomorrow tomorrow. That is Wednesday the 30 or excuse me the first The tickets for bit block boom go up in price. So do not forget if you're going to do that if you're going to join me out at bit block boom in Dallas on August 17th and 18th. Do not forget to go ahead and get your tickets. And don't forget about my discount code CC that will get you 30% off that happens tomorrow. So make the decision now, you don't have to pay a higher price. All right guys. Um with that now let's jump into our article by plan be titled modeling Bitcoins value with scarcity. introduction Satoshi Nakamoto published the Bitcoin white paper on October 31st 2008 created the Bitcoin Genesis block on January 3rd, 2009 and released the Bitcoin code on January 8 2009. So begins a journey that leads to a 70 billion dollar Bitcoin market today. Bitcoin is the first scarce digital object. The world has ever seen it is scarce like silver and gold and can be sent over the Internet radio satellite Etc. quote as a thought experiment imagine there was a base metal as scarce as gold but with the following properties boring gray in color not a good conductor of electricity not particularly strong not useful for any practical or ornamental purpose, but one special magical property can be transported over a Communications Channel and quote, Satoshi, 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 Bitcoins value. scarcity and stock to flow Dictionaries usually Define scarcity as quote a situation in which something is not easy to find or get and a lack of something Nick Szabo has a more useful definition of scarcity, unforgeable costliness quote. What do antiques time and gold have in common. They are costly do either to their original cost or the improbability of their history and it is Difficult to spoof this costliness. There are some problems involved with implementing unforgeable costliness on a computer if such problems can be overcome. We can achieve that gold end quote zabba. Quote precious metals and Collectibles have a nun for jables scarcity due to the costliness of their creation. This one's provided money the value of which was largely independent of any trusted third party, but you can't pay online with metal. Thus it would be very nice if there were a protocol where by unfortunately costly bits could be created online with minimal dependence on trusted third parties and then Yearly stored transferred and assayed with similar minimal trust bitgold end quote by neck Zaba. Bitcoin has unfortunately costliness because it costs a lot of electricity to produce new Bitcoins producing Bitcoins cannot be easily faked note that this is different for Fiat money and also for alt coins that have no Supply cap have no proof of work have low hash rate or have a small group of people or companies that can easily influence Supply Etc. Say fitting almost talks about scarcity in terms of stock to flow ratio explains. Why gold and Bitcoin are different from consumable Commodities like copper zinc nickel brass because they have high stocked flow quote. Bruni consumable commodity doubling of output will dwarf any existing stockpiles bringing the price crashing down and hurting the holders for gold a price spike that causes a doubling of annual production will be insignificant increasing stock piles by three percent rather than 1.5 percent it is this consistently low rate of supply of gold. That is the fundamental reason. It is maintained its monetary role throughout human history. The high stock to flow ratio of gold makes it the commodity with the lowest price elasticity of supply. The existing stockpiles of Bitcoin in 2017 were around 25 times larger than the new coins produced in 2017. This is still less than half of the ratio for gold but around the year 2022 Bitcoins stock to flow ratio will overtake that of goal end quote honest. So scarcity can be Quantified by stock to flow. Stop to float equals stock / the flow. Stock is the size of the existing stock piles or reserves flow is the yearly production instead of stop the flow people. Also use Supply growth rate or flow / stock note that stock to flow equals 1 divided by the supply growth rate. Let's look at some stock to flow numbers Gold stock is 185 thousand tons. Flow is 3,000 tons. So the stocked flow is 62 with a supply growth of 1.6% and price per ounce of $1,300 market value eight point four trillion silver stock is 550 thousand tons flow is 25,000 tons or a stock. The flow of 22 Supply growth is 4.5% price. Per ounce is $16 with 308 billion dollar market value. Palladium stock is 244 tons flow is 215 tons or as stock to flow of 1.1. The supply growth is eighty eight point one percent price per ounce is $1400 market value eleven point nine billion. And platinum has a stock of 86 tons a flow of 229 tons or a stock to flow of 0.4 with a supply growth of two hundred and sixty six point seven percent at eight hundred dollars per ounce is a 2.4 billion dollar market value. Gold has the highest stock to flow at 62. It takes sixty two years of production to get current gold stock silver is second with stock to flow of 22 this High stock to flow makes them monetary Goods Palladium platinum and all other Commodities have stock to flows barely higher than one existing stock is usually equal or lower than yearly production making production a A very important factor. It is almost impossible for Commodities to get a higher stock to flow because as soon as somebody Hoards them price Rises production Rises and price falls again. It is very hard to escape this trap. Bitcoin currently has a stock of Seventeen point five million coins and new supply of point seven million per year or a stock to flow of 25. This place has Bitcoin in the monetary Goods category, like silver and gold Bitcoins market value at current prices is 70 billion dollars supply of Bitcoin is fixed new Bitcoins are created in every new block blogs are created every 10 minutes on average when a minor finds the hash that satisfies the proof of work required for a valid block. The first transaction in each block called the coinbase contains the block reward for the minor that found the block the block reward consists of the fees that people pay for transactions in that blog and the newly created coins called subsidy. The subsidy started at 50 Bitcoins and is halved every 210,000 blocks about every four years. That's why having's are very important for Bitcoins money supply and stock the flow having's also calls the supply growth rate in Bitcoin context usually called monetary inflation to be stepped and not smooth. And here he just shows the chart of the block height against the amount of Bitcoins in circulation as it tapers toward 21 million and just shows that we are on the we are two steps in we started at 50 move down to 25 are down to 12.5 and then it will continue at 6.25 3.125. Etcetera Etc until you reach the end of Bitcoins actual monetary inflation. No. Stock to flow and value. The hypothesis in this study is that scarcity as measured by stock to flow directly drives value a look at the table above confirms that market values tend to be higher when stock to flow is higher. The next step is to collect data and make a statistical model. data I calculated Bitcoins monthly stock to flow and value from December 2009 to February 2019 111 data points in total number of blocks per month can be directly queried from the Bitcoin blockchain with python or PC or Bitcoin D actual number of blocks differs quite a bit from the theoretical number because blocks are not produced exactly every 10 minutes for example in the first year 2009. There were significantly less blocks with the number of blocks per month and known block subsidy. You can calculate flow and stock I corrected for lost coins by arbitrarily disregarding the first million coins or seven months in the stock to flow calculation more accurate adjusting for lost coins will be a subject for future research bitcoin price data is available from different sources, but starts at July of 2010. I added the known Bitcoin prices $1 for 1309 Bitcoin in October of 2009 first quote of point three cent on bitcoin market and March 2010 and two pizzas worth forty one dollars for 10,000 Bitcoin in May of 2010 and interpolated data archaeology will be a subject for future research. We already have the data points for Gold stock the value of six you to market value of eight point five trillion and silver stock to flow of 22 market value of 308 billion, which I use as a benchmark. Model A. First scatterplot of stock to Flow versus market value shows that it is better to use logarithmic values or axes for market value because it spans eight orders of magnitude from $10,000 to 100 billion dollars using logarithmic values or axes for stock to flow as well reveals a nice linear relationship between the natural log of the stock to flow and natural log of the market value. Note that I use natural logarithm Ln with base e and not common logarithm log with base 10, which would yield similar results? And here we have the now rather famous chart of the market value versus the stock the flow and the stock to flow starts at Point 1 and heads over 100 as things move forward. And then we also have the market value starting at 1,000 and moving up to 100 trillion on the y-axis and both of these are logarithmic and then it also shows the color coding. Of the number of months until the having until the next having takes place and it shows a rather remarkable Trend and rubber banding effect of how closely the price is pulled back towards the stock to flow model, whenever it either overshoots the price or undershoot sit when a new happening occurs, so it's a very very interesting. Sing and if you have not like really looked at this chart, this is one of the most fascinating charts and then it also has silver and gold on the chart showing where their values are in relation to the stock to flow model as well. fitting a linear regression to the data confirms which can be seen with the naked eye a statistically significant relationship between stock to flow and market value 95% r squared significance of f 2 point 3 e to the negative 17 P value of slope 2 point 3 e to the negative 17 the likelihood that relationship between SF and market value is Caused by chance is close to zero, of course other factors also impact price regulation hacks and other news that is why r squared is not 100% and not all dots are on the straight black line. However, the dominant driving Factor seems to be scarcity and the stock to flow. What is very interesting is that gold and silver which are totally different markets are in line with the Bitcoin model values for stop to flow. This gives extra confidence in the model note that at the peak of the bull market in December 2017 Bitcoin stop. The flow was 22 and Bitcoin market value was 230 billion dollars. Very close to Silver. Because having's have such a big impact on stock to flow. I put months until the next having as a color overlay in the chart dark blue is the having month and red is just after the having next having is May 20-22 current stock the flow of 25 will double 250 very close to Gold stock to flow of 62 the predicted market value for Bitcoin after May 20 20 having. Is 1 trillion dollars which translates into a bitcoin price of $55,000 that is quite spectacular. I guess time will tell and we will probably know one or two years after the having in 2020 or 2021 a great out of sample test of this hypothesis and model. people ask me where all the money needed for one trillion dollar Bitcoin market value would come from my answer silver gold countries with negative interest rates Europe Japan the u.s. Soon countries would predatory governments Venezuela China Iran, turkey Etc, billionaires and millionaires hedging against quantitative easing and institutional investors discovering the best performing asset of the last 10 years. We can also model bitcoin price directly with stock to flow the formula of course has different parameters, but the result is the same 95% r squared and a predicted bitcoin price of $55,000 Woodstock to flow of 50 after the May 20 20 having I plotted Bitcoin model price based on stock to flow the black and actual bitcoin price over time with the number of blocks as the color overlay. Again, we have another great chart. Don't forget that I will have the link to the original article in the show notes as well as the Twitter post so that you can go see this and these charts really lend themselves to actually seeing the correlation between these two between the model and the actual price because it's really astounding so it's definitely something to go check out. Note the goodness of fit, especially the almost immediate price adjustment after the November 2012 having adjustment after June 2016 having was much slower possibly due to etherium competition and the Dao hack. Also you see less blocks per month in the blue in the first year 2009 and during downward difficulty adjustments the end of 2011 mid-2015 and end of 2018. E18 introduction of GPU miners in the 2010 to 2011 and Asic miners in 2013 resulted in more blocks per month, which you can see in red. power laws and fractals Also, very interesting is that there is indication of a power law relationship the linear regression function or the natural log of its market value equals three point three times the natural log of the stock to flow plus fourteen point six, it can be written as a power law function market value equals the EXP function to fourteen point six times the stock to flow 23.3. Power laws are scarce. You don't find them very often the possibility of a power law with 95% r squared over 8 orders of magnitude adds confidence that the main driver of Bitcoin value is correctly captured with stock to flow a power law is a relationship in which a relative change in one quantity gives rise to a proportional relative change in the other quantity independent of the initial. Size of those quantities every having Bitcoin stopped the flow doubles and market value increases 10x. This is a constant Factor power laws are interesting because they reveal an underlying regularity in the properties of seemingly random complex systems see appendix for some famous power law examples complex systems usually have properties where changes between phenomena at different scales are Of the scales. We are looking at this self similar property underlies power-law relationships. We see this in Bitcoin to 2011 2014 and 2018 crashes. Look very similar all have around 80% dibs, but own totally different scales respectively $10 $1000 $10,000. If you don't use log scales, you will not see it scale invariance and self-similarity. Charity has a link with fractals. In fact parameter 3.3 in power law function above is the fractal dimension for more information on fractals. See the famous length of coastlines study. conclusion Bitcoin is the first scarce digital object. The world has ever seen it is scarce, like silver and gold and can be sent over the Internet radio satellite Etc. 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 Bitcoins value a statistically significant relationship between stock to flow and Market. You exists the likelihood that the relationship between stop the flow and market value is caused by chance is close to zero adding confidence in the model gold and silver which are totally different markets are in line with the Bitcoin model values for stock to flow and there is indication of a power law relationship. The model predicts a Bitcoin market value of one trillion dollars after the next having in May 20 2016 and slates into a bitcoin price of $55,000. All right, and that will conclude modeling Bitcoins value with scarcity by plan b or 100 trillion USD and I am going to take a break real quick grab myself another coffee and we will jump back in and talk about this amazing piece and a really fantastic pricing model for estimating and predicting Bitcoins value. So let's go ahead and hit our sponsor. And we'll come right back. For anyone who has a podcast anchor cannot be beaten particularly for trying to get off the ground their entire platform is free. This includes unlimited hosting both in audio that you upload and how much your listeners download. I have uploaded an incredible library of audio now and I've never paid anchor a dime. In fact, they connect me with other sponsors and have run an ad consistently on my show. So they've paid For exposure to my audience that's really hard to beat even if we ignore that I can record directly in the app or my browser. I don't need any other software. If I don't want it I can edit at sound effects clips and they automatically publish to all of the top podcasting platforms. I never had to do a thing. So if you were thinking of starting a show or already have a podcast, there's no better platform out there check out anchor by downloading the app or go to Anchor dot f fem today All right. So let's talk about 100 trillion USD s again, that is the best the Twitter tag, but he goes by Plan B. Let's talk about this incredible model for valuing the Bitcoin Market against its scarcity. And it's this is you really have to look at the charge to kind of see how powerful this correlation is particularly with the Once I love the fact that he color codes the months until the next happening because after these huge swings what you see is it actually it's slingshots back to that that power regression that that straight like like perfectly sloped line on the log chart of the market value versus its scarcity. And it's so funny because like it as you see like the markets recover, whatever it starts to calm down and volatility decreases as it gets closer to that line. And then you have a having and you see just how like it just shoots away its shoots so far away from the line because our new flow in the stock to flow model the asset becomes in Intensely more scarce and then that's when you see subsequent growths in the market value trying to catch up when almost every time at the peak it overshoots and then has to come back down in order to find that equilibrium. And if you actually look at where we are right now, we're actually far more in line not very far off from that that power. In that that straight line this is kind of it would actually have technically predicted that we were going to come back up off the three thousand range back between 12,000 and twenty thousand roughly. I'm it's really hard to see on these log charts just because how how compact the how close together the like, you know, the 900,000 in the 800,000 Mark are when you're like looking at the the the ones that you Closer to the next order of magnitude it gets the differences in the prices get harder and harder to tell so again, you can have to look at the chart to see this now. I want to go over a couple of the statistical relationship things that he talks about like the r-squared. The r-squared is is really he doesn't really like straight-up Define it but it's something investment is just a way of measuring the difference between your proposed. Model and how well the actual investment aligns with that model? So if the model predicts a price change to the upside to what ratio in a sense it's not obviously it's not a clear ratio. But to what degree does the actual price respond to that and move with the predictor move with the model? And the fact that this is a 95 percent correlation is pretty astounding like and when he says he says the P value of slope 2.3 e to the negative 17th, the p-value slope is another way to measure essentially correlation. It's just another way to essentially decide how accurate this model is and kind of how it goes is the the our the P value the better the predictor actually is a meaningful the better your model is a meaningful relate has a meaningful relationship with what the actual excuse me what the actual value does. So if you're expecting again, if you are expecting the if the predictor or the model says that this is overpriced or underpriced and then the actual variable and the value you're measuring responds to that and moves with it. Like back to equilibrium or back to the model, then you should have a lower P value and anything less than .05 is significant is considered a significant correlation. This is significantly less than .05 and he'd recently just posted on Oh man, where is it? I didn't close it. Did I? Man, I think I did. Let me see if I can find it real quick. But But what he did in the chart that he posted was he took out a lot of the data points, he would instead of using the 111 monthly data points, which would just show more of the volatility. He actually showed more of he took it. I think they were like October. Let's see before. Okay? Okay, here we are. Here we are. Um, so it's the 2012 stock to flow model and what he's doing here is I'll read the quote real quick or the Tweet real quick the stock to flow model made with the 2009 to 2012 data only for data points before any having so there's a green line that just stops in. 12 and they've got four price data points that he's using fun and it correctly predicts the 2013 to 2019 7 out-of-sample data points and the blue line which it will like show going forward with a 99.5% r squared. So this is unbelievable correlation in what he's doing here. Is showing he's extrapolating this model from 2012 stopping the data up to 2012 and then drawing a seven out of sample data points. So he's ignoring exactly like pulling from like the blockchain or whatever. He's getting what 2012 would estimate the future would bring if we were using this model and then those seven out-of-sample data points versus the October. Monthly closing prices, which he pulls from every single year and there's a 99.5 percent r squared on the out-of-sample data and on the in-sample data the the data that we actually are pulling from 2009 to 2012. There's a 99.7 r squared that is incredible incredible correlation. And honestly when we talked about this in the in the terms of scarcity when he shows like charts that if you're not following Plan B, by the way, if you're not like looking at these charts and like thinking about this, you are crazy crazy missing out because a you should definitely be following at 100 trillion USD, but the data that he's pulling together is just fascinating to think about and he's got it compared to like how it's like Valuation in accordance to like Platinum Palladium silver diamonds gold and their stop to flows and he's got he's got these charts and it shows shows the diamonds are like right on this predictive line of the stock to flow and it's over. It's like 1.2 trillion dollars I believe is so it's not not not quite 1.1. God is log charts messed me up. So but it's basically putting Bitcoin undervalued. Dude, at its current state and is its predictive of like come like the beginning of 2021 that the stock to flow value the price of Bitcoin that it should be swinging back toward whether it's shot past it at this point which considering the fact that you're looking at six months out from a happening. It's very likely that we're going to have slingshotted above the stock to flow model and then coming back down. Is that historically what happens is there's too much momentum as it's trying to catch up with the the new scarcity flow and in the actual market, so I'd be inclined to bet that it would be coming back down but it 2021. It's indicating a price of a hundred thousand dollars per coin and it's not until 2023 and going into 2024 that there's significant change to it again. But 24 and 25 pushes into the million dollar per Bitcoin territory. So between 2025 and 2028. That's what this stock to flow model is predicting. Now, obviously, this model has to break down at some point for two reasons one. We're not going to be pricing things in dollars when this thing is significant enough to be pulling trillions of dollars from other markets like trillions and now dollars from other markets. Is that it won't and it won't be an S curve of like, oh, it starts increasing and then it levels off and it becomes a dollar price know it will continue to increase in this gradual fashion until it's large enough that it's soaking money out of the dollar. So what you're seeing is a an exponential effect, you're seeing a double effect where not only is Bitcoin growing and value from the dollars coming into it is an investment, but you're seeing a greater impact on the value of the dollar being cut down. So you'll see see an amplification of it. So when you're reaching like a million dollars per Bitcoin or or higher, you're looking at doubling the stock to flow model when we're talking about comparing it and doubling is just kind of a pulling it out of my ass. This is just an example of the fact that if we double the value of Bitcoin necessarily the value has to come from something else and that's when it starts being stupid to price things. In dollars, like Bitcoin will be the the ultimate measuring stick to price against at that point. And also when you get something like Market saturation in a monetary good like this, we've never seen one. That is this scarce. I mean, it literally stops the flow stops. Like there won't be no new Bitcoin issued. No such thing. No such thing in the natural world Bitcoin is the first money that is ever done. Done that so it will genuinely act as an unmovable metric to value and price things against so as we figure out how to produce more efficiently and as the economy becomes more productive as our labor becomes more valuable and our time it takes less time to do things. We will see Things Fall exist. Centrally what we see. In the computer Market where progress is incredibly fast, and we see prices fall constantly of all Goods like, you know in three years. My phone has no no value or like a twentieth of its value because the new phones are just so much more powerful and the ability to create something that is the equivalent of my current phone is so cheap like and then we have smart phones now that you know, you can get for 10 20 dollars that you can actually put little apps on like the cheap the ability to make cheap processing and memory now is unbelievable. But what will essentially do is will experience that same level of deflation in a lot of markets. It won't be the same throughout because some markets won't be able to some markets won't reiterate or innovate it obviously is quickly something like Moore's Law does in the computer markets, but because of the scarcity of Bitcoin any Patience egain at any stage in the production it will still compound. So if we get a little bit better at using our energy, well, then even something like shirts shirts use energy that it takes energy to make shirts. Those prices will start to come down in relation to bitcoin and then slight increase in the efficiency of creating shirts or in you know, new designs and new models taking less human labor to do it a machine that actually just kind of stamps these things out constantly. Etc and anywhere down the line like just the ability to feed the employees that keep the machines running being able to do that more efficiently lowering the cost of moving the chicken from from the farm to the actual sandwich that you're serving to your employee if that decreases in price and increases in efficient efficiency while then so does again the entire process that creates shirts or TVs or whatever it is, whatever production process that we're working in. So all of these things will fall in relation to bitcoin as Things become more efficient. And I think this leads very strongly into the discussion on deflation versus inflation which produces a sustainable and healthy economy. And I think I don't know maybe it's just maybe it's just me and like I've been reading this kind of stuff for every seems obvious to me that that's deflation, but I want to address this in full and hit it. Really hard argument on why deflation is vastly preferable and and is a more Justice and actually a something that with inflation you cannot have certain degrees of freedom. It is only with deflation and sound money that you can actually have certain levels of economic Liberties and also social Liberties isn't in an indirect way and I'll kind of hit the that argument I think in another episode soon. I'm hoping to hit it tomorrow, but it means I've got to really focus and get the last of my faults worked out here and kind of fine tune it for tonight. But this this model is really intuitive. And I love the data that he's putting together. He's he's dropping stuff constantly the he's got another great one that he dropped very recently about how Bitcoin markets bull markets start at the difficulty bottom. Like when the when the difficulty actually bottoms out in the in the bear Market you have essentially it's measuring minor capitulation. When do they finally start giving up and it bottoms out and then we start increasing again. Well, basically right now we are in that increasing stage and it would be essentially predicting that in, you know, another 10,000 20,000 block somewhere around like a hundred days like right in the middle of there somewhere. I think it's like like 72 like a hundred 40-ish days that will be hitting the will be hitting the green periods on this block difficulty on versus the price adjustment like the the price growth rate and we'll be back into green territory and essentially historically if you look all of the green area is heavy heavy growth is nothing but upward momentum at that point until we make The adjustment to the new having and basically overshoot the next scarcity level the next scarcity value prediction of our model and then come back down to try to find what the actual equilibrium is. And in his article. He says it's $55,000. But again, that's kind of like I think it would be in our previous previous marker. Yeah. We would be at like 2017. Was somewhere right around 7000 dish it looks like like between 2017 and 18. So and that's what we saw. We saw from the $20,000 Peak. We pulled back down into the six and seven thousand dollar range and we sat there for quite some time and then kind of we had our minor capitulation. We had our final swing down to where Bitcoin was deeply undervalued in relation to the stock to flow model and then As as it sat there for long enough. Well now we got back into the $10,000 range for the stock to float model and it just it again acted like a magnet and it just pulled it right back up and we're getting closer and closer to a having and I think it's going to start it makes sense that it would front run now like this is less of an anomaly less of a confusion in the market for investing in this good like people know having's are coming coming CNBC. Talks about the having. In fact, Joe squawk just mentioned think it was today or something about this actual model is very recently. So this has spread like wildfire. It is crazy to have been watching this because I because I saw this one Plan B was I don't know. I feel like maybe a thousand two thousand followers. It was right around something that was near my follower count because I was like, this is fascinating and I jumped on this. He's so fast because it's just such a there's so many good there have been a lot of models, but none of them have been great. They've been decent but they've all had faults like the nvt and like measuring via like transaction count and stuff in an attempt to actually measure the network like the the square of the number of users and then we've got like the market value to what is it the realized market value God forget that I forget the names. And ex exact acronyms of all these things but there's a lot of very interesting models, but they only seem to work for like a short period of time and in that way. It's cool to see one that doesn't try to measure the network of it because that data is so hard to guess like it's it's coming from so many data points that are easily manipulated or hard to verify in some way. Like how many coinbase users are there? And then obviously transactions you've had a hard cap on the amount of data we can put in the blockchain and then we're moving things off into new layers, you know, it's like it's like measuring the size. Eyes of the internet with the number of IP addresses and obviously that doesn't work as soon as you start getting into home networks and you have 1020 devices in a home that are all on their own their own one IP address on the network. Well, then it becomes pointless to like that metric breaks down really quick early on in the internet that would have worked and that's kind of what the nvt like kind of seems to fail at is that it worked really great early on and then it it started to break down. But this one makes a lot more sense from Bitcoin as the concept of Bitcoin as an asset and actual scarce asset that you can use for a huge number of purposes. The fact that people say, I mean, I love Connor Brown's article about Bitcoin doesn't have any utility and he means it in the sense of Alternate which by the way, I've read that one on the show. If you have not listened to it another great one to go into and obviously he links to excuse me hiiii. Quotes from a number of different great as ABO pieces in this one. I think one of the quotes is from money blockchains and social scalability and then obviously from the quintessential shelling out again both I've read on the show. I will try to remember to link to those and throw those in the show notes so you can check those out but Oh, man, it just I don't remember the hell. I was getting into O'Connor Brown It's so insane that Bitcoin had no extra utility and he's meaning it in the sense that you can't you can't use Bitcoin for other than like, what's within the Bitcoin Network like it is it is a self-contained thing. I can't take a Bitcoin and you know use it for a non-monetary or non Value Store purpose and doesn't it doesn't make any sense. Digital thing it's a proof of the power of Bitcoin in the fact that it's an unalterable accounting system. It's a nun manipulatable and manipulable manipulatable. I guess that's right, accounting system and uncorruptible accounting system one that if we built as a foundation to tether things to, you know, not a shout-out to not not a shout out to some shit tokens, but if we can Whether things are linked things to so that they fall back. So they resort to bitcoin is essentially the the accounting court for all of our monetary goods and all of our store values and contractual Arrangements. There's an unbelievable utility and Power in one that executes 100% the same no matter where you are in the world no matter what jurisdiction you are or who you are no, no social. Your political hierarchy or occupational hierarchy values one transaction over another it's completely a flat playing field throughout the network and it's decentralized and therefore, you know, it's run by its run by the people like like I don't know. It seems a little bit cliche but it is you know, and it's just a fashion fascinating fascinating a show fashion aging So basically it's predicting 2021 got a hundred thousand and twenty twenty-five and onward at a million and pushing higher and this would suggest that this is going to move insanely quick and the ability for governments and other Goods to actually respond to this is going to fall away very quickly. This is going to get out of hand. Only fast and I would be very inclined to think that there might be a time where people are mining just out of a form of securing their asset. So like if somebody is Mining and only getting back like 80% of their good like of their input, but if you're holding, you know trillion dollars worth of value in that chain, it might make sense to to burn an extra 20% in order to in order to know you're creating a buffer between your ownership and like any exchange that you're dealing with. Not sure if I explain that very well. An example an example like people large the extremely wealthy people spend enormous amounts of money securing their wealth, right? They they spend on vaults they buy like entire pieces of property. They they set up overseas accounts. They do tons of work. They hire lawyers. They hire accountants. They they create structures of things in order to secure the wealth and it makes sense that when you have That much wealth to protect that you would want to make sure you have a stake in creating that energy barrier like the last episode we talked about immutability in the blockchain and what it meant for a Bitcoin to be immutable and you know, writing things and digital Stone etcetera that you would want to be able to know that you were contributing to that energy barrier. Even if it meant at a loss, I mean because technically you know when you hire an Armored car to move gold or something. You were quote unquote doing you're securing gold at a loss. It's a enormous cost to secure it. So it might make sense that people might front run this as an actual cost for for the added benefit of knowing the degree of security that they're their transaction has and it could be a situation like it because when we're talking about Assurance is all we're I'm getting into a way different topic here. But in fact know what we'll come back to that because I want to do one on the security Assurance is by Nick Carter. I think I want to hit that one soon because that one's really good. So far actually haven't finished it again. I've gone through and I've started having to skim so many of these articles because there's just my list is massive right now, but that definitely seems like so far what I've read of it looks really really great and I love talking about the assurances of a transaction and how much How much time has to pass before the value of your transaction is defended by the the same amount of energy like value and energy as the transaction itself. So that reversing it would essentially cost the amount that was spent. But again, we'll again we'll get there that's a whole different conversation, but I don't know. I just this gets me so excited because obviously holy shit. Bullish orange coin go up. Those are all great things, but it's just fascinating to have An intuitive model that not only predicts even when you take early data points this one that he just dropped not too long ago about the 2009 212 data that correctly predicted everything in the next six to seven years is just fascinating and I think I think this is the only model that makes serious sense and we have no idea where this goes. We have no idea what it Like to have a perfect monetary instrument, there is no such thing as something that we have used as money that can't that does not have a flow that does not have new coins new new supply of that good being issued into the market. So I think after 2025 to 2030, I think everything is off the table. I don't think we have any idea how this is going to play out and all we can know is that Bitcoin is going to be immensely immensely valuable and we will proof we will see where it goes and I think it's going to be a crazy awesome future even without even without writing the the wave of Bitcoin. I think everyone is going to benefit massively from the literal trillions of dollars saved from corruption and ditional trillion dollars say Moved in inflation and the concern the confiscation of value from The Producers into the hands of the money makers and the bankers and the manipulators and then after all of that to realign incentives with the long-term preference with like to realign culture with savings the savings mentality to end this horrific debt crisis that we are drowning in. The the number of the amount of good that this will produce even if you don't buy any Bitcoin, I believe will be just incredible and I think the value produced as as we find a stable Global monetary good I think and I don't mean that it's stable and price. I mean that stable in its metrics in its core monetary propositions or its Monetary characteristics I guess but as we find that I think the value that will be Unleashed will will dwarf what the internet has done for the world. And I think it's crazy crazy exciting to think that this could truly happen on the order of 10 years, you know, like like we've seen we've seen what 10 to 20 years can do and it only makes sense that next 10 years plays out like the last T and these are exponential Trends. So I think I think we're going to grossly underestimate the impact that this has in the in the long term because we're trying to create that linear. We're trying to put that linear growth, you know, like people think in people do not think in exponents, you know, we think in linear progression, so when we lay out kind of the current state of things Things going forward on a linear growth path. It looks like Oh weird 50 years out. But if you do it, exponentially when you when you actually see the compounding effects of these Technologies and the corrections that some a technology like this could work through like or could start to facilitate. I think we're going to see some I think it's just going to be crazier than we can possibly imagine. It has been a wild wild ride already and I do not think it is going to calm down for quite some time. So anyway, that's just my rant about to stock the flow model and I absolutely love that plan b or a hundred trillion USD, whoever whatever I call them put this together. It's amazing work and he is producing charts. The time they're looking at it from New Perspectives and showing just how to Value these things and what to compare it to and the unbelievable accuracy of this prediction model still blows my mind. So do not forget to follow if you are not following him. What the hell I don't you're missing out on the most some of the most amazing charts and data points in the Bitcoin space. So you got to do that. I will make sure to link to all of his stuff in the Show notes to the article so that you can see the data points and the charts that I was pulling from and trying to describe and also so that you can follow him on medium. And of course dropped some massive Applause on this work and I will link to his Twitter and tag him in Twitter as well. So Yeah, follow him if you're not you just missing out. All right guys, thank you so much for listening peruse and yeah, I will catch you tomorrow. Not sure exactly what I'm diving into tomorrow. Like I said, I'm hoping to get some thoughts together and finalize some notes on a couple of episodes maybe tonight if I get a chance to I am getting my goody bag stuff ready for bit block boom, and don't forget if you were joining me. August tomorrow is the price increase so you got to get it now use my coupon code or discount codes CC and you get 30% off. Don't miss it. You're going to get your tickets get them now and you'll also get a nice goodie from the crypto economy in your goody bag. So with that I think that's everything. Don't forget to subscribe to the show. I am at the crypto Kana me on Twitter follow me up there as well. I'm getting so close to 4,000 it's happening and thank you guys so much for listening to the show. Thank you guys for joining me here on this insane ride through the crypto Konami its development the the ideology that's that it's born from and all the crazy stuff around Bitcoin that is empowering this Thing and making the crypto Konami a reality. Don't forget to share this out with everybody, you know in the Bitcoin and crypto Konami space and until next time I'm guys Swan signing off. Take it easy guys.
The incredible model for predicting and assessing the value of the Bitcoin network by @100trillionUSD is analyzed in his exceptional article that we read on today's show, "Modeling Bitcoin's Value with Scarcity." With an R^2 above 95%, if you plan for a bitcoin future without closely assessing this model, you are ignoring a powerful indicator. Hear all about what it means for "orange coin number" in today's episode! Don't forget to drop some major applause for the excellent work at the original article: https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25  Be sure to follow @100trillionUSD on Twitter so you don't miss out on his continuous amazing work: https://twitter.com/100trillionUSD  Other episodes mentioned in the show to dive deeper: Conner Brown's - Bitcoin has no Intrinsic Value, & that's Great! https://anchor.fm/thecryptoconomy/episodes/CryptoQuikRead_249---Bitcoin-Has-No-Intrinsic-Value---Thats-Great-e43bcm Money, Blockchains, & Social Scalability https://anchor.fm/thecryptoconomy/episodes/CryptoQuikRead_066---Money--Blockchains--and-Social-Scalability-e2ndsj Shelling Out: The Origin of Money https://anchor.fm/thecryptoconomy/episodes/Shelling-Out---The-Origins-of-Money-e2ndom  If you want to support my work and be a part of the exclusive Cryptoconomy Telegram group to get the inside scoop on the show and what other things I'm working on, become a patron! https://www.patreon.com/thecryptoconomy  ---   This episode is sponsored by  · Anchor: The easiest way to make a podcast. 