A Brief History of BTC Macro Thesis: Part I
— By Ibrahim Quabboua
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 $900bn 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.
Surely this digital scarcity has value. But how much?
In this article fellas, I will try to simplify some economic metrics used to value BTC, and we are going to discover if they are really, really worth looking at, or are they just exit liquidity for one of the best scammers in the history of Twitter, yes Plan ₿, I’m talking about you
Let’s dig in.
S2F ratio is a measure of scarcity.
Scarcity is the demand for a good or service is greater than the availability of the good or service.
The power-law relation between S2F and bitcoin price over time captures the underlying regularity of bitcoin’s complex dynamic system of network effects as described by Trace Mayer.
S2F model is a power-law function described on a monthly DATA.
BTC price =0.4*S2F ^3 (where S2F=1/inflation rate).
All of these is kind of information processing systems that want to upfront the noobie investors, and we call them Efficient Market Hypothesis.
Currently, in modern finance, two hypotheses are accepted :
Historical price data is already priced in and cannot be used to make profits. Technical Analysis (TA) and Time Series Analysis (TSA) do not work.
Public news from media outlets like MSNBC, Bloomberg, WSJ, and research companies is already priced in and cannot be used to make profits. Fundamental Analysis (FA) does not work.
Risk / Return
This chart is showing a risk/return graph for the best solid investments
Out there, you might be consider looking in it before you make any stupid jump.
The chart shows three classic assets: bonds, gold, and stocks. Bonds have the lowest risk 8% and the lowest return 6%. Gold has a higher risk of 33% and a higher return of 7.5%. Stocks have the highest risk 40% and the highest return 8%.
I assume that you were confused with where bitcoin is placed, and yes you read right that’s a portfolio with 1% BTC and 99% cash, not so trash anymore IMO.
BITCOIN is king, but there are some risks we should pay attention to:
· Risk that bitcoin dies
· Risk of governments making bitcoin illegal and prosecuting developers
· Risk of fatal software bugs
· Risk of exchange hacks
· Risk of 51% attacks by centralized miners
· Risk of miner death spiral after halving
· Risk of hard forks
Bitcoin S2F model is nearly on track, but there is some confusion and being traded upfront to a degree that it is worthless.
Historical risk & return data of bonds, gold, stocks, and bitcoin, shows that bitcoin markets overestimated risk. Bitcoin return was not in line It is possible that markets still overestimate future risks.
All of this leads you to this :
If you understand the tech. And you can observe satoshi’s POV