28
votes
Accepted
If Bitcoin becomes a globally accepted store of value, would it be liable to the same problems that mired the gold standard?
It would not just be plagued by the same problems it would create some new ones.
Following the Weber (2016) who actually written research exploring exactly the question that you are asking here:
The ...
- 57.7k
9
votes
If Bitcoin becomes a globally accepted store of value, would it be liable to the same problems that mired the gold standard?
If someday this "bitcoin standard" does come to fruition, would it be susceptible to the problems that plagued the gold standard?
A bitcoin standard implies that all major countries have ...
- 9,907
8
votes
Accepted
Are cryptocurrencies a ponzi scheme or a bubble?
In general, "Ponzi schemes" in the context of asset pricing refer to "rational bubbles", or a failure of the transversality condition you need when passing from a flow identity to a present value ...
- 691
7
votes
If Bitcoin becomes a globally accepted store of value, would it be liable to the same problems that mired the gold standard?
The only real advantage of "bitcoin standard" over gold standard is that bitcoin standard wouldn't drive gold prices up, thus depriving of it industries which need gold as a raw material.
...
- 229
6
votes
Does an instant settlement system (such as blockchains) eliminate the possibility for short selling?
Imagine:
I borrow 1 bitcoin from you and agree to pay you back $(1+r)$ bitcoin in a month.
I immediately sell the bitcoin you lent me.
One month from now, I buy $(1+r)$ bitcoin and pay you back.
If ...
- 906
5
votes
Is any aspect of the cryptocurrency adoption violating a widely held economic tenet?
There is quite a bit of research on it and a good argument as to why central banks should not issue cryptocurrencies, but should issue electronic money. I would recommend reading https://research....
- 2,006
5
votes
Do 'liquidity pools' effectively determine market price?
I've never heard of this before so I have no idea if this works well. However, In some sense I think the concept is quite interesting.
Let $B$ be the amount of rice in the pool and $A$ the amount of ...
- 12.5k
4
votes
What is a suitable exponential to model a currency or cryptocurrency price increase?
If I understand correctly you are asking for a model of the price of bitcoin based on the number of transactions.
This is impossible for a number of reasons.
1) Theres not necessarily a relationship ...
- 954
4
votes
Theoretical market capitalisation of a crypto currency?
As there is no practical limit on the number of cryptocurrencies that can be created, and as no one crpytocurrency has a unique advantage over any other, and as no cryptocurrencies are legal tender ...
- 8,168
4
votes
How are cryptocurrencies reported in GDP?
Mining cryptocurrency can be considered an export of computing processing time, which is paid in a foreign currency (e.g. BitCoin).
The GDP is a measure of production of wealth of a nation. Exports ...
- 2,155
3
votes
Accepted
Facebook's Libra - Why would it vary in value
It will vary in value because trust in it will fluctuate just as trust in facebook fluctuates.
There will also be volatility as trust varies in confidence in the payment system; its integrity and ...
- 8,168
3
votes
Accepted
Is any aspect of the cryptocurrency adoption violating a widely held economic tenet?
Cryptocurrencies can be analysed from different perspectives: from the monetary perspective or from the asset & security perspective. The difference is: a digital asset is a good with some value ...
- 2,155
3
votes
How do economic and financial policies in government deal with cryptocurrencies?
In order to increase use of a cryptocurrency it could be suggested that the developers making this currency should not seek to develop a medium of exchange which would work separately from the country'...
- 889
3
votes
Optimal pricing for Crypto-Currency Exchanges
You are missing the key element, transfer fees. If the transfer fees are large enough, then the marginal cost to move between exchanges just needs to stay inside the gross bid-ask spread. It can ...
- 2,006
3
votes
Financial Smart Contract on Ethereum: can an Ether Futures contract be priced in Ether?
Futures and Options are all about exchanging something for something else. These kind of derivatives all involve exchanging different 'kinds' of goods so it doesn't make sense to have both sides ...
- 502
3
votes
Accepted
Why exchange rates of national currency are usually stable, where as cryptocurrency like bitcoin and ethereum is highly volatile?
The value of currencies (including most popular cryptocurrencies) is set by a market. If more people want to sell the currency (i.e., exchange it for a different currency) than to buy it then some of ...
- 17k
3
votes
How does the size of the largest cryptocurrency compare to the largest traditional currency?
The Wall Street Journal ran a great article comparing cryptocurrency sizes. The article compared the asset classes by relative market capitalizations if you added everything up.
Source: WSJ
Source: ...
- 353
3
votes
Why does the entire cryptocurrency market go down when BTC goes down?
Bitcoin is the market leader for crypto-style assets - it is older, more established, its brand is more entrenched. For example: I can expect others to know about Bitcoin off the top of their head, or ...
- 3,477
2
votes
Is it valid to compare cryptocurrencies by using their smallest divisible unit?
No, the above calculations are not a valid way to compare cost of these curencies, for exactly the reason you state: a cryptocurrency is just worth what someone is willing to pay for it.
They don't ...
- 8,168
2
votes
What are the differences between cryptocurrencies and digital currencies backed by CBs?
Two more differences
(1) You can pay your taxes in a government controlled digital currency, and you can't do that in cryptocurrency. According to Modern Monetary Theory, that is an essential ...
- 1,358
2
votes
How can lending be feasible on blockchain?
So, I don't understand how loans would be feasible on blockchain.
Lending and borrowing money via blockchain is similar but not equal to traditional methods.
The similarities:
Same parties: lender, ...
- 242
2
votes
Accepted
Currency Value Formula
This is a difficult question in that it is very difficult to prove that something is impossible. However, based on the types of analysis done in financial markets, estimating supply and demand curves ...
- 9,907
2
votes
How do economic and financial policies in government deal with cryptocurrencies?
Governments and financial institutions usually don’t like anything that is not under their control. The same applies to cryptocurrencies. In this case, however, it seems that such careful policy (so-...
- 462
2
votes
Crypto-tokens: how do they function in a latter stage of company?
The companies who engage in these sort of mechanisms expect the token to have a variable price which remains accessible and fair for the product in question, and also keep some tokens for themselves ...
- 2,155
2
votes
Accepted
Theoretical market capitalisation of a crypto currency?
Unfortunately, those who are riding the current trend do not have a clue about what they are doing. I guess, they don't even think of hypothetical situations you've given above to legitimise ...
- 2,020
2
votes
Does an instant settlement system (such as blockchains) eliminate the possibility for short selling?
I feel there's some technical confusion in the original question regarding "Instant Settlement" and BitCoin that's worth clarifying.
Traditional short-selling doesn't occur because of the lack of ...
2
votes
Accepted
What is a suitable exponential to model a currency or cryptocurrency price increase?
There are assumptions in your thinking that probably are not valid. You are observing exponential growth in the short-run and assuming that the valid model is exponential. There is plenty of ...
- 2,006
2
votes
Venezuela Petro Cryptocurrency
Cryptocurrency is never a good medium of trade exchange compare to printed notes.
Anyone follows the history and trend of cryptocurrency can tell you that, cryptocurrency has become speculative ...
- 381
2
votes
Accepted
What determines a new cryptocurrency's initial value?
A cryptocurrency's initial value is set at the same way as an established cryptocurrency.
It's the price that people are willing to pay, when they believe the hype told to them by the crypto's ...
- 8,168
2
votes
Whats the math behind calculating the price of cryptocurrency through supply and demand?
Prices are set the same way as in any other market, which is to say that there is a (continuous, ongoing) process of tâtonnement where (say) buyers find that they cannot purchase at the maximum price ...
- 335
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