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Questions tagged [economic-theory]

About Bitcoin as it might be discussed in economics class, e.g. supply, demand and price in theory.

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How could pool-resistant mining change the censorship resistance of Bitcoin?

Researching mining centralization in Bitcoin, I came across Wownero's solo-mining only pool resistance. There do not seem to exist any pool mining Wownero as shown in miningpoolstats.stream. Let us ...
John Smith's user avatar
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2 answers
84 views

Owning bitcoins: does it really make one rich or not?

I have been thinking about this question for years without really understanding it. Let's say Bob invested a small amount of money, some amount around 100 dollars, in 2013, and now it would become ...
cr001's user avatar
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Is it possible to implement further divisibility to Bitcoin in the future? [duplicate]

I’ve been wondering if it would be possible to modify Bitcoin to further split sats so that emission could theoretically continue asymptotically beyond 2140. I’m not an experienced coder (currently ...
b0d's user avatar
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1 vote
2 answers
80 views

What is a lower bound for global bitcoin mining energy usage?

How can we estimate a lower bound for the electrical energy consumed by Bitcoin's Proof of Work (PoW) mechanism? Obviously there is no hard bound, but there are some market laws at work and I think it'...
Dr. Hans-Peter Störr's user avatar
3 votes
2 answers
176 views

Impact of mining technology on global bitcoin energy usage?

I often hear that improvements of mining technology (more hashes per kWh) would improve Bitcoin energy usage. Isn't that just a misunderstanding? Isn't the energy usage hardly dependent on the actual ...
Dr. Hans-Peter Störr's user avatar
1 vote
4 answers
123 views

If bitcoin replaces current monetary system wouldn't deflation be a problem?

Basically that's the whole question. From what I understand in current monetary system inflation is intentional(not high, but moderate). It is done to motivate people to actually spend money instead ...
Piliponful's user avatar
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1 answer
51 views

If bitcoin was created as a currency, why is it used as a trading asset

I just read Satoshi Nakamoto's whitepaper, and in that it states bitcoin is designed and meant to be a decentralized form of electronic currency. But even though this was the original idea of bitcoin, ...
ihsan's user avatar
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1 answer
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Are bitcoins with more confirmations more valuable?

Are bitcoins with more confirmations more valuable, or does the number of confirmations not add a sort of "time value of money (TVM)"?
Geremia's user avatar
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Could OFAC create a soft fork?

If OFAC demanded that no US entity build on top of a block with a sanctioned TX included, would it cause a soft fork?
Bertram Lund's user avatar
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48 views

The competitive practicality of Bitcoin

Bitcoin is to be trustless by the thousands of nodes, but is this no more trustless than the Federal Reserve system? An account size in 8b on each device is a feasible alternative with absolute ...
Nick Carducci for Carface Bank's user avatar
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1 answer
100 views

One address 2+ private keys. Bitcoin future

Since bitcoin uses cryptography algorithms to create private and public keys there is a possibility it could repeat. Person 1: L54w...KraG -> bc1...kq4 Person 2: L3mV...JU8G -> bc1...kq4 So ...
Varun W.'s user avatar
10 votes
6 answers
2k views

Can bitcoin protocol be changed to add economic incentives to validating nodes?

We all want more decentralized bitcoin network and more people to run nodes. However, as we know that things are driven more by market economics rather than philanthropic or feel good factors. Similar ...
dark knight's user avatar
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How interest payment work in lending under bitcoin standard?

In Fiat Standard lending creates money. Whenever the debt is fully paid the monetary supply increases (principal + interest). What happens under bitcoin standard? Assume all the bitcoin has been mined ...
ticktock's user avatar
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1 answer
87 views

How will a common guy use Lightning Network when BTC hits 10 mln$?

If BTC hits 10mln$ and transactions fees will be horrendous denominated in $, how a "common guy" will be able to opt in using Bitcoin, if even opening LN channel will be too expensive then ...
Saunter's user avatar
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What literal thing is determining the price of Cryptos / stocks? [duplicate]

Yes, supply and demand I know. But what literal thing is determining the price. When I see the price changing every second on Coinbase or Robinhood, what is controlling that. Is it an algorithm? What ...
Aaron's user avatar
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Can dust outputs become an economic problem?

I'm thinking about actually economic problems, not about UTXO set size. One example would be: Bitcoin adoption gets global and the value of a Bitcoin gets to be ridiculously high, let's say $100,000,...
My Quid Pro Quo's user avatar
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Do most small miners join mining pools? Is "pay-per-share" the dominant approach?

Is it correctly understood that most individual/small miners join mining pools? Is "pay-per-share" (or some variations thereof) the most popular mining pool approach, which means that the ...
arni's user avatar
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Who is paying for the running costs of Bitcoin?

Bitcoin mining will consume around 70TWh for 2020 (~3 nuclear power plants). As far as I know, electricity is paid using fiat money. If 1 kWh costs 0.1 $, without counting hardware costs, that means ...
souch's user avatar
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3 votes
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How is a USD-chained currency like Tether economically possible?

(I'll try my best to keep it relevant to Bitcoin, but feel free to close it if it seems inapplicable to Bitcoin trading. It's more about economics) Say there's a currency whose supply is controlled (...
MCCCS's user avatar
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2 votes
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Who is the target audience?

I can not stop asking myself the question, what problem does bitcoin actually solve? Before you accuse me of being lazy and not doing any research, here is my thought process: You want to have a ...
Felix B.'s user avatar
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4 votes
3 answers
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What is the incentive to use bitcoin due to transaction fees?

Apologies for any naivety in the question, as my understanding of the subject is still basic. My understanding is that once all the coins have been mined, the incentive for miners comes solely from ...
octosquakk's user avatar
3 votes
2 answers
647 views

Will cryptocurrencies that have a finite supply (like 21m btc) cause deflation?

I figured out that cryptocurrencies can cause a deflationary spiral, since the cap is the same (eg. 21m BTC) but the economy is growing. That would only happen if all coins are mined. But deflation ...
Andrew's user avatar
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2 answers
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Is the 51% attack the only technical reason no country will adopt Bitcoin as a state currency? [closed]

Is the 51% attack the only technical reason no country will adopt Bitcoin as a state currency? Lets suppose a country with GDP size less than 300 Billion USD adopt the Bitcoin as an official currency. ...
Mohaqiq's user avatar
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2 votes
1 answer
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"stable-coins": A formal definition?

In crypto-currency news, we might heard about term of "stable-coins". Can we define a stable-coin as follows: A crypto-currency that is pegged to a fiat / formal currency to minimize the ...
Questioner's user avatar
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If Bitcoins aren't tied to a conventional currency, how did they get so valuable? [duplicate]

I would appreciate it if someone could provide me with some insightful information.
user avatar
2 votes
1 answer
66 views

How does Bitcoin get over the capital controls problem?

So, people now talk about Bitcoin as a store of value instead of as a currency. I'm confused as to how central banks will respond to this? Right now, bitcoin is not widespread. Assuming bitcoin ...
Somya Agrawal's user avatar
1 vote
3 answers
292 views

How can loans work with bitcoin?

Before answering this question please go through this scenario Let's assume that we have now become a bitcoin-only economy and nearly all bitcoins have been mined. Now, someone wants to do business ...
Manish Arora's user avatar
4 votes
5 answers
239 views

Where exactly is the scarcity?

In discussions on the intrinsic value of BTC, one often reads the claim that BTC is scarce because the maximum amount of BTC that can ever exist is 21 million BTC. I find this explanation rather ...
Rodrigo de Azevedo's user avatar
1 vote
2 answers
76 views

What has the nonaggression principle to do with bitcoin trading?

In the Introductory page of the book 'Attack of the 50 foot Blockchain', the author says (in reference to Ross Ulbricht) : A young physics student starts a revolutionary new marketplace based on ...
ecdhe's user avatar
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2 answers
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What is the source of bitcoin value?

From what I understood, the economic intrinsic value of Bitcoin as a currency is based on the "CPU-work" required to produce them. That is what makes Bitcoin rare enough to qualify as a currency. Is ...
Montelieri's user avatar
2 votes
4 answers
225 views

What is the advantage of a market-specific cryptocurrency?

Reading this article, http://nakamotoinstitute.org/mempool/the-coming-demise-of-altcoins/, I wonder why there would be a separate coin for each market, like a coin just for buying bananas, marijuana, ...
Michael Szer's user avatar
1 vote
2 answers
207 views

Block chain and its uses cases for a non-financial asset market

So i have been reading a lot about block chain technology and its use cases in the finance and cryptocurrecncy markets. One thing that guarantees blockchain's success in the cryptocurrency market is ...
Muhammad Hamza Hanif's user avatar
0 votes
1 answer
2k views

Who receives the money when a bitcoin is purchased? [duplicate]

Where does the real money when someone buys a bitcoin? I understand that if you buy from someone or an exchange you are paying them in real money but who gets the money for a newly mined bitcoin?
user70213's user avatar
3 votes
5 answers
2k views

Mining = Printing money

Recently I got in a discussion with my brother over what bitcoin is and what mining is. He had never heard of it so I had to do my best to explain it all from the beginning. I had trouble explaining ...
Atomiklan's user avatar
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2 votes
2 answers
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How would debt work in a bitcoin only economy, and why would anyone ever spend?

Been keeping track of BTC for a while and have always had these nagging questions about its feasibility as the "future" of currency. I like all the not tracked, no third party involvement, etc (i.e. ...
user67874's user avatar
3 votes
3 answers
213 views

Should USD savers be concerned about the rising popularity of cryptocurrencies? [closed]

I recently took an interest in cryptocurrencies. Mostly, I'm interested Ethereum and Smart Contracts, but all the news about Bitcoin's rising price has prompted me to study currencies and economics ...
Michael Prescott's user avatar
2 votes
3 answers
6k views

Will I double my money after a bitcoin hard fork?

Could anyone please explain to me how this fork will work? Examples would be greatly appreciated. The way I'm understanding is, if I have 1 BTC on Coinbase, they will match it. So after the fork I ...
John's user avatar
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2 votes
1 answer
475 views

How to obtain inputs and outputs of a bitcoin block more quickly, using JSON RPC or similar

Currently, it takes me almost 1.5 hours to obtain all inputs and outputs of a bitcoin block from January using JSON RPC. At this pace, it will take a significant amount of time to go all the way back ...
JohnCampbell's user avatar
1 vote
1 answer
47 views

What benefit of Bitcoin (to governments) outweighs the cost of not being able to control the value of a fiat currency?

I've read some books about finance / economics, and one of the things I've read is that governments often like having the ability to control the value of their own fiat currency. This allows them to ...
Nathan Wailes's user avatar
2 votes
2 answers
2k views

Why bitcoin is not inflationary? [duplicate]

I understand that a lot of people today stack Bitcoin instead of spending them and that makes sense because there is a limited number of bitcoins. However, I think that for bitcoin to be a real ...
Mike's user avatar
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3 votes
2 answers
2k views

Can an altcoin be worth less than 1 satoshi (0.00000001 BTC)?

I have a friend who thinks that it's safe to invest in any altcoin that approaches 1 satoshi (0.00000001 BTC) in value, because there will always be someone who is willing to buy it at that price, and ...
Tyler's user avatar
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0 votes
2 answers
612 views

Exchange-based vs over-the-counter (OTC)

I read an article about China ban on exchange, which mentions that ... the ban on exchange-based cryptocurrency trades will not extend to over-the-counter (OTC) transactions. I am confused over ...
Consy's user avatar
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3 votes
3 answers
4k views

If cryptocurrencies have no intrinsic value, how do they originate?

In theory, anyone could create an infinite quantity of their own cryptocurrency right now. However, if you were to do this, it would have no value and, thus, it would be useless. Since value comes ...
M Smith's user avatar
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1 vote
2 answers
573 views

Would free energy cause a market collapse?

Consider a world where energy is free and plentiful. Bitcoin, and other cryptocurrencies, are given value since they are 'proof' of work. This work comes at the cost of: a. time b. energy By ...
Dylan Madisetti's user avatar
-1 votes
1 answer
119 views

Bitcoin usage over time: investment vs spending

1) Some people buy bitcoins as a method to invest/save money, other also spend them directly for purchasing stuff "here and now". First question is how ever can we estimate the ratio: ...
Yurii's user avatar
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2 votes
1 answer
143 views

Bitcoin boom and bust - Inherent instability of Bitcoin

I'd like to put the a question to the community regarding the inherent stability/instability of Bitcoin. I hope it's not off-topic since it's more a economics-type question. So, here's the scenario in ...
mcmayer's user avatar
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3 votes
5 answers
3k views

Why does bitcoin have a value? [duplicate]

I got this pretty good question the other day - why does bitcoin have a value at all? After all it's nothing - who is willing to pay for nothing?
tobixen's user avatar
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1 vote
1 answer
255 views

What would happen to the world if Bitcoin were the only allowed currency? [closed]

Could a world economy be based solely on Bitcoin? I mean the only mean to pay would be bitcoin. From the point of view of economy would this be possible or would all the economy collapse? Could we ...
Jose Javier Garcia's user avatar
2 votes
2 answers
6k views

Halving reward, price effects? [duplicate]

What is the case after halving reward takes place: Would bitcoin price gets double, since its harder to mine? Would Blockchain introduces more blocks (e.g: 1/5mins)?
simonpeter35's user avatar
4 votes
1 answer
132 views

Will people not spending their Bitcoin cause Bitcoin to fail? [duplicate]

Everyone I know that owns Bitcoin (including myself) seems to plan to sit on it until it becomes widely accepted/used and the price sky rockets to a ridiculously high value (100000 dollars each). It's ...
Joe's user avatar
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