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Questions tagged [economics]

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

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3
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1answer
333 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 ...
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2answers
84 views

Is the 51% attack the only technical reason no country will adopt Bitcoin as a state currency?

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. ...
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2answers
333 views

How can I measure the “health” of Bitcoin?

What are the metrics that matter when evaluating the overall "health" of Bitcoin? What are the thresholds? Specifically Economic (e.g. velocity, days destroyed, market volume & beta) Technical ...
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6answers
2k views

Traditional VC investment vs. bitcoin IPO

There are few Bitcoin "stock exchanges" trading mainly BTC mining company pass-through shares, like https://btct.co/ https://bitfunder.com/ We are planning to get investment for our Bitcoin-...
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9answers
2k views

What happens when bitcoin loans start to appear?

What happens when bitcoins loans start to appear? Loans have interest rates that "create additional value". Given the limited amount of bitcoins, couldn't we realistically run out of them? ...
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3answers
193 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 ...
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9answers
102k views

Why was 21 million picked as the number of bitcoins to be created?

Why did Satoshi pick 21 million as the number of bitcoins to be created? What is the significance of that number?
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1answer
262 views

Are there studies about a Bitcoin-like economy with inflation?

Assume, we create an alternative cryptocurrency ("InflationCoin") based on the bitcoin software with one change to the protocol: The Block reward is constant, e.g. 50 InflationCoin Technically this ...
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3answers
148 views

whats the use case of bitcoins?

Before answering this question please go through this scenario Lets assume we have now become a bitcoin only economy nearly all bitcoins have been mined, now someone wants to do business and he needs ...
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3answers
2k views

Is it possible to estimate the Gini coefficient for Bitcoins and if the trend is increasing or decreasing?

The Gini coefficient is a measure of the inequality of something's distribution, where a value of 0 represents total equality and a value of 1 maximal inequality. Is it possible to perform this type ...
2
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1answer
81 views

“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 ...
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4answers
7k views

How to get paid providing full node services?

I run a full node. I would like to get paid for the services I provide. How can I go about getting that to happen?
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1answer
46 views

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.
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2answers
187 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 ...
3
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5answers
661 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 ...
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2answers
3k views

Why are fiat Currencies inflationary and Bitcoin deflationary?

Why are all fiat currencies inflationary, and lose value with time? Could governments make them deflationary? What are the advantages of inflationary currency compared with deflationary currency? ...
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3answers
6k views

Why is mining difficulty increasing?

I have heard in many places that mining difficulty is increasing, meaning that the hardware used to mine new coins will need to be more and more powerful as time goes on. What is pushing mining ...
2
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1answer
37 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 ...
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0answers
139 views

How does the Bitcoin forex work?

Does it work differently in relation to a regular forex because of its underlying technology? How can the market calculate its value?
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5answers
226k views

What are “bitcoin days destroyed”?

The concept of bitcoin days destroyed has been proposed as a measure of bitcoin volume. However, I don't think the bitcoin wiki really explains the idea very well. What is the purpose or advantage of ...
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4answers
30k views

What keeps the average block time at 10 minutes?

I've been told "the network" sets the difficulty level such that there will be one new block mined every ten minutes. I imagine the rich would instead prefer to keep difficulty as high as possible to ...
2
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3answers
126 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. However, since the "atom" is the ...
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2answers
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 ...
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2answers
580 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 ...
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3answers
4k 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 ...
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2answers
211 views

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. ...
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2answers
50 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 ...
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2answers
1k 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 ...
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2answers
83 views

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 ...
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4answers
191 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, ...
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4answers
2k views

Is Bitcoin antifragile?

A friend presented me the concept of antifragile and asked me if Bitcoin is antifragile. I couldn't answer properly, so I'm asking the experts: Can bitcoin be categorized as antifragile?
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5answers
4k views

Is Bitcoin deflationary and inflationary at the same time?

I was wondering as Bitcoin is represented in the public and media as a deflationary currency (for more adept media as payment protocol). Is it really deflationary? Deflation is described on Wikipedia ...
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2answers
813 views

Inequality in a Bitcoin World

So let's assume at some point in the future bitcoin has replaced fiat currencies and we thus have a fixed money supply. Let's also assume we have increasing production and therefore deflation. It ...
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1answer
963 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?
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1answer
170 views

How and where is Bitcoin price physically maintained? [duplicate]

Is there a physical mechanism that determines and maintains the price of cryptocurrencies, be it a robot or a human? Let's say there is a price surge and the first buyer bought a crypto unit at $1. ...
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11answers
10k views

Will Bitcoin suffer from a mining Tragedy of the Commons when mining fees drop to zero?

One issue that I haven't seen clearly addressed is the possible Tragedy of the Commons in Bitcoin's future (see this answer). 40 years into the future, the only significant direct benefit for honest ...
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2answers
330 views
2
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1answer
345 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 ...
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4answers
706 views

Would bitcoin be destroyed if a wealthy organization obtained a CPU majority for a sustained period?

Inspired by this question ("Could bitcoin be destroyed by an entity cornering the market?") and the top comment on this answer to this question ("How much would it cost to execute a 51% attack?"). ...
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1answer
29 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 ...
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2answers
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 ...
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6answers
7k views

Who issues bitcoins and how?

I can't find information on who actually issues the bitcoins. I understand that miners generate new bitcoins but what party is responsible for issuance?
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6answers
8k views

Why did Bitcoin first start to gain economic value?

I am really having difficulty answering this: Why does a bitcoin have an economic value, such that there are people willing to trade US$ (or any other traditional currency) for these virtual ...
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2answers
455 views

How do we know that the algorithm of Bitcoin does not embed bugs since inception?

I'm new to Bitcoin. My understanding as a trained economist (and not a programmer or IT expert) is that the key selling point of Bitcoin is the assignment of monetary policy prerogatives to an ...
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1answer
774 views

How much Bitcoin volume is for purchasing stuff versus trading/speculation/investment?

What percentage of Bitcoin transaction volume is due to people actually buying stuff ("goods") versus between traders, investors and speculators? Of the "goods" volume, what percentage is for illicit ...
2
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1answer
72 views

Are there any instruments that I can use to trade bitcoin volatility?

In the stock market, there are several financial products that allow an individual investor to trade/hedge daily volatility? As an example, there is the VIIX. Are there any such financial products ...
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3answers
3k views

What happens if Bitcoins are lost

Since there are a finite number of Bitcoins that can be created, I am wondering what happens if some of the coins are lost. My questions are three fold: How do you define a "lost" coin? For example ...
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15answers
21k views

Does hoarding really hurt Bitcoin?

Some people believe that hoarding hurts the Bitcoin economy. But are they really right? As long as corresponding goods vendors and services will be here to stay and reinforce people's faith in ...
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2answers
171 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 ...
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1answer
98 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: ...