Cryptocurrency Economics

in #cyptocurrency9 years ago

Value = Supply x Velocity

This equation is borrowed from the economics of a country and its currency wherein GDP=Money Supply x Velocity. Check out https://fred.stlouisfed.org/series/M2V

This pertains to the USA and the dollar. Notice that velocity is tanking. Inflation will not kick in until that velocity turns up.

As you look at coinmarketcap.com, you will see the capitalizations of numerous cryptocurrencies. Each has its own use case and the value of any particular currency will follow this equation. The most confusing aspect to most is velocity which in economics is the velocity of spend. The bitcoin ecosystem has the most value because it is in use and has velocity. Check out all of the businesses that will take bitcoin. I am looking at the future value of currencies by their utility and thus propensity to generate velocity.

Check out mrrho also. He has many interesting articles.