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I am relatively new to bitcoin and the inner workings of the economy and i’m currently reading the bitcoin standard.

One of the passages that clicked for me was where the book talked about how the hunt brothers lost over a billion dollars trying to drive the price of silver up, the inevitable cycle of when a consumption commodity is used as a store of value, the simplification i made was they bought up a large chunk of the existing silver supply, it drove the price up, in turn this creates more incentive for the producers of the commodity to produce more.

The production doubled and began to dwarf the existing stockpiles of silver, the price crashes due to an inflated supply and when the dust clears the ones closest to the production on the consumption commodity have siphoned the spending power from the misguided folk that couldn’t understand stock to flow and used it as a store of value.

“for any consumable commodity, this doubling of output will dwarf any existing stockpiles”

Just trying to further my understanding, anyone have something they want to add or correct?
d6
Deleted Account 1y ago

Here is a pricing model for assets based on their respective stock to flow. You’ll notice it tracks pretty spot on with a straight line on a power law basis. Real estate however has a premium of value, perhaps as the most scarce thing it captures more value or because it is essentially subsidized by the banking industry. Even if those aren’t true real estate has major draw backs as a store of value.

- not fungible

- is trapped in its original location

- subject to ongoing expenses and taxes to maintain

Despite this it still has a premium as the most scarce. Due to bitcoins preprogrammed halvings though it will surpass both gold and real estate. Potentially reducing the function of both in a portfolio meaning…

- countries that hoard gold loose to bitcoin hodling countries like #elsalvador

- central banks will have to print even more to prevent a collapsing housing market.

Bitcoin is essentially attacking the fiat system by exploiting the problems it stands to solve.

#stocktoflow #powerlaw #subsidizethis #nostr #gold #realestate #bitcoin

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Discussion

96
nobody 1y ago

dude whoah🤯 love that graph

96
nobody 1y ago

Smart guy told me bitcoin goes through phase transitions like water does, you don’t get that in normal assets where as in bitcoin you can program a different stock to flow ratio over time. This graph is a wonderful thing to look at.

d6
Deleted Account 1y ago

If people just understood that the properties of bitcoin and it’s stock to flow will surpass gold and real estate soon they would have their savings in bitcoin not be 0% of their portfolio. I don’t think most people will ever know or care. It will be applications that get bitcoin to the millions. The applications will be different because the properties of the native currency. That and fleeing the old system will drive the adoption.