Economists to Develop BTC 'Equilibrium Price' Paper

Emiliano Pagnotta and Andrea Burasch have proposed a theoretical structure for networks based on proof of work, which include bitcoin and ethereum.
17 April 2018   147

Two economists have developed a model for estimating the price of bitcoin and other assets in decentralized financial networks. This is reported by CoinDesk.

Emiliano Pagnotta and Andrea Buraschi, professors of finance at Imperial College London, presented a theoretical framework for evaluating networks using the Proof-of-Work consensus mechanism, including Bitcoin and Ethereum.

In their model, analysts use two main variables: the number of users representing the demand side, and the hash-rate of the miners representing the supply side.

The authors draw attention to the fact that decentralized financial networks are unique, since the crypto-currencies in them "simultaneously perform two functions". In addition to being an asset, they also encourage the miners to maintain the network. The equilibrium price of a crypto currency is a solution to a "fixed-point problem, characterized by the interaction of consumers and miners."

Researchers write that this problem has 2 solutions under any set of conditions, one of which is $ 0.

Indeed, if the price of bitcoin were zero, miners would not provide any resource to the network, and its trust would be zero. Consumers would derive no utility from the system and would not pay a positive price for bitcoins.
 

Emiliano Pagnotta and Andrea Buraschi

Professors of finance, Imperial College Business School in London,

But there is a place in this model for a positive equilibrium price. What that figure is depends on the network's hash rate, the expected number of future network users, and the value users place on the network's resistance to censorship, they argue.

According to Pagnotta and Buraschi, a change in regulation in China will have a greater impact on the cost of bitcoin than the same changes, for example, in the UK. Despite the fact that the number of bitcoin users in both countries is approximately the same, there are more miners in China, which means that the restriction of their activities will have a stronger impact on the hashrate and, consequently, the price.

Factor the authors did not take into account is "pure speculative motives," which arguably affected the price of bitcoin more than any other development in 2017.

Australia joins the crypto-discussions arena with Bitcoin & Blockchain Fair

The inaugural Bitcoin and Blockchain Fair will be presented at the Sydney Showgrounds on May 12-13 with an all-round program about cryptocurrency and blockchain
21 April 2018   23

A high profile event in cryptocurrency and blockchain is coming to Sydney, Australia on May 12-13 – Bitcoin and Blockchain Fair. The conference will provide a platform to interact and discuss on all areas of the cryptocurrency and blockchain technology sectors (fintech, investment, venture capital, regulation, ICO, etc.), current opportunities and perspectives in the form of a Forum and an Exhibition Showcases.

The Exhibition Showcase that will allow to exhibit showcases and engage with crypto services providers, government and fintech startups. Forum is the bulk of the conference and is comprised of 2-day sessions to allow international speakers and industry leaders of the crypto and blockchain sectors a chance to share their expertise. May 12 is focusing on cryptocurrency and ICO engagement; May 13 wil cover blockchain technology overview, case studies, solutions and future trends.

The fair is organized by ABF Business and Principal Sponsor Coinspot. Exhibitors and Speakers include attendees from Asia, Europe and USA together with key Australian high profile crypto & blockchain enterprises. The full agenda of the event can be found here.