Quote from: hatshepsut93 on April 05, 2024, 11:44:25 PM

So this theory tries to tell us that Bitcoin's price is a result of some sophisticated adoption curve, but from my point of view adoption is largely irrelevant for Bitcoin - most of those who own Bitcoin are speculators, some are short-term speculators, some are long-term speculators, but everyone is planning to at some point sell. So instead Bitcoin should be analyzed as a zero-sum investment game. If more money comes in than comes out, the price grows. This growth incentivizes money to stay and wait, basically a positive feedback loop. But this loop can break if too little money will be coming in and those who were waiting will become disappointed and start quitting.

This is quite a controversial comment, but frankly, going back and forth here would end up in a game of definition, semantics and misunderstandings or lack of knowledge on all fronts.

I think one of the most important things that fillippone pointed out is

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Bitcoin is more similar to a city and an organism than a financial asset.

I have been trying to wrap my head around the Power Law Theory here, but it is tough to develop a clear understanding of the matter. franky1 has got some valid points and he is pinning it down when he refers clearly to the term "law". Arbitrarily tweaking numbers such that resulting graphs seem as they were adhering to a law isn't a particularly good way that there is a law at work.

But at the same time I get what is trying to be conveyed here in the thread as a whole and there is some agreement on my part although I have difficulties to put it into very good wording, let alone mathematical formulas.

franky1 made the point of retroactive vs. predictive and this fundamentally interferes with laws. While at first retroactively detecting a law can make sense, arbitrarily tweaking formulas to adhere putatively to a law is problematic or plainly false.

I think the term "theory" would be more appropriate here and it wouldn't really undermine Santostasi's points. His remarks could still be very relevant, it is just that the term "law" may go too far. The reason for my stance here goes back to

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Bitcoin is more similar to a city and an organism than a financial asset.

While there are more and more mathematical models trying to depict "the emergence of cities and urban patterning...", none of these models will ever result in a law as there is a plethora of externalities that could fully undermine mathematical assumptions. The Power of Law would have to hold universally true despite potential externalities. Bitcoin is subject to countless of influencing factors and if it seems to be following a certain pattern retrospectively for a specified period of time, it would be highly hypothetical to derive a law from that.

That's why this remark

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In this sense the content of the article is not a "model" about Bitcoin, but a coherent "Bitcoin theory".

should be carefully considered in the context of whether there are laws at work here. Whether it represents a law might rather be a "coherent theory". I somwhere read the sentence that laws usually nail something down in a very concise manner, and if we are dealing with infinitely complex matters like the development of ecosystems, puring these complex matters into laws is probably doomed to fail. Maybe it could make sense for partial aspects of an ecosystem, but it kind of undermines the whole idea when partial aspects need to be considered in isolation only to make sure they could then be following a law while in reality an isolated consideration makes no sense.

I find this type of discussion very uselful and I wasn't aware of the topic until now. fillippone shared a good one here! In my opinion this will remain a point of contention as there are lots of ways to attack the "law" hypothesis. I don't have a final opinion on this, but I do believe that there is something at work that is at least very approximative of laws (or Power Laws for that matter). I think one of the problems might be that the term "law" raises the bar for universal validity to an undisputable maximum and that's where peope trying to put very complex things into a law will always run into differing opinions. I think there is nothing wrong with someone trying to discern patterns and modelling those into formulas. In a world with ever-growing complexity, the term "law" itself may deserve a less confined interpretation in some contexts. If a pattern were to repeat infinitely, does it make that pattern a law?