Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
6890040 | Telematics and Informatics | 2017 | 23 Pages |
Abstract
Using cross-sectional empirical data examining 66 of the most widely used cryptocurrencies, a regression model was estimated that points to three main drivers of cryptocurrency value: the level of competition in the network of producers, the rate of unit production, and the difficulty of algorithm used to “mine” for the cryptocurrency. These amount to relative differences in the cost of production of one digital currency over another at the margin, pointing to differences in relative cost of production - electricity goes in, cryptocurrency comes out. Using that as a starting point, a no-arbitrage situation is established for Bitcoin-like cryptocurrencies followed by the formalization of a cost of production model to determine the fair value of a bitcoin.
Related Topics
Physical Sciences and Engineering
Computer Science
Computer Networks and Communications
Authors
Adam S. Hayes,