Wednesday, September 28

Three Reasons PlanB’s Stock-to-Flow Model Is Unreliable By CoinTelegraph

© Reuters. Three reasons why PlanB’s stock-to-flow model is unreliable

In the last two years, the stock-to-flow model proposed by PlanB has become very famous. A quantitative study published on the site planbtc.com shows the model and the prediction that () could reach a capitalization of 100 billion dollars. Obviously, the crypto industry, including me, was fascinated by the logic of the model and even more so by the idea that it could reach and exceed $ 100,000 by 2021.

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In fact, the stock-to-flow model assumes that there is a relationship between the amount of a precious metal that is mined each year (flow) and the amount already mined or previously mined (stock).

For example, what is extracted each year is slightly less than 2% of the gold in circulation (in the hands of central banks and individuals). It takes more than 50 years – at the current rate of extraction – to double circulating stocks, making gold a rare commodity.

Read the full article on Cointelegraph

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Reference-es.investing.com

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