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The block is hot
Published in Massimo Ragnedda, Giuseppe Destefanis, Blockchain and Web 3.0, 2019
Sune Sandbeck, A.T. Kingsmith, Julian von Bargen
This purchasing power volatility has rendered it fundamentally useless as a store of value, and most long-term holders of Bitcoin have invested in it speculatively, as an asset that should theoretically increase in value given its deflationary architecture (Weber 2016). For those who intend to use bitcoins as a medium of exchange, however, there is an inherent incentive to minimize the amount of time that bitcoins are held, since its value oscillates unpredictably. Similarly, sellers who accept Bitcoin as a means of payment typically quote prices that float according to Bitcoin’s exchange rate with an established currency such as the US dollar. In this sense, Bitcoin not only fails as a store of value but also as a unit of account, since its instability leads to prices being implicitly denominated in established fiat currencies.
Crypto-assets portfolio optimization under the omega measure
Published in The Engineering Economist, 2020
Javier Gutiérrez Castro, Edison Américo Huarsaya Tito, Luiz Eduardo Teixeira Brandão, Leonardo Lima Gomes
In January 2009, the first block of the system, known as the “genesis block”, was officially created, and since then, the number of users of the system has been steadily increasing. Since the inception of Bitcoin, many other crypto-currencies known as altcoins loosely based on the Bitcoin concept have been created, each with their own distinct characteristics. More recently, the use of crypto-currencies has expanded to include its use as a store of value, in addition to a means of payment. Thus, crypto-currencies have also become a new class of investment asset, competing with any other traditional investment asset, such as stocks, fixed income securities and commodities (Baur, Hong, & Lee, 2017).