Bitcoin as Absolute Zero

Thermodynamics

In thermodynamics, the main reason for the existence of thermodynamic phenomena is the thermal difference between two communicating systems.

T(x) = P ₓ / F (x)

where

Pₓ - the current price of asset X

F(x) - forecast price of asset X at a future point in time, from an investor’s PoV

For simplicity, we can ignore risk as a factor.

Based on our definition above, an asset with a forecast price greater than Pₓ can be classified as being underpriced, and would exhibit an economic temperature of <1, and one with a forecast that’s lower than the current price, can be considered as being overpriced, and will have an economic temperature greater than 1.

Bitcoin

Bitcoin represents a truly unique economic good because its supply is fixed regardless of demand. Due to a fixed, known supply, as well as a known total market capitalization, we are able to somewhat predict its price upon asset maturity.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store