Cryptocurrencies
Bitcoin May Evolve Into What Everyone Fears, Mathematicians Say
- Pitt study implies cryptocurrencies are a classic bubble
- Fringe buyers hold sway, and nimble traders may benefit
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Prices of cryptocurrencies such as Bitcoin may never stabilize, and digital tokens risk simply ending up being a bubble.
Using mathematical modeling and experimental economics, two University of Pittsburgh researchers tried to determine Bitcoin’s value, and concluded that it’s "an asset which has no value by traditional measures" and may be in a bubble. Its price is largely driven by the opinion of fringe buyers, often holding erroneous views. As these fringe buyers run for cover, worried that their investment is not as secure as they thought, the price plummets. It goes up when the fringe buyers feel safe enough to step back in, they wrote.