Will Bitcoin follow Moore’s Law?

Last Updated on 2 October 2020 by CryptoTips.eu


Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]

One of the most famous predictions in tech was made back in the 1960s and is known as Moore’s law. At the time, computers were big and clumsy and Intel was only a small player on a market dominated by IBM. Apple and Microsoft hadn’t developed yet.

Intel’s CEO and co-founder, Mr Gordon Moore, predicted that the number of components per integrated circuit within a computer would continue to improve every decade. By the 1970s, he revised his projection and said it would grow by some 40% every two years.

Ever since then, computing power has indeed grown exponentially at such a rate and the trend has become known as Moore’s Law.

Stock to flow

Another such prediction model is the stock to flow ratio of a good, meaning that there is a certain period needed to get all the existing supply of a certain investment asset, like gold or silver for example, out of the ground and into the people’s hands.

This period can be calculated and this time length is known as the stock to flow ratio. For gold it is assumed that the stock to flow ratio is 62, or in other words it would take some 62 years before all gold located in the earth’s crust could be mined and found. For silver, the stock-to-flow ratio is 22 years.

An anonymous Dutch hedge fund manager called PlanB, tweeting with the handle 100trillionUSD, wrote a document earlier this year which calculated the stock-to-flow ratio of Bitcoin and came to a surprising conclusion, predicting an incredible $288,000 Bitcoin price by 2024 at the latest, which would be extremely bullish.

Whenever Bitcoin makes a jump in price, the known twitter handle refers to the document at hand and claims it is all going according to the stock to flow ratio plan.

However, the CEO of crypto app Swan Bitcoin, Cory Klippsten, does not believe the model is accurate and stated that:

It’s extremely important to be bullish for the right reasons, otherwise you’ll have weak hands when your belief is proven false.

By now, even Adam Back, the well known crypto commentator and founder of Blockstream has waded in, tweeting:

One should think about @100trillionUSD’s S2F model like Moore’s Law: it’s just an observation and speculative projection an observed trend may continue.

By 2024 we’ll see who was right, Moore or PlanB.