Logarithmic Scale – An Optimist’s Take on the Price of Bitcoin

By February 4, 2015Bitcoin Business
Click here to view original web page at newsbtc.com
Logarithmic Scale – An Optimist’s Take on the Price of Bitcoin

By now we are all familiar with the price chart bitcoin pessimists throw at us when discussing the imminent “death” of bitcoin and the digital currency space as a whole. The classic bubble spike to above $1000 and the collapse to where we now sit just ahead of $200 does, indeed, lend credence to the suggestion that bitcoin has yet further to fall in value.

However, there is a much more logical way to chart changing values over time when looking at something like digital currency – a logarithmic chart. From a logarithmic chart, somebody looking at bitcoin price versus the US dollar can gain an added perspective. So, this said, what does the price of bitcoin versus the US dollar look like when charted logarithmically since its inception? Take a look below.

Bitcoin

When considered logarithmically, it is clear that – despite the recent decline in price – bitcoin is still very much advancing in value (long-term) versus the fiat reserve. Sure, we may have seen a number of spikes followed by the inevitable deflation, but this shouldn’t be taken as an indication that bitcoin is doomed.

A popular doctor of economics refers to the traditional line chart that illustrates large, quick and rapidly expanding changes in something as “panic charts.” A look at US national debt on a linear chart for example, is enough to induce panic. A look at it on a logarithmic scale will show a pretty much constant rate of change.

While, of course, these are just charts of historical action and – especially in the early days of a breakout technology such as digital currency – cannot be relied upon as 100% accurately indicative of future events, a look at bitcoin from this perspective does at least stand up as an argument for bitcoin’s future, rather than against. Something that we believe is sorely needed at the moment.

Image Courtesy of Blockchain.info

However, there is a much more logical way to […]

Leave a Reply

All Today's Crypto News In One Place