Monopoly Without a Monopolist: An Economic Analysis of the Bitcoin System [pdf]
This paper mainly focuses on the miner-transaction fee-protocol economics, completely neglecting the real world economic interactions and history of BTC.<p>Satoshi&#x27;s core design of bitcoin minting favored early adopters to mint coins at extremely low cost and processing power, this is why someone traded 10,000 bitcoins for two pizzas because it took no effort to generate those early on. Satoshi decided to decrease the amount of rewards as the network grew older and presumably more users would adopt it, why? This is a marketing gimmick seen with beanie babies and base ball cards where the cost of production is low yet you tell customers the supply is very limited so you must act quick while supplies last. And the supplies of this type of service are increasing with every day as alternative networks offering the same service (blockchains, trustless distributed databases) are increasingly sprouting up. The question speculators should be considering when evaluating the economic worth in trading bitcoins or any other altcoin should certainly take into consideration what value the network provides them versus alternative service networks, what the risk of volatility in each network is especially because extreme drops in value are much easier than rises in price as liquidity is severely limited and many &quot;whale&quot; accounts often own enough supply of coins to crash the entire market [1] [2] [3].<p>Exchanges like MTGox, Bitfinex, etc have been suspected of manipulating exchange rates and insider trading via maliciously scripted exchange bots within the exchange [4] [5] [6].<p>[1] <a href="https:&#x2F;&#x2F;bitinfocharts.com&#x2F;top-100-richest-bitcoin-addresses.html" rel="nofollow">https:&#x2F;&#x2F;bitinfocharts.com&#x2F;top-100-richest-bitcoin-addresses....</a><p>[2] <a href="https:&#x2F;&#x2F;etherscan.io&#x2F;tokenrichlist" rel="nofollow">https:&#x2F;&#x2F;etherscan.io&#x2F;tokenrichlist</a><p>[3] ETH had a presale which sold for $0.35 USD - $0.45 USD. The vast majority of cryptocoin variations premine or rapidly mint their supply, and then game speculators to pass the bag off to greater fools in what is essentialy a pyramid scheme backed by a network of databases running double-entry bookkeeping marketed as magic technology that&#x27;s changing everything.<p>[4] <a href="https:&#x2F;&#x2F;www.theguardian.com&#x2F;technology&#x2F;2014&#x2F;may&#x2F;29&#x2F;bitcoin-bots-bought-millions-in-the-last-days-of-mt-gox" rel="nofollow">https:&#x2F;&#x2F;www.theguardian.com&#x2F;technology&#x2F;2014&#x2F;may&#x2F;29&#x2F;bitcoin-b...</a><p>[5]  <a href="https:&#x2F;&#x2F;medium.com&#x2F;@bitfinexed&#x2F;are-fraudulent-tethers-being-used-for-margin-lending-on-bitfinex-5de9dd80f330" rel="nofollow">https:&#x2F;&#x2F;medium.com&#x2F;@bitfinexed&#x2F;are-fraudulent-tethers-being-...</a><p>[6] <a href="https:&#x2F;&#x2F;medium.com&#x2F;@bitfinexed&#x2F;meet-spoofy-how-a-single-entity-dominates-the-price-of-bitcoin-39c711d28eb4" rel="nofollow">https:&#x2F;&#x2F;medium.com&#x2F;@bitfinexed&#x2F;meet-spoofy-how-a-single-enti...</a>