An Equilibrium Valuation of Bitcoin and Decentralized Network Assets
Open accessAbstract
We address the valuation of bitcoins and other blockchain tokens in a new type of production economy: a decentralized financial network (DN). An identifying property of these assets is that contributors to the DN trust (miners) receive units of the same asset used by consumers of DN services. Therefore, the overall production (hashrate) and the bitcoin price are jointly determined. We characterize the demand for bitcoins and the supply of hashrate and show that the equilibrium price is obtained by solving a fixed-point problem and study its determinants. Price-hashrate “spirals” amplify demand and supply shocks.
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Long, S., Xie, Y., Zhou, Z., Lucey, B. M., & Urquhart, A. (2025) · The British Accounting Review · doi:10.1016/j.bar.2025.101682 · Cited by 11 · see citing works
Digital assets in accounting: the concept formation and the further development trajectory
Дерун, І., & Mysaka, H. (2022) · Economic Annals-ХХI · doi:10.21003/ea.v195-06 · Cited by 9 · see citing works
Blockchain: A Review from The Perspective of Operations Researchers
Wan, H., Li, K., & Huang, Y. (2020) · Winter Simulation Conference · doi:10.1109/wsc48552.2020.9383924 · Cited by 9 · see citing works
Can Bitcoin be Trusted? Quantifying the economic value of blockchain transactions
Cole, B. M., Dyhrberg, A. H., Foley, S., & Švec, J. (2022) · Journal of International Financial Markets Institutions and Money · doi:10.1016/j.intfin.2022.101577 · Cited by 9 · see citing works
Gurdgiev, C., O’Loughlin, D., & Chlebowski, B. (2019) · SSRN Electronic Journal · doi:10.2139/ssrn.3328205 · Cited by 9 · see citing works
Token Economics in Real-Life: Cryptocurrency and Incentives Design for Insolar’s Blockchain NetworkPreprint
Laskowski, M., Kim, H., Zargham, M., Barlin, M., & Kabanov, D. (2019) · SSRN Electronic Journal · doi:10.2139/ssrn.3465085 · Cited by 9 · see citing works
Why Fixed Costs Matter for Proof-of-Work Based CryptocurrenciesPreprint
Garratt, R. J., & van Oordt, M. R. C. (2020) · SSRN Electronic Journal · doi:10.2139/ssrn.3572400 · Cited by 9 · see citing works
- Authors
- Pagnotta, E., & Buraschi, A.
- Affiliations
- Singapore Management University (SG)
- Centre for Economic Policy Research (GB)
- Corresponding author
- Pagnotta, Emiliano
- ORCID
- Buraschi, Andrea
- Venue
- SSRN Electronic Journal
- Publisher
- Elsevier BV
- Published
- 2018
- ISSN
- 1556-5068 (ISSN-L)
- OpenAlex
- W2797891494
- Cited by
- 199
- References
- 29
- Citations by year
- 2026: 10 · 2025: 17 · 2024: 19 · 2023: 27 · 2022: 31 · 2021: 33 · 2020: 23 · 2019: 22 · 2018: 16 · 2017: 1
- Type
- posted content
- Language
- en
- Open access
- green
- doi.org
- Locations
- SSRN Electronic Journal (acceptedVersion)
- Topics
- Physical Sciences › Computer Science › Information Systems › Blockchain Technology Applications and Security
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Keywords
- blockchain tokens, hash rate, mining, fixed point problems, price shocks
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Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
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