PreprintCited by 199Blockchain Technology Applications and SecurityEconomic theories and modelsFinancial Markets and Investment Strategies

An Equilibrium Valuation of Bitcoin and Decentralized Network Assets

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Pagnotta, Emiliano, Buraschi, Andrea·2018·SSRN Electronic Journal

Abstract

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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Crossref · 10.2139/ssrn.3142022

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Authors
Pagnotta, E., & Buraschi, A.
Affiliations
  • Singapore Management University (SG)
  • Centre for Economic Policy Research (GB)
Corresponding author
Pagnotta, Emiliano
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
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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