The Economics of Digital Cryptocurrencies and the Blockchain

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Quote from: alyssa85 on April 29, 2019, 06:25:18 AM

http://ide.mit.edu/economics-digital-cryptocurrencies-and-blockchain-christian-catalini

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I reached out to two of our students, one undergraduate and one MBA, who were interested in essentially giving everybody at MIT $100 in Bitcoin and jump starting an ecosystem here on campus around cryptocurrency.

I was fascinated by their idea. I convinced them to turn it into a research study. They had already pretty much raised the capital from a group of our alumni. When Catherine Tucker and I got involved, the idea was really to first make it safe so that the moment where we were starting to drop half a million dollars on campus, we wouldn't be crazy, but also to learn something from it from a research perspective.

This is a fairly long article but worth reading to find out what happened in the study.

One of the interesting findings was that early adopters were the most likely to cash out.

when comparing to the beginning stage of the blockchain system today situation is much better than the previous situation so we don't expect a lot the development in quick period of time but that changes will always be needed to get the connectivity more better than today.

Reid

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They're students.
I dont think there is that idea of investing in their beautiful minds.
Once they have a family then they might think back into what they have done.

Sure there are a series of good news about bitcoin but still there are much bad news spreading about it.
With that given, there is this fear to lose it even just for $100 of money. They want it all of a sudden which is not new to us here.

We can see a lot of users here who just came in and out when they got what they wanted. Although it is not that much. I dont blame them. It is money already and maybe it changed their day even for just a moment.

Beerwizzard

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I haven't seen a speciality of those students in the article. The point is that sometimes even the smartest people with technical education from silicon valley or some other well-known people are talking complete bullshit when discussion is going outside of their main sphere of their work. So pretty often we may see how incredibly rich people are saying something like we should give free money to everyone or we should stop all wars.

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Quote from: Haunebu on April 29, 2019, 02:38:34 PM

Quote from: alyssa85 on April 29, 2019, 01:48:35 PM

Quote from: dothebeats on April 29, 2019, 12:27:27 PM

This is interesting, giving students some money and use whatever it is for research. It would be way cooler if they could build a working community/economy that peruses the said digital vurrency and not just letting it sit and accrue value over time due to volatility. Surely, this is what most students will do since they also need the money, but hopefully some would kickstart an economy at MIT, perhaps by trading items/essentials in exchange for btc.

Yeah - perhaps give the money to a migrant community and see if they used it to pay bills or remittances.

Or perhaps give the money to a traditional working class community and see if they kept it or sold to buy a new truck.

I don't think that would help too much since majority of them would most likely sell the BTC and convert it into FIAT right away which is why the student group is better in this aspect.

As expected, some of the students HODLED and won bigger gains in the long term.

Or would've been better to extend their study to differemt class of people not just student, such as, people who have businesses, people who likes technology, working class, etc. and see if the result would be the same.

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Quote from: Yakamoto on April 29, 2019, 12:11:07 PM

Quote from: LeGaulois on April 29, 2019, 10:24:34 AM

Good stuff but very long to read
So the students, in the majority, used Bitcoin as a store of value. Not really much different than in the crypto community. The real uses were very slow, again not much different. Over 10% converted to fiat because they were not interested (when you look at the lifespan of students' credits for completing their studies, I'm not surprised that they preferred to get the $350 in fiat)

You also have to consider that they're students and likely needed at least a portion of the money they got from cryptos to reduce their expenses or pay for some of them at the very least. A lot of students do not have money to spend on luxury goods, to begin with, let alone money to have invested when it could be used as a ramen fund. Even if they attend MIT, they're probably suffering more from low incomes due to the affluence of their school and the relatively high cost of living that comes with it. $350 is a lot of money for a student, and it can be a month's worth of groceries, maybe two if they eat cheap. Unless they're aware that they have a good job for the summertime or post-graduation, they will likely be extremely financially conservative. The study can be kind of skewed this way; the demographics don't have a wide consideration and thus skims over the people who do treat it as an investment or "new way of life". It is representative of what a lot of people think of cryptos, but not realistic in most cases.

It's a relatively good study to read, and there are some lessons/ideas that can be taken from it, but it must always have the demographics in mind since there are relatively strong biases.

This could be consider in crypto too not everyone could hold on to their crypto because they need money for food and bills.
Most people would feel bad because other sold their crypto in a low price but there is nothing that could be done since they really need the money.
So about the article it is really great and OP is right it is long but worth the time to read, Thanks for sharing it.

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Quote from: Haunebu on April 29, 2019, 02:38:34 PM

Quote from: alyssa85 on April 29, 2019, 01:48:35 PM

Quote from: dothebeats on April 29, 2019, 12:27:27 PM

This is interesting, giving students some money and use whatever it is for research. It would be way cooler if they could build a working community/economy that peruses the said digital vurrency and not just letting it sit and accrue value over time due to volatility. Surely, this is what most students will do since they also need the money, but hopefully some would kickstart an economy at MIT, perhaps by trading items/essentials in exchange for btc.

Yeah - perhaps give the money to a migrant community and see if they used it to pay bills or remittances.

Or perhaps give the money to a traditional working class community and see if they kept it or sold to buy a new truck.

I don't think that would help too much since majority of them would most likely sell the BTC and convert it into FIAT right away which is why the student group is better in this aspect.

As expected, some of the students HODLED and won bigger gains in the long term.

I think they don't sell all of the bitcoin if they can cover their daily from converting btc to fiat especially if they are aware of the bright future of bitcoin.
They will save bitcoin for another reason because they believe the bitcoin price will increase higher in the future.
That will happen too with the student who can learn about cryptocurrency, and they believe that cryptocurrency has a long journey to get an increase.

Haunebu

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Quote from: alyssa85 on April 29, 2019, 01:48:35 PM

Quote from: dothebeats on April 29, 2019, 12:27:27 PM

This is interesting, giving students some money and use whatever it is for research. It would be way cooler if they could build a working community/economy that peruses the said digital vurrency and not just letting it sit and accrue value over time due to volatility. Surely, this is what most students will do since they also need the money, but hopefully some would kickstart an economy at MIT, perhaps by trading items/essentials in exchange for btc.

Yeah - perhaps give the money to a migrant community and see if they used it to pay bills or remittances.

Or perhaps give the money to a traditional working class community and see if they kept it or sold to buy a new truck.

I don't think that would help too much since majority of them would most likely sell the BTC and convert it into FIAT right away which is why the student group is better in this aspect.

As expected, some of the students HODLED and won bigger gains in the long term.

salty

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Thanks for the interesting article and interview at the same time.After reading the text, I thought maybe not only students have become participants of the 500-day experiment and all users of cryptocurrencies.Perhaps we are the participants of the experiment, the results of which will determine the future and price policy of cryptocurrencies.

jjjfff

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Quote from: alyssa85 on April 29, 2019, 06:25:18 AM

One of the interesting findings was that early adopters were the most likely to cash out.

Well we know of at least one who traded his early Bitcoins for pizza.

alyssa85

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Quote from: dothebeats on April 29, 2019, 12:27:27 PM

This is interesting, giving students some money and use whatever it is for research. It would be way cooler if they could build a working community/economy that peruses the said digital vurrency and not just letting it sit and accrue value over time due to volatility. Surely, this is what most students will do since they also need the money, but hopefully some would kickstart an economy at MIT, perhaps by trading items/essentials in exchange for btc.

Yeah - perhaps give the money to a migrant community and see if they used it to pay bills or remittances.

Or perhaps give the money to a traditional working class community and see if they kept it or sold to buy a new truck.

Genemind

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Quote from: dothebeats on April 29, 2019, 12:27:27 PM

This is interesting, giving students some money and use whatever it is for research. It would be way cooler if they could build a working community/economy that peruses the said digital vurrency and not just letting it sit and accrue value over time due to volatility. Surely, this is what most students will do since they also need the money, but hopefully some would kickstart an economy at MIT, perhaps by trading items/essentials in exchange for btc.

It's really surprising how they conducted their research by giving students bitcoin and studying how will this students use and utilize bitcoin. Most of them had really HODL bitcoin since they had distributed it at $350, which grew to $800. Same as how the real bitcoin community works. There are less bitcoin activity, only few are using bitcoin and most are using it as an investment tool, and surprisingly some are increasing the amount of bitcoin they have because of it's profitability potential.

dothebeats

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This is interesting, giving students some money and use whatever it is for research. It would be way cooler if they could build a working community/economy that peruses the said digital vurrency and not just letting it sit and accrue value over time due to volatility. Surely, this is what most students will do since they also need the money, but hopefully some would kickstart an economy at MIT, perhaps by trading items/essentials in exchange for btc.

Yakamoto

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Quote from: LeGaulois on April 29, 2019, 10:24:34 AM

Good stuff but very long to read
So the students, in the majority, used Bitcoin as a store of value. Not really much different than in the crypto community. The real uses were very slow, again not much different. Over 10% converted to fiat because they were not interested (when you look at the lifespan of students' credits for completing their studies, I'm not surprised that they preferred to get the $350 in fiat)

You also have to consider that they're students and likely needed at least a portion of the money they got from cryptos to reduce their expenses or pay for some of them at the very least. A lot of students do not have money to spend on luxury goods, to begin with, let alone money to have invested when it could be used as a ramen fund. Even if they attend MIT, they're probably suffering more from low incomes due to the affluence of their school and the relatively high cost of living that comes with it. $350 is a lot of money for a student, and it can be a month's worth of groceries, maybe two if they eat cheap. Unless they're aware that they have a good job for the summertime or post-graduation, they will likely be extremely financially conservative. The study can be kind of skewed this way; the demographics don't have a wide consideration and thus skims over the people who do treat it as an investment or "new way of life". It is representative of what a lot of people think of cryptos, but not realistic in most cases.

It's a relatively good study to read, and there are some lessons/ideas that can be taken from it, but it must always have the demographics in mind since there are relatively strong biases.

Harlot

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Christian Catalini is by far the most neatral economist I have ever seen in an interview. He is way different ckmpared to the most traditional economists we have as his perspective is way different because he view cryptocurrencies has a viable way to be part of our daily life and it has proven it to be useful in our world. Unlike how other economists sees it that they will start saying Bitcoin is a bubble or cryptocurrencies has no fair value Christian Catalini had a different approach in the subject and he had explained it perfectly including Blockchain technology.

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Good stuff but very long to read
So the students, in the majority, used Bitcoin as a store of value. Not really much different than in the crypto community. The real uses were very slow, again not much different. Over 10% converted to fiat because they were not interested (when you look at the lifespan of students' credits for completing their studies, I'm not surprised that they preferred to get the $350 in fiat)

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http://ide.mit.edu/economics-digital-cryptocurrencies-and-blockchain-christian-catalini

Quote

I reached out to two of our students, one undergraduate and one MBA, who were interested in essentially giving everybody at MIT $100 in Bitcoin and jump starting an ecosystem here on campus around cryptocurrency.

I was fascinated by their idea. I convinced them to turn it into a research study. They had already pretty much raised the capital from a group of our alumni. When Catherine Tucker and I got involved, the idea was really to first make it safe so that the moment where we were starting to drop half a million dollars on campus, we wouldn't be crazy, but also to learn something from it from a research perspective.

This is a fairly long article but worth reading to find out what happened in the study.

One of the interesting findings was that early adopters were the most likely to cash out.

Topic: The Economics of Digital Cryptocurrencies and the Blockchain (Read 220 times)