Vitalik Buterin critiques stock-to-flow model as giving 'false sense of certainty' By AdamMorganMc
Financial models that give a false sense of certainty are harmful and deserve mockery, according to the Ethereum co-founder.Ethereum co-founder Vitalik Buterin came out against overly simplified financial models for crypto markets on Tuesday, citing the stock-to-flow model as a"harmful" example.that the stock-to-flow model was not looking good and he couldn’t help but criticize simplistic financial models.
“I think financial models that give people a false sense of certainty and predestination that number-will-go-up are harmful and deserve all the mockery they get,” heStock-to-flow is a model some bitcoin traders use to forecast the price of the cryptocurrency, that was used for natural resources like gold. As these are scarce resources the amount that can be produced reduces over time, which causes the stock-to-flow ratio to increase.
Essentially the ratio measures the amount of bitcoin available in the market divided by the amount mined annually. This is then used to create a line on a price chart showing estimated prices in the future.
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