What is money, how much of it do you have, how can we value it, and where is it all going? We will attempt to answer these ideas here in the Value of the Dollar.
Welcome to The Value of the Dollar and The Battle for Crypto. This battle doesn’t just take place now, it begins amazingly all the way back in the Middle Ages with the Knights Templar. The Knights Templar began an important service of accepting gold and in turn releasing an IOU. They would protect the gold for you and your IOU could be redeemed anywhere in Europe; convenient, if you are a traveler or pilgrim. However, it gets better, and the Knights Templar couldn’t resist temptation. They began creating extra IOU’s out of thin air just because they could. They would take in ten pieces of gold from ten people and issue them IOU’s, they would then lend those 100 pieces of gold out and additionally create an extra say 20 or more IOU’s. The question then becomes what is money? At this time, it is whatever the Templars deemed; if there was another cathedral to be built simply issue more IOU’s and since they are redeemable anywhere and the general populous swapped them due to trust in the Templars, the idea went on. Behind their shroud the Templars could create and expand. This is a form of counterfeit: where the Templars issued credit and created wealth outside of the monarchs of the age; counterfeit money simply means you are countering the official currency of the realm. Bitcoin is a counterfeit currency. The Templars, like Bitcoin, seemed to be global and truly beyond the realm in nature. However, the Templars were not the only ones using obscurity and the curtain to advance their position, the monarchs were doing it as well.
They had the benefit of seigniorage, where they could profit from the issuance of currency and their interest-free loan that went along with it. Bitcoin does this in blocks, every ten minutes 3.125 new Bitcoins are minted, in Bitcoins case this creates interest and not inflation while we ask "how can this work for the whole community?" This new money could make everyone very happy, but, as we pump money into our country, gradually, more dollars chase less worth and the inputs for production rise and thus the poor get left behind. You can argue that their wages may rise in tune, although this rarely happened, as it is the nature of capitalism to keep wages low, and the people were generally left in the dark. Bitcoins blockchain provides transparency and clues about its health, use and reach.
You could also say we could buy more foreign goods from behind our shroud, and that is perfectly fine and wise but you must remember the dollars you issued to buy foreign goods are now sitting in a foreign sovereigns treasury, and if they become worthless, if you don’t actually produce in turn, if you issue ten billion of your dollars, swap it for his dollars, buy his stuff and then don’t come around and offer anything but your inflation in turn, your reputation and dollars will be burned. In the modern era this is seen as a demand for foreign currency to buy their products and a reduction in yours. The short end of inflation is that if you issue a bunch of money as a one-time thing you may be able to get some goods now, but if you don’t do anything in return or have the trust of the people it is useless. If everyone knows you just issue money all day every day to pave roads, they are going to value that currency less and less. If everything goes from $1 to $5 and you still didn’t do anything, your neighbor will know his loaf of bread is $1 and yours is $5 so he has a stronger, more effective currency than you and he knows it. If a foreign powers dollar is higher and more powerful than yours it makes sense for them to use it to move in on you; he can control more of your dollars for less of his. If your bread is cheaper, because your paper is worth less and less, they may buy it and export it from your country; or in the case of mercantilism, buy goods from you at lower prices and export to you finished goods at higher prices. This initial buy-up can help bring demand back into your nation and thus creates the typical business cycle. So, for the poor and for your pride you must be careful.
This carefulness was found in the association of gold and currency, a practical but primitive approach; it generally put people on the same footing and foundation. Thus, the pump and dump scheme of monarchs is generally over, but they still had tools of deception remaining. Instead of pumping the amount of money in the system up, they tied it to gold, and they would “clip” coins or “cry down” their value. The monarch would rattle up debts, building, hopefully, awesome things for the people. First, the monarchs would inspire the people to build amazing works for the nation. They would pay the people from their treasury. Then the nobles would tax the people and pay the monarchs. The monarchs would call in taxes of gold and silver coins from the nobles. He or she would then siphon off or clip say 20% of the gold or silver of the coin and presto-changeo have 20% pure gold and silver to play with, hopefully helping the people who built for him or her or being used to buy foreign goods. Then the monarch would say to his or her nobles this coin with 20% less gold and silver is now worth 20% less and you must make up the 20% difference on your taxes next year! So where are the extra 20% of these coins going to come from? The monarch! To their best friends and, morally, the people who work for it. Thus, the monarch makes 40%; 20% of pure gold now and they would then issue 20% more new “cried down” coins in credit. So, the nobles have to scratch for an extra 20% and could get breaks or favor from their Lord creating more fat in the system and a form of cronyism. This made the nobles quite mad but meant the people working for them had to work harder and produce more, as well as additional wealth for the Kings and Queens. Ideally, they want to produce more and have it cost less; this is why crying down coins is brilliant, it is the golden rule and a bastion of finance. It created balance. The monarch can spend 20% pure gold now and make the system work 20% harder in the future to make up for it, creating credit and thus… time is money! Without it, is a barter system. But what is money really? Thus far we are exploring inflation, credit and currency; and the idea of how they, as we have seen, are produced by sovereigns and exchanged between monarchs and nations. We have seen the curtain. Bitcoin seeks to fight the curtain and takes it one step farther to produce wealth, credit and exchange services in a transparent decentralized manner. Bitcoin was created as a challenge to the 2008 banking crisis, as a decentralized solution to money and wealth that was produced and exchanged in ways that endangered investors and the people paying loans, the backbone of our economy, shaking greedy capitalism to the core. Bitcoin can produce unique tokens, use smart contracts to exchange and move money and create credit in special ways, and the blockchain can track and foster exchange and manage trust in the system!
Bitcoin was created by Satoshi Nakamoto and is known as a new counterfeit currency that is decentralized and truly global in nature, and set to disrupt the banks and their inflation. Bitcoin does not produce inflation it produces interest. Bitcoin produces new Bitcoins in blocks, 3.125 every ten minutes. These new coins keep interest in the currency and rewards workers for verifying the accuracy of transactions and helps grow the system. With Bitcoin, exchange is facilitated by the blockchain. This is a method of showing everyone where the Bitcoins are going and who has them. Then, Satoshi takes on the curtain with a public ledger. He fights inflation and even the gold standard by attaching value to a Proof-of-Work. This Proof-of-Work is based on money spent on the inputs of the mining process and an open ledger system, as well as every coins use. Imagine if a lender or monarch had to actually be responsible and transparent in their dealings? This responsibility can span the globe and in fact makes Bitcoin ideal for international trade.
Let’s look at an example. Say a foreign worker resides in Canada and wants to send money back home to her family in Indonesia. She can work and then send Canadian dollars back home through Western Union, mail, or perhaps a bank, at a high rate. Now this takes money right out of the Canadian economic system and sends it to Indonesia. When the exchange is made it puts upward pressure on Indonesian currency even though they did not produce anything, Canada did! Bitcoin can solve this. The lady instead gets a Bitcoin wallet and buys Bitcoin from a local Canadian Bitcoin company, then, she sends the Bitcoin to a specified wallet in Indonesia who then redeems it at a local Indonesian Bitcoin company, or as a pre-paid crypto-visa card, or through another local person or exchange, for Indonesian dollars at a fraction of the cost of the old system. You can also borrow Bitcoin and get credit at a lower rate than most currencies. So, what is money? In this case it is a system of convenience and a transfer of wealth and equity.
Nations, rulers, and individuals have been trying to figure out what money is since the beginning of time. Is it a trade, a barter, a piece of code, a type of credit or investment, a new idea or a symbol, is it time as they all say? A transfer of wealth is how most people value money, but we seriously disagree. We argue that money is not a measure but a method. (It is not selfish it is a tool). In Bitcoin, it is not the value of the coin, but the value of the system, the method to move that money, namely, the blockchain. We would like to draw a difference between Bitcoin the measure or dollar value and Bitcoin the method, or the system, also known as the blockchain, to transfer that money. If you are a consumer, you look at a pack of smokes and say “hey, that is five dollars” if you are a producer you say, “that pack of cigarettes is rolled tobacco, all manner of deadly chemicals, transportation, and retail.” These different positions represent the materialist and chartist movements. The materialists believe money is tangible gold and silver. The chartists believe it is a mathematical relationship between people the economy, a social contract and work. The chartists have the greatest potential for growth. They say enlightenment is the awareness of what is behind it and how it works, and this is where the chartists win. Your money is not tied to some brick of gold behind the counter that stagnates growth, it is a mathematical relationship between your pocketbook, societies, and the banks.
What is behind Bitcoin is a powerful tool known as the blockchain. You can measure Bitcoin in many ways, but the method of Bitcoin is the most robust. The diverse blockchain has the ability to have programs run “on top” of it. It can be used to create “Smart Contracts” and levy useable, tradeable, tokens. The blockchain can be used to vote. Every person sends a micropayment or token to one of say two wallets. We can verify that everyone sent a payment and even who! Libertarians don’t want this kind of information out there but based on the past, we can still subpoena people and find crime on the blockchain. The blockchain and Smart Contracts can be used to track and divide up royalties and payments. You can even search the blockchain yourself at blockchain.com. You can use blockchain technology as a way to facilitate your supply chain. At each part of a products journey it is rendered as a log or payment from A wallet to B wallet. You can use blockchain to prove your diamonds were not blood diamonds and that your Louis Vuitton came from Louis Vuitton by checking the blockchain. You can use blockchain technology to transfer titles of land and create titles. It belongs to A who sold it to B who sold it to C. You can use the blockchain in games and awesome platforms to trade items and track their journey as the game advances. You can create your own NFTS, games and items and store them on the blockchain and beautiful marketplaces. You can use the blockchain to track re-saleable art or concert tickets forever cutting out a middleman like eBay and giving more money to the artists. You can use the blockchain to log scientific discoveries permanently and give credit to the creators. You can use blockchain to prove copyright and claim. You can use the blockchain to blast information to a network. You can use blockchain to prove your identity. You can use it to log and credit work that has been done. All of these transfers are transparent and can be viewed. They can even be used to create credit: the blockchain knows how much you made last year, and you can give claim to that, and even levy a token. Thus, you can see “the book value” of Bitcoin, or how thick the book of trades are with in Bitcoin. You can see how many people are in the pit buying and selling Bitcoin and you can see how often; you can see the liquidity and the value. You can use this to derive a price. Most people only look at the outstanding number of Bitcoins in circulation and their current worth, they don’t see the whole of Bitcoins value, that is to say, Bitcoins applications and “velocity of money.”
Velocity of money is how fast money circulates through the system and is an integral part of its value and nature. Currently the velocity of money in America is around 1.4 times and 2.42 for Bitcoin respectively. The velocity of money tells the true value of Bitcoin. As it is passed around and around you can actually collect goods in the form of gold and silver, access to oil, real estate, NFT art tokens and investments, social ideas and ideals, the curing of diseases, work services, tasks, jobs, fair games, crazy betting platforms, travel and vacations, paid bills and Amazon and Walmart items. You can even get paid to surf the net and spend time online, you can tell the world about yourself and the blockchain will listen and record it. We will show you how this is done. As the velocity increases and more people get into Bitcoin you could spend your wallet only to have it refilled by some new tokens airDrop! So, money is not a measure but a method. It is not that Lamborghini you got, it’s how you got it: were you exploiting children and selling drugs? It is not Bitcoin the measure of value but Bitcoin the method of value. This makes more sense for investors. Don’t focus on the price, focus on the system and what it can do. Put first things first, then you can get a predictable price based on the blockchains behavior. We would admit that investors who only speculate on the price of Bitcoin are selfish and uninformed. It is not the rise in price of Bitcoin that should matter to investors, it is the rise of the Bitcoin system, culture and ecosystem that matters. Put your dedication to the system over your desire for profits and you will become a true capitalist investor.
Bitcoin is a community and a philosophy. Although, it is an amalgamation and melting-pot of philosophies it is sound. Imagine what Bitcoin means to a youth in communist China. It spans the world and is business incarnate. It is pure hands-off capitalism. It is the transfer of value and even has the ability to create credit and wealth through smart contracts, tokens and the blockchain. With tokens it can help you become your own bank. It is technology and programs running “on top” of the platform. It can let you speculate on anything and act as a monetary hedge. It can bring the under and unbanked into the modern world. It can cut the costs of doing business by reducing credit card and other fees. It is a decentralized, no middleman, tool for the proletariat. It can help you see behind the veil. It frees people from central trust. It is an alternate system to invest in. It is libertarian. Warrant Buffet called it a “mirage.” But we say The Value of Bitcoin is in the future.
What, however, is the value of a Bitcoin or even a Dollar? As die-hard chartists we will attempt to answer that for you. Put on your contemplation and competition hats and reach for the sky. In this case, the sky is the limit, and the limits are exactly what we are against. We are the moderator of moderation. The method behind the madness. We are the social-utopian capitalists that will break through the veil… again.
How can we define a Bitcoin Dollar? What gives Bitcoin its value is six things: the miners, favorable tax laws, smart contracts, tokens, blockchain technology, and philosophy. We can add up all the dollars demanded and divide by the number of coins to get an estimated value for production. We can also use simple math to gauge supply and demand and even see who is buying and selling and at what breakeven price. We can see remittances: money sent overseas, as a use for Bitcoin as well as investor, business and market sentiment. Bitcoin is typically classified as the entire Market Capitalization or Network Value being the outstanding number of coins multiplied by price. It is also calculated in 24 hour $USD Trading Volume. Traders will take the Network Value and divide by the daily 24 hour $USD trading volume to get a multiple. They want to see how many times 24 hour trading goes into Network Value. If this is happening faster that is a good sign for the network. We argue there is speed of Bitcoins moved and speed of price to be compared, along with many other formulas, as there are many ways to skin a cat, just think simply. There are also the crafty miners. They spend thousands upon thousands of dollars for their specialized mining rigs, how much do you think they would be willing to sell a single Bitcoin token for?
The Miners
We can first define a Bitcoin Dollar based on what a miner would sell it for. This is a simple calculation. We first find Bitcoins Hash Rate. A hash is an attempt to solve Bitcoins Proof-of-Work. We want to find the SMA Smooth Moving Average of the last 30 days. You can find that here. We will say it is 550 EX/s for Exo hashes Per Second. You then need to know your hardware’s hash rate. You have 2 Bitcoin Antminer S 19s for 257 (Tera Hashes/s) TH/s x2 = 514 TH/s. You convert 514 TH/s to 0.000514 EX/s. Divide that by 550 EX to get your stake in the network. It is 0.000000929. You times this by 164,062.5 new BTC added and you get 0.152 BTC a year. You spent $8,276 on equipment for 0.152 BTC. Now divide your cost of $8,276 / by 0.152 BTC and you get $54,447 per Bitcoin as a minimal price. We can check and see we have 2 out of 5,812,947 Bitcoin Antminer S 19s in total for a network stake of 0.000000344 or similar to our original. You can also use this mining calculator! We put in 514 TH/s, 10,690 W, and $0.13 per kWh and make 0.34 BTC a year and including electricity costs of $12,000 we make $6,500 a year with a Bitcoin price of $54,447. If Bitcoins price is $62,000 our yearly profit with electricity is $9,073 or $24.40 per day. We can also check and use USD/THperDay. So, on Jun 27, 2024 that value was 0.04768 Per TH. Multiply that by 514 TH we made $24.50. Not bad. Thus, a miner will earn $25 a day with electricity and wants a price of $54,447 to $62,000.
The Formulas
Network Value
Network Value Market Cap = Total # of Units * Price. We can also look at Network Volume as a function of value. If Total # Of Units goes up and price comes down it may rebound. If price goes up and Total # of Units goes down price may fall. Simply do the calculation with two values this month and note Units and Price. However, cheat and see if there are more buy or sell orders. This way if there is a lot of selling volume, but if it is for sales you will know! Lots of selling will reduce the price, lots of buying will increase it.
Net Work Value / Volume Per Day = Velocity. Velocity is the most important thing! It represents usage and demand. It is usually around 30. You can use an average to see if it is increasing or decreasing. If you want to dig deeper go reverse the formula so (# BTC moved over period * AVG Price over period) / (# BTC Total * Price now). This will give you a number you can plot. It will show you the power of each period vs now; and the power within each period! You can plot this on a graph.
You can also take BTC moved / Net Work Value to find a value and plot it over time.
$ Volume Per Day = BTC moved * Price
$ Volume Per Day / Price = BTC moved. Watch how many BTC move and by what price. Compare: Higher Price with lower BTC moved may cause price to fall, unless there are whales. More moved means Price may rise, if there is not a sell signal as noted above.
# of Units Used Over Time / # Of Total Units = FLOW / STOCK = Ratio Of Demand.
Ratio Of Demand * Price Over Time = A Success Ratio. Use this against another Success Ratio! See the movement for a given price point and plot over time!
Speed in #Numbers = STOCK BTC / FLOW BTC transacted over time = Multiple as a portion. Multiply by FLOW BTC to see how fast STOCK will be attained. You can also reverse the formula to get a % and see how fast it is to get to STOCK.
Speed in $Dollars = Net Work Value in $ / $ Over Period = Multiple as a portion. Multiply by $ Over Period to see how long it takes to reach Network Work Value. You can also use a % and see how long it takes take to get Network Work Value the faster the better.
Check Price Elasticity over time
Price Elasticity = Change in Quantity Demanded / Change in Price. Change in Price is easy to find and Change is Quantity Demanded is the difference in BTC moved from one time to another. Use two periods. If a good is inelastic a change in price does not affect demand, if a good is elastic a change in price changes demand. A value of 1 or greater is elastic and less than 1 inelastic. See what happens with a change in price and compare.
Check Relative Strength Index RSI
RSI shows momentum and trends. It is done over 14 periods be it a day a week a month or a year. You take your 14 periods and find how many times the price went up then give an average. Then you do the same for down turns. We will say out of 14 days 8 Went up an average of 5% and 7 days went down 2.5%. If we get a value above 70 the item is overbought. If it is below 30 it is oversold. The RSI is usually plotted with price. The formula is:
RSI = 100 - { 100 / 1 + ((65 + 5) / (32.5 + 0) = 100 – { 100 / 3.153 } = 68.2. This has gone up as we are simply adding more buying to the average mix. We added a 5% Current Gain. Showing the item is getting closer to being over bought with 5% more buying per average. This is to weigh the current time frame more.
Perhaps consider the Stoch RSI as well where you can multiply its results by 100 to get a similar RSI indicator:
Use Simple Moving Averages
A Simple Moving Average takes the sum of a number of prices and divides them by the number of prices. An Exponential Moving Average weights current time more. The idea here is to use different time frames. If a 200 Day moving average was going up but a 50 Day moving average was going down is may signal a sell and change in market sentiment.
Use Golden and Death Cross With Simple Moving Averages
Golden Cross = Short 50 Day SMA goes above 200 Long SMA
Death Cross = Short 50 Day SMA goes below 200 Long SMA
Traders also look for an increase in volume. You should look for bid ask spreads and if they are trending down. If the Long Moving Average is heavier than the Short Moving Average this indicates less current interest.
Use a Simple Moving Average for Volume, take the AVG BTC traded over 20 days and / AVG BTC traded over 200 days. You can also simply take the average of BTC over a 30-day average. Then plot this on a graph. Then use the Simple Moving Average for Price. Take the AVG price over 20 days and / AVG price over 200 days. You can also simply take the average Price over a 30-day period.
If the Average Price is climbing beyond Average Volume, there is not enough volume to justify the price. However, price can feed back into growth, so as a caveat, see if volume is coming from sell orders or buy orders. This can be found on InToTheBlock quite easily. If Volume is increasing, Price may pick up, see if people are buying or selling and how many wallets are in the money, if they are they may sell and we may be at a ceiling. Whatever you think of think of why and try to come up with a new, different, counter argument to get the full picture, without compromising on the math or market sentiment. By using indicators in conjunction with one another you may be able to cancel out the noise and focus on the health of the network. Everyone wants to hit it rich but to do so you must cast a large net and ask “is this sustainable” or “is it a bubble” and bring the world back to earth. A lot of people just HODL, (hold on for dear life) but you can just as easily profit from a downturn as an upturn! Think simply and practically.
Use MACD Moving Average Convergence and Divergence
MACD used 3 lines to interpret market momentum. The MACD line = 12day Exponential Moving Average – 26d EMA. Then there is the Signal Line = 9d EMA. Finally, there is the MACD Histogram line which is = MACD – Signal line. MACD should be looked at as the past and the Signal Line as the future. If the past is going up and the future more this signals a buy. If the MACD line goes up it shows confidence, if it goes down it shows less confidence. If the Signal Line crosses it on the way up trends may be quickly going up as overall sentiment falls back down with the MACD line going down. It is all about convergence and divergence, if there is a divergence there is a big difference between past and future signaling volatility. To use this simply draw two arrows for MACD and Signal and see where they both go! The question is, “is the future keeping up with the past?”
Use Bollinger Bands
Bollinger Bands have 3 lines. The first is the Middle Line it is = Simple Moving Average of 20 Days. The Upper Band = 20 Day SMA + (20 Day Standard Deviation x 2). The Lower Band = 20 Day SMA - (20 Day Standard Deviation x 2). If the SMA rises above The Upper Band the market may be over extended, or if repeat contact is made there may be a ceiling. New theories use Exponential Moving Averages. If the Upper and Lower Bands converge this signals less volatility. If the gap is large there is more volatility.
Use Net Value to Transactions Ratio NVT
NVT = Market Cap $ / Transactions over period in $. As noted one can also use BTC Moved.
Transactions over period $ = BTC moved * AVG Price $. NVTS is the same but with a 90-day smooth moving average as the denominator.
Use Market Value to Realized Value MVRV
Market Value is the Market Cap and Realized Value is the last time the coin moved.
MVRV = Market Cap / RV. RV = # of BTC * AVG Price of last move.
MVRV = # BTC * PriceNow / # BTC * AveragePrice. Remove the # of BTC.
MVRV = PN / AP,
Y = PN / AP ; AP = PN / Y
on Dec 13, 2023, MVRV = 1.972 PN = $42,887 / 1.972 = $21,747 AP.
Ratio Y large = lower $ in the past, signals growth. Y Ratio Comes Down as closer prices.
AP is close to PN = Confidence, less volatility. AP is far from PN = Growth as likely AP to sell at PN.
Think of AP as Old Price and if you are curious you may use InToTheBlock, here.
Use the crypto fear and greed index
For fun and information use this hilarious index where 0-49 = Fear and excess supply and 50-100 = greed and a bubble. The index is comprised of Volatility (25%) Market Momentum/Volume (25%) Social Media (15%) Surveys (15%) Dominance (10%) and Trends (10%). You can see the index over time.
Use the Ichimoku Cloud
The Ichimoku Cloud is a decades old approach that has been re and refined. It still holds true to this day. It is for advanced traders and uses 5 lines. It uses a better formula for averages and includes multiple day moving averages. It shows market momentum and trends.
Use the Volume Weighted Average Price VWAP and Time Weighted Average Price TWAP
This is a very important indicator. First we can approach it simply. Simply take a time frame Multiply Price by Volume to get a Confidence Factor for a Given Price. You can give this factor a simple moving average over time. You can also take a moving average of $ in price, moving BTC, or both. Use all three! It is important to ask did price go up, or did Volume and/or Average Transaction size go up? If there was a lot of volume selling see # of wallets or accounts in or out of the money or coming from exchanges as a buy signal. This could be a double-edged sword, if people are in the money and selling price will go down but, volume can pick up at the same time and drive-up price.
One can go forward. To get TWAP = P1 + P2 +P3 / n. Add up the Average Price a day and divide by the number of days to get a simple moving average. Then compare and take the Volume a day multiply by the Average Price and divide by the same number of days to get a weighted moving average. Then get the VWAP by going VWAP = PV1 + PV2 + PV3 / Total Volume. PV1 = Price times Volume of period 1. If the volume weighted average is higher than the simple average people had more faith at a given higher price. It will show market confidence at simple prices.
We can also simplify and go = Typical Price * Typical Volume / Total Volume. To find Typical Price take an average say Open, Close and High and divide by three, multiply by your given times volume and divide by a total volume. The higher Total Volume the longer your picture. Similar to a golden or death cross you can use weights over time like a workout. Take VWAP as = (Typical Price Now * Volume Now) / (Typical Price then * Volume Then) and get a ratio if it is the same not much is happening if it is going up currently there is more interest. As stated formulas are not as important as dynamics. Always plot values and always use averages to compare.
Use the Fibonacci Sequence
The Fibonacci Numbers are 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, ect. You then divide the number by the one to its right to get 0.618, then by one away to get 0.382, then two away to get 0.236 then traders add in 0.50 and 1 for fun. A trader will take a high and low and plot them on the graph with the corresponding lines at their corresponding percentages. This is used to derive support and resistance levels. Support is the floor represented by miner prices, and resistance is the top represented by high prices and falling volumes. Rebellious traders see this as a self-fulfilling prophecy or magic in the math where the math supports certain highs or lows based on what has happened or will through resistance levels.
Use Hash Rate
As we know the velocity of money is $USD Traded over a small Period / $ Total USD in a total Period. When compared over time, if this is faster over time it shows growth. We can also include the Average Price over time. Additionally, we can use Total BTC moved / Total BTC from period to period. Together it shows Bitcoins health. If there is more volume at a lower price, this shows inflated volume. If price goes up and the actual Bitcoin moving are not moving as fast as its Price, this shows inflated demand. This represents a higher price for less use. As a caveat, Price however can feedback and influence BTC moved, so look to see if Dollars Per Transaction went up, then we know we are dealing with whales. New moves can also say look at $USD per hash and BTC produced per hash, this represents what miners are making, and must be thought of as such. If $USD per hash is picking up beyond what BTC per hash is providing over time it means there is more demand than supply! If there is a lot of BTC being developed per hash, price will go down, so you need to ask did hash rate go down? These three wise men can guide you. We can take BTC per TH/ Day and * it by Price and get USD per TH/ Day. This can all be done at Hash Rate Index. We can also use another trick where we find the network hash rate. We take the given difficulty in this case 79,495,195,323,031 and multiply it by 2 to the power of 32. This secret number represents how many hashes it takes to solve a block for one given level of difficulty. Thus, we multiply by 4,295,967,296. Then because hash rate is measured in seconds, and it takes about 10 minutes to find a block we divide by 600 seconds to get the hash rate in seconds over time. We plug this into Hash Rate Index as Hashes. It is 564 Exo Hashes Per Second, when the 7 Day SMA is 589 so hash rate is coming down. As this happens coins are found faster and more easily lowering the cost of production, competition, and price. So, it is wise to check all these numbers together. We can also get devious and see, technically, if on July 11 we got 0.000822048 BTC per Penta Hash per Second and the hash rate on that day was 597 Exo Hashes Per Second, we plug in on Hash Rate Index and times by 597,000 Penta Hashes per second and get 490 coins. This is more than 450 coins produced per day, so miners may sell off the excess and drive price down. The question becomes is there demand for it and if you are really technical are the block times happening faster resulting in more of the coins? You have to put on your Sherlock Holmes hat. One could argue that 40 * 60,000 = $2,400,000 trading volume on $2.4 Billion does not make any difference, but it is capitalism. So, in summary use $ Per TH/day and BTC Per TH/day, Price, and Hashrate.
Use Assumptions
You are not supposed to do this as a scientist, but if you can’t experiment what can you do? Check out the GameStop Saga, here.
Here is one of our models with new numbers used:
$54,000 Per Coin from miners.
$150 B from remittances / 19,761,237 coins = $7,590
$500 B from investors / 19,761,237 coins = $25,302
$10 B from businesses / 19,761,237 coins = $506
= $87,308 per BTC
Today 19,761,237 BTC Trade at $57,950 = $1.145 T,
Assumptions as of 07-12-2024:
Ex 1). If we assume this all will take a year, as we have done, we can take 19,761,237 coins and divide them by 365 days and we get a daily average transaction volume. It is approximately 54,140 bitcoins moved a day. If we find a higher volume we can see an increase in demand. Using Blockchain.com we see the average day transaction volume at 100,679 in 2023. We see the amount of BTCs moving at 1.86X what would be averagely accepted. We want to plot this and compare it to below.
Ex 2). If we take a Market Cap of $1.145 Trillion and divide that by our 365 days $3.136 Billion should be exchanged over the system in a given day. Using Blockchain.com we can see the USD traded daily averages to approximately $6 Billion or 1.91X what would be expected. Thus, Bitcoin is performing about 2X what was expected on average for the value over the network. We can also use $22 Billion as a number for daily value, more recently. We want to plot this and compare it to above.
We can then continue. We can see $6 Billion transferred a day over 110,000 coins in 2024 from Blockchain.com gives us a per coin value of $54,545. If we look at the Price Per Bitcoin we see the price on average at $58,000.
Ex 3). We can then look back. On June 15, 2023, halfway through the year, we had 19,402,915 Bitcoins in total, how many Bitcoins were traded in 2023? We can thus find the velocity (or multiple) of Bitcoin Moving. In 2023 it is 36,748,000 Bitcoins traded. This is 1.89X greater than the supply or how many traded out of total pool. We know in the first half 2024, 23,881,000 coins moved assuming this continues (47,726,000) Bitcoins moved out of 19,719,248 as of June 30, 2024. Thus, the velocity of Bitcoin Moving is 2.42X in 2024. We know given an old velocity of Bitcoins Moving at 1.89X and a new velocity of 2.42X the growth is 28%. Also, the number of coins traded is up by 29.8%. If the velocity of coins is higher than the velocity of money, more use is coming from the system, and it will grow. We also want to see the Velocity of Dollars and plot them all.
What do we know? Supply seems to be doubled. Demand seems to be double. Money sent over the network is doubled. Our estimates show Bitcoins trading up by 29.8% and the velocity of Bitcoins Moving up 28%. We also know, There are 5 indicators you can use. DeFi also has 7 indicators, see here.
The Nope
Now we will switch gears and see predictability in nature and in the market. In this case math is money. We would like to thank Lilly for her work. We use the NOPE Net Options Pricing Effect to predict movements in the SPY digital index. It is crazy at being right. It predicts anomalies and lets one smooth out market volatility and track how weird it can get while peering into the future. You can reliably apply the NOPE to any index. They have input from researchers and secret connections to options databases. The Nope can peer 14-30 days into the future. Happy hunting!
Our next section is The True Cash Economic Formula, it is the ultimate Smart Contract from one economy to the other with the most sincerity! It is full of both promise and math, and for that reason it is advisable that one may skip over it, if they believe in the current establishment or if you dislike math. If you care to shake up the paradigm, by all means read on! We want a formula for each economy’s power that they can rely on for international trade. We hope one day everyone will demand the use of the formula to mathematically put every economy on earth on the same foundation! It is rebellious, tedious and meticulous, and exact, we hope we will bring the creativity to get smaller nations into a larger system. This is the True Cash Economic Formula: It is geared to challenge the status quo. It will link yourself with politicians and hold them to a higher standard. It is logic and math and the calling of every true rebel.
We want to create a formula for the Value of the Dollar. The Value has to be comparable from one nation to the next, and one wallet to the next. Since the gold standard has been abandoned we need to supplement a new system. We try to circumvent the problems of a rigged oligarchy by utilizing a proof of work, much link Bitcoins Proof-of-Work, this can secure a fair global reality. Once we invested in hype and not cynicism or critical thinking and bought into Iraqi Dinar that were supposed to revalue at 1:1 with USD via a pump and dump scheme. It was a monopoly on information and a lot of paranoia with promises coming from the top. No one understood the conspiracy was there simply to prop up the Iraqi Dinar and not investors. The price is exactly identical from day one. It is your responsibility to only slightly blame, but also take the responsibility to do your own homework. If we are smart we can hold the entire world to this responsibility and use it to revamp trade tools and get a fair-trade value for the dollar, one economy to another. Unfortunately, this may mean no more pegging the Yuan to the Dollar (that stopped in 2005), and because the revolution supported many puppet democracies in South America perhaps their leaders will find self-determination and abundance upon their own lands with our efforts to create a reliable trade exchange system. We are not here for the melting pot we are here for decentralization of wealth through reliable exchange rates. Perhaps the exchange of oil will be done in American dollars, perhaps it will not; we are here to supplement a new system and circumvent the old one with its current rules keeping the poor down and the media confused. We will avoid the cliché, the monopoly, and turn power and profits to the people. It is all math, and it is all simple and it is all the Value of the Dollar.
What we shall do is take the Modified Average Distribution of Dollars and add in the Velocity of Money to get our economic growth, then add the Power of the Economy that works as a sort of exchange rate between economies, followed by International Exchange Balance, next we give a figure of the Average Home Price, Unemployment, and tackle the Consumer Price Index and Inflation, and finally that will equal ones Economic Efficiency!
The Value of the Dollar:
The True Cash Economic Formula
It should be noted we want similar values for a fair fight, so in this spirit instead of using a percentage difference, we use an absolute value. Thus, normally for a percent we go 100 – 75 / 75 = 0.33 for the percent growth of 75 to 100 being 1 / 3. However, we also use 100 – 75 / 100 = 0.25 for the reduction of 100 by 25% as a tighter number, so beware! It is known as a percent reduction we call it absolute value.
Term 1 Velocity Of Money:
First we begin with simplicity. How many Dollars are there per person on average and how many times do they cycle through the economy? We can look to the average dollars per person; however, this must be modified. As we could have a kingdom with $10,000 on average for 10 people for $100,000 but one person (the king) has $80,000 and everyone else has $2,222 versus another kingdom where everyone had $10,000! This is an important factor and is known as Average Dollars Distribution. We have $100,000 and 1,000 people.
First, is endorsed by none other than Vitalik Buterin. It is log-of-average minus average-of-log. Log-of-average represents the economy where everyone had an even, average, share. To calculate it you go add up all the terms then divide by the number of terms getting a number you then use a log for, you go log on your scientific calculator and voila. For example, we have a population with dollar worths of $30,000, $40,000, $50,000, $100,000. You add them up and get $220,000 / 4 terms for $55,000 as an average. You then go log 55,000 to get 4.74. You then minus average-of-log representing the economy as it is. You take the log of every term and then get an average. Log (30,000) = 4.47, log (40,000) = 4.6, log (50,000) = 4.69, log (100,000) = 5. We have an average and get 4.695. We take 4.74 and subtract 4.695 and get 0.045! To give that some context: if the last term were $50,000 instead of $100,000 for a more balanced economy the spread is 4.74 – 4.619 = 0.121 or a lot higher than the last! To compare these different economies, you could do a percent difference or an absolute difference. You could minus. You could also do one over each other, get a ratio, and multiply by a dollar weight, all to modify the Dollars Total! There are many ways to skin a cat and modify dollars per person to AVG Dollars Distribution. We will go through them all one by one so you can see the battle of logic!
The Gini Coefficient and the Lorenz Curve are up next. The Lorenz Curve first plots a perfect 45 Degree line where x = y. For example, 50% of the population have 50% of the wealth. This is very nice. We then plot what we actually have. $30,000, $40,000, $50,000, $100,000. The X axis represents population. If we quickly look we can see the bottom 50% have (30,000 + 40,000) / 220,000 or 31.8% of the wealth. Y represents their share of Total Dollars. There is a difference between the 50% they should have in a perfect society and the 31.8% they have now. The closer this relationship the lower the Gini and the fairer the society. The two lines are closer at parity. Gini of 50% = (Difference of should have – have) / Total = 50 – 31.8 = 18.2 / 18.2 + 31.8 = 0.364.
The Gini Coefficient and the Lorenz Curve are up next. The Lorenz Curve first plots a perfect 45 Degree line where x = y. For example, 50% of the population have 50% of the wealth. This is very nice. We then plot what we actually have. $30,000, $40,000, $50,000, $100,000. The X axis represents population. If we quickly look we can see the bottom 50% have (30,000 + 40,000) / 220,000 or 31.8% of the wealth. Y represents their share of Total Dollars. There is a difference between the 50% they should have in a perfect society and the 31.8% they have now. The closer this relationship the lower the Gini and the fairer the society. The two lines are closer at parity. Gini of 50% = (Difference of should have – have) / Total = 50 – 31.8 = 18.2 / 18.2 + 31.8 = 0.364.
Standard deviation will standardly measure the deviation from the mean to find the distribution for a population. First you must find the mean, or average of the data. We take, $30,000 + $40,000 + $50,000 + $100,000 = 220,000 / 4 = $55,000. Then we find how far from the average each term is, so we have 25,000, 15,000, 5,000, 45,000. We then square these values to remove negative values and give more weight to larger deviations, we will divide by 1,000 first for simplicity. 25^2 = 625, 15^2 = 225, 5^2 = 25, 45^2 = 2,025. Then we find the average. 625 + 225 + 25 +2,025 = 2,900 / 4 = 725. This is equal to the variance. Variance is different from volatility as variance measures deviation from a mean and velocity is that variance over time. To find the Standard Deviation we take the square root of the variance, and bring the numbers back to earth! We get a standard deviation of 26.9. A low standard deviation means less variance from the mean, and more variance gives regard to a higher standard deviation. We could use a percentage difference to modify Dollars Total to AVG Dollar Distribution. We could take a special number like 100 / Standard Deviation and multiply by Dollars Total to get AVG Dollar Distribution for a population. Note, we are working with a formula here and not exact, real dollars, we want to be able to compare populations. Another simple trick to do is to use the Coefficient of Variation.A Gini of 0 = Perfect Equality, everyone shares. A Gini of 1 = Perfect Inequality, one person has everything.
We can move on and do a Gini Coefficient for the entire population 100%. With $30,000, $40,000, $50,000, $100,000.
X = POP = 25%, 50%, 75%, 100%
Y = Wealth = 13.6%, 31.8%, 54.5%, 100%
G = 1 – SUM OF (Xn – Xn – 1 )(Yn + Yn – 1 )
G = 1 – SUM OF [(0.25 – 0)(0.136 + 0) + (0.50 – 0.25)(0.318 + 0.136) + (0.75 – 0.50)(0.545 + 0.318) + (1 – 0.75)(1 + 0.545)]
You may be wondering why this is different from above. Above is worse as there is greater deviation from the Lorenz Curve and the remainder of the data. Be careful to ask the right questions! So, for example what happens if we change to $30,000, $40,000, $50,000, $60,000
X = POP = 25%, 50%, 75%, 100%
Y = Wealth = 16.6%, 38.8%, 66.6%, 100%
G = 1 – SUM OF [(0.25 – 0)(0.166 + 0) + (0.50 – 0.25)(0.166 + 0.388) + (0.75 – 0.50)(0.388 + 0.666) + (1 – 0.75)(1 + 0.666)]
G = 1 – SUM OF [(0.0415) + (0.1385) + (0.2635) + (0.4165)]
G = 1 – (0.86)
G = 0.14, It is getting better!
To apply this to modify Dollars Total to AVG Dollar Distribution you could do a percent difference from one population to another. So, a good Gini Coefficient of 0.2 versus a bad one of 0.9 becomes (0.9 - 0.2) / 0.2 = 3.5 or for an absolute value (0.9 – 0.2) / 0.9 = 0.77. This difference would modify average dollars to reflect the dollars distribution.
Additionally, there is a nifty trick of hand we can use: we go (Difference in Economies) / (Size of a Single Economy). So, using the information above we have $40,000 / $220,000 = 0.18 and $40,000 / $180,000 = 0.22. You will see the 0.22 is better as it means more data is structured around the average! We can then multiply these values by average income to find a modified value. So, first our average is $30,000 + $40,000 + $50,000 + $100,000 / 4 = $55,000. We modify the average by multiplying by 1.18 and get $64,900. Our second average is $30,000, $40,000, $50,000, $60,000 / 4 = $45,000 times its weight of 1.22 we get $54,900. So, our modified numbers are $64,900 and $54,900, with the same difference of $10,000. We have gone from $55,000 / $45,000 = 1.22X difference income from each naturally to each other, to $64,900 / $54,900 = 1.18X income each modified. For a 0.04X difference, and closer is better! This is a small modification, but it reflects only a $40,000 change between the economies that are quite similar and large. Its purpose is to modify the average income from each economy so they are close. To get a reliable idea one could subtract one from the other and modify the better economy by that number. We must understand the average and modify it and do that standard deviation is next.
Standard deviation will standardly measure the deviation from the mean to find the distribution for a population. First you must find the mean, or average of the data. We take, $30,000 + $40,000 + $50,000 + $100,000 = 220,000 / 4 = $55,000. Then we find how far from the average each term is, so we have 25,000, 15,000, 5,000, 45,000. We then square these values to remove negative values and give more weight to larger deviations, we will divide by 1,000 first for simplicity. 25^2 = 625, 15^2 = 225, 5^2 = 25, 45^2 = 2,025. Then we find the average. 625 + 225 + 25 +2,025 = 2,900 / 4 = 725. This is equal to the variance. Variance is different from volatility as variance measures deviation from a mean and velocity is that variance over time. To find the Standard Deviation we take the square root of the variance, and bring the numbers back to earth! We get a standard deviation of 26.9. A low standard deviation means less variance from the mean, and more variance gives regard to a higher standard deviation. We could use a percentage difference to modify Dollars Total to AVG Dollar Distribution or subtract. We could even take a special number like 100 / Standard Deviation and multiply by Dollars Total to get AVG Dollar Distribution for a population. Note, we are working with a formula here and not exact, real dollars, we want to be able to compare populations. Another simple trick to do is to use the Coefficient of Variation.
For the Coefficient of Variation you take Standard Deviation and divide it by the average. We can use this as a multiple of Dollars Total to turn it to AVG Dollar distribution. We can also think simply and use a weighted ratio, let us explain.
We can simply take a weighted average. We take a sample from the top and bottom of the economy. We know you can take any sample you wish and have the data grow over time; you just have to let the math decide. What we will do is take the total income of the bottom 20% and multiply it together. We will then divide by the amount of wealth of the top 1%. These numbers can be changed! So, for example we have:
A population where the bottom 20% have 7% of the wealth and the top 1% have 20%. We go (20 * 7) / (1 * 20) = 7. We then have a comparable economy where the bottom 20% have 3% wealth, much less than before. The top 1% still have 20%. Thus, (20 * 3) / (1 * 20) = 3.
Then we have 2 more populations where the top 1% only have 15% of the wealth.
Finally, we could have a population where the bottom 20% have 8% and the bottom 1 % has 20%. For a rating of 8. To modify Total Dollars, one could divide one comparable term from the other to find a ratio and multiply that by Total Dollars. Then you can bait and switch the terms around. So originally, one economy has 7 / 3 = 2.33 and the other 3 / 7 = 0.42. We can also do is a percent difference from one economy to the other, 3 – 7 / 7 = 0.57 or 3 – 7 / 3 = 1.3. You can choose from these terms, and they could modify Total Dollars to AVG Dollars Distribution, it is all plug and play!
You can even get dumb and use the Nakamoto Coefficient, it is the minimum number of participants to equal 50% of the total worth, and the more the merrier! Let us compare two economies. If we have 1 vs 3 we could divide and conquer and find 1 / 3 is our modification factor of 0.33 for 33%. However, if we do this for 1 vs 4 that is 0.25 or 25%, since more people making up 50% is a better distribution we would want 1 vs 4 to have a higher modification factor, not a lower one! Thus, we have to put these values over 1 / x. So, 1 / 0.25 = 4 and 1 / 0.33 = 3.03. We can then compare! One could divide this by a multiple of 100 and change the economy by 0.04 or 0.0303. Also, we could do percent growth for 1 - 3 / 3 = 0.66 or 1 – 4 / 4 = 0.75 as a larger spread giving more weight to diversity. We want 4 people to equal 50% of wealth not 3, so give it more weight!
What one may use is (Bottom 20% * % of Wealth) / (Top 1% * % of Wealth) = A, then Divide A from B of another economy and modify the Total Dollars from there. Essentially what you have to do is pick a formula to work with, and the greater the deviation from the mean, the more one is penalized for outliers. The more centralized money the more the penalty! Thus, you can have it your way and adjust Total Dollars by any of the above formulas. It’s all about the difference and it’s all about building a stable economy that transforms stratified data into uniform data.
Term 2 Power of Economy:
We will now move on to the next term in the equation, the Power of the Economy! This can be seen as a sort of exchange rate that compares economies, their efficiency and their size, the question is “how does it work?”. It is Velocity of Money / Population, to give us a per capita value of Velocity of Money. The Formula for Power of Economy is:
So, we have 4 economies with 3 variables: Dollars Moved, Total Dollars, Total Population.
A: has 10,000 Dollars Moved, 100,000 Dollars, and 1,000 People.
B: has 50,000 Dollars Moved, 100,000 Dollars and 1,000 People.
C: has 10,000 Dollars Moved, 200,000 Dollars and 1,000 People.
D: has 10,000 Dollars Moved, 100,000 Dollars and 2,000 People.
Let us see the equation in action!
The Power of Economy Equation gives us a good view of what is going on. In the case of A to B, if we up our Velocity of Money 5X we grow by five times. If we flood the market with double the dollars the result is our formula is reduced by half. If we double our population but produce nothing our productivity falls by half. Thus, it is wise to make refugees effective members of society as we are all in the same basket! Now, we must ask how to rate the differences between economies? We can do a simple difference. We can do a value divided by another value, then modified by a weight. So, we do 0.0005 / 0.0001 and get 5 and multiply by a weight. We can also do a percent difference. We can additionally combine and do a % Difference / (Economy 1 / Economy 2).
So, for B vs C we have 50 vs 5. So, (50 – 5 / 5) = 9 and / (50 / 5) = 9 / 10 = 0.9 Modification for 10X difference!
For B vs A we have 50 vs 10. So, (50 – 10 / 10) = 4 and / (50 / 10) = 0.8 modification as they are closer.
So, we can simply elaborate, we take the difference between the value and give a common denominator to reach our definition of modification.
For A vs C we have 10 and 5. So, (10 – 5 / 5) = 1 / (10 / 5) = 1 / 2 = 0.5.
So, a 2X difference in the economy is modified by 50%, a 5X difference in the economy is modified by 80% and a 10X difference in the economy is modified by 90%!
Term 3 Foreign Exchange:
We must now move on to our next term, the Foreign Exchange rate! This is the amount of money into and out of the economy because of foreign trade! First, one should recognize that if we sent $100 to another country at a 1 : 1.50 ratio we move $100 for velocity of money and so does the other economy by $150. It is a debit to us AND a credit to them. So, $100 dollars in foreign exchange is $250 at a 1 / 1.50 ratio. Thus, we want to encourage increased international trade! And the math can make dollars appear like magic! Let us imagine a system where:
Of course, the question is how much will they send back and what will the bank do? So, part of the trade deficit is in dollars in and dollars out but also a portion of it is in the exchange rate. We are for whatever measurement is most prudent and convenient at the time, after all it is math. This makes international trade more feasible, profitable and wise and adds to the value of the dollar!
How to define a dollar in international trade? So, one would think we should have Value In – Value Out = Surplus. However, this assumes 101 In – 100 Out is the same as 1,001 In and 1,000 Out! We could also think we have In + Out = Trade Power. However, again there would be a difference between 50 In and 50 Out and 90 In and 10 Out! To calculate this term most effectively we would simply do a ratio difference times a weight in the size of the economy! Our analysis tells the capitalist in us it is tricky and more complicated, but it may work as there are many ways to approach the problem we may as well honor the creativity! So, we know value in or out can be measured in any dollars one would wish, allowing for favorable swings in the exchange rate. When favorable include them, when not favorable deal only in one currency to keep things simple and chugging along. For simplicity below all the values will be positively molded to a single currency that we can imagine to be USD. If the exchange rate moves in your favor use it, if it does not revert to the original currency and remember to invest in the growth of your economy as noted above! For the win, win, win motif to play out!
We will use and test 3 formulas:
We will apply formula 1, 2 and 3 to different economies!
A: (600 In 300 Out) B: (1,200 In 300 Out) C: (1,200 In 600 Out) D: (900 In 300 Out)
Q: (900 In 600 Out) Z: (1,400 In 100 Out) L: (500 In 100 Out) K: (2,400 In 2,300 Out)
Note: C should be Greater than D as they have the same surplus of 600 but more dollars traded at 1,800 vs 1,200. C1 is greater than D1, by 1.68. C2 is larger than D2, by 1.125. C3 is the same as D3, the formula does not work!
Note: Q and D have the same 900 In, yet D has a 300 Larger Inner surplus and Q has 300 Larger Dollars Out. If we are looking for a surplus D should be greater than Q, that is formula 2. If we are looking for more dollars sent out and a more balanced trade Q should be greater than D, that is formula 1!
If D > Q we give weight to the Surplus In. If Q > D we give weight to the Total Supply Sent.
D1 to Q1 increases by 1.56, as we give credence to the surplus!
D2 to Q2 decreases by 1.28, as we give credence to the total supply. If D is less than Q, Q is more powerful, If Q is more powerful we are more sensitive to more sent value! (as opposed to surplus).
Note: For L3 at 3,000 it is much larger then A3 at 1,800 by 1.66 Times when A3 has a larger economy at 600 In and 300 Out, and only 100 Less of a surplus! Note the A economy had 100 more exports (money in) for a 0.20 increase and 200 more imports (money out) by 3 times. We can continue.
L3B is a much smaller economy yet according to formula 3 it appears to have a value of 2,000 compared to L3A at 1,750! Thus, the formula 3 does not work!
So, we know if we have a close trade balance and multiply that by a weight we get a resulting smaller number than the economy should be. If we have a large multiple and times that by a small weight distribution we get inflated results! Thus, it is best to be in the happy medium!
Others may argue we could use a different formula such as (A + B / B) * A – B taking into account a difference in the trade balance instead of a sum. This term is simple to debunk. If we have to go back to C and D we can promote our point. C has 1,200 In and 600 Out where D has 900 In and 300 Out. At all costs C must be bigger than D. If we do the math:
Note: This also happens if you use (A – B / B) * A – B or (A + B / B) * A – B.
Other Formulas that don’t work!
(A – B / A) * (A + B)
Remember: A % Difference = A – B / A; if we apply this to a Sum or a Difference we will experience essentially a dilution in the effectiveness of the formula, to demonstrate let us look at K and A:
K: (2,400 In 2,300 Out)
(2,400 – 2,300 / 2,400) = 0.04 * 4,700 = 195!
A large balanced economy is rated worse than A at (600 – 300 / 600) = 0.5 (900) = 450!
(A – B / A) * (A – B)
Remember: If we use C must be greater than D:
C: (1,200 In 600 Out)
(1,200 – 600 / 1,200) = 0.5 * 600 = 300
D: (900 In 300 Out)
(900 – 300 / 900) – 0.66 (600) = 400!
(A + B / A) * (A – B)
Note: If we do C greater than D the formula just barely works!
C: (1,200 In 600 Out)
(1,200 + 600 / 1,200) = 1.5 * 600 = 900
D: (900 In 300 Out)
(900 + 300 / 900) – 1.33 (600) = 800!
However, if we apply K:
K: (2,400 In 2,300 Out)
(2,400 + 2,300 / 2,400) = 1.95 * 100 = 195!
Versus A (600 + 300 / 600) = 1.5 (300) = 450.
(A + B / A) * (A + B)
Note: if you use Q and Z you will see the magic of this formula fall apart!
Q: (900 In 600 Out) Z: (1,400 In 100 Out) as they have the same sum Z must be larger as it has the greater surplus into the nation!
Q: (900 + 600 / 900) = 1.66 (1,500) = 2,500
Z: (1,400 + 100 / 1,400) = 1.07 (1,500) = 1,607
To check back, our formula is:
(A + B / B) * (A + B)
Q: (900 + 600 / 600) = 2.5 (1,500) = 3,750
Z: (1,400 + 100 / 100) = 15 (1,500) = 22,500
The experiment checks out!
So, note through trial and error we have essentially knocked off all possible equations after exploration! We have our new equation for the strength of an import and export system so you can see which system you would invest in, and which has the most pride! However, we must tweak the formula! We have to include the potential for a deficit!
We want to give the economy the best fighting chance, so we want the largest possible figure! We have refined the formula so in the event of a negative surplus we can still match us to other economies.
(A + B / B) * (A + B) is the formula!
So, for a deficit example:
N: (200 In 400 Out)
(200 + 400 / 400) = 1.5 (600) = 900.
If we are the opposite of Economy A: (600 In 300 Out) with a rating of 2,700.
N2: (300 In 600 Out)
(300 + 600 / 600) = 3 (900) = 1,350 or half. However, we could tweak the formula, so we give Creedence to Outgoing Money and change the formula.
(A + B / A) * (A + B)
(300 + 600 / 300) = 1.5 (900) = 2,700 and the formula balances as we are perfect trading partners! We give more credence to Money Out or Imports all in this formula as we weigh imports leaving heavier in the equation! The remaining magic is in the hands of exchange rates, and as noted above they can make money appear like magic or be used to reinvest in a nation! After this bit of modification perhaps a bonus could be applied for how much of the economy is dedicated to international trade. The more the better! However, some of you may think a penalty should be applied to the economy with a trade deficit and not exports in their favor. So, maintain the same formula and:
(A + B / B) * (A + B)
(300 + 600 / 600) = 1.5 (900) = 1,350 or half of 2,700. Perhaps an average should be taken.
We must now compare economies to each other. We aim to modify them each by a simple percent.
We technically divide one by the other, so, we have 2,700 / 1,350 = 2. Or we have a percentage difference as 2,700 – 1,350 / 1,350 = 1. Or we can have an absolute value and go 2,700 – 1,350 / 2,700 = 0.5 difference in the economies.
We could also have two economies, one with 3,500 and one with 1,000. First, 3,500 / 1,000 = 3.5 times different. We want a closer multiple so we can next go 3,500 – 1,000 / 3,500 = 0.71! Or, 3,500 – 1,000 / 1,000 = 2.5.
We can take 0.50 and 0.71 as differences within our master equation, we can revert to creativity and pick whichever formulas fit for us. For a new example, 4,500 – 1,000 / 4,500 = 0.77 an increase of 6% for an actual increase of 1.28 times (4,500 / 3,500) or 28% (4,500 – 3,500 / 3,500) = 0.28. One economy grew from 3,500 to 4,500 a 0.28 percent increase, yet we rate it only as a 7% difference, so enemies are closer! We are nice.
So, to recall, a 2X difference in the economy is modified by 50%, for example one economy at 500 the other at 250: (500 – 250 / 500) = 0.50.
A 3.5X difference in the economy is modified by 0.71, for example: (3,500 – 1,000 / 3,500) = 0.71
4.5X by 0.77, for example: (4,500 – 1,000 / 4,500) = 0.77.
A 5X difference in the economy is modified by 80% and a 10X difference in the economy is modified by 90%!
But for fun, what happens if there is only a 0.50 difference in the economies and not 3.5? If you continue with the formula: (150 – 100 / 150) = 0.33. The economy is even closer to its compared neighbor! Or you could simply let the 0.50 difference be, you can choose to change when the math makes sense. All it takes is some digging and the same attitude asking, “how can we measure the value of a dollar, so everyone gets its best worth!”. Leading us to more math and the next term in our adventure Housing Effectiveness.
Term 4 Housing Effectiveness:
Every economy is based on the ability of its population to acquire houses. In fact, the underlying velocity of money is attached to loans for houses, and the interest rate people pay. Of course, one could circumvent the system and live off the grid, but that term is unemployment and is saved for later! In reality if homes are unattainable so is the economy, if you were a clever investigator you would also determine how many people rent and how many people buy. To lead the economy, we will need Guru’s teaching people to efficiently maximize their capital to eventually become landlords, so we can fight the centralized system owning everything! Additionally, we will need liquid mechanisms to get people access to credit so they can begin building a lively worthwhile life. It all hinges on the system coming full circle where renters can eventually afford to own their own homes and pass that wealth on to the next generation. We are getting close in the cryosphere to have all of your homes title and equity easily transferred on the blockchain, and maybe one day you could issue token credits against your house! This could kill the banks, the ranks, and turn currency from tomorrow into money for today, and add fat
in the system. We hope you won’t have to borrow as much and hope to get you in touch with renters who are screened and growing into their own homes!
The math for this procedure is simple: We take the average price of a home and divide it by the average income of the population to see how long it would take one to buy a house. We can add on inflation to the cost of the house, or remove it from income to reflect these movements. It truly is unique when you own your own home, and we want to guide people in that direction.
We admit that the 1 year is arbitrary and can be based on many things. However, it could also be flexible and used to modify our data. The question is can we use a ratio, the answer is probably. If n was 3 we could determine 1 year to be 1/3 of a year times by 0.8 of the population who does not rent. For a 0.26 modification, yet, if we had n as 4 we would use 1/4 times by 0.8 for 0.20 reduction. The numbers are flexible, but you want them to match data. Strictly speaking the longer it takes, the less effective one’s economy becomes. Also, we must ensure overlords are not rigging the system so one must account for renters versus homeowners!
Term 5 Unemployment:
This is a very simple term, yet it requires dubious investigation. How are you going to determine if a person is unemployed or on social services and so on? What is the difference between a few percent unemployed between nations that are huge and full of variety? What about old people? What about the total number of unemployed or number of people in the economy. Obviously a nation with 1% unemployed out of 10,000 is different from a nation with 2% unemployed out of 1,000.
Again, you can roll with the numbers when doing comparison. You can compare at an absolute value of a population putting everyone on the same footing as we did above, or across the board as it is. If we simply take the total unemployed from Nation A to B, A is 1.5X larger. If we just do the percentage difference of unemployment from A to B we have a 3X difference, and we want our numbers to be closer for fairness! If we do an absolute value assuming everyone has the same population we get 3X again. From A to C there is a 5X difference in unemployed, but a 10X difference in population! This brings us to our next way to skin a cat, that actually does not work.
Most would say “Ok, we can give all the slack to a larger economy.” One that caters to a large consumer base, with large exports, fair housing and a fast velocity of money. As we have learned it is true to speculate and speculation is the exact enemy of the unemployed. The wanna be in the wise may say “If we have an economy with double the population it can have double the unemployment. Technically, this makes sense at first glance, let us explore.
Calculation and Conclusion:
So, you can go every term at once, or do one term at a time for Economic Efficiency. Thus, there are again two ways to skin a cat and approach the problem of a distributed formula for the value of a dollar. We attempt to translate the language of the economy into a trade balance that can be compared against other economies. We will distill the math and turn it into a transparent formula that should provide insight into the nature of a nation and give credence and support to its population’s efforts. We will expose excess inflation and surplus population, and we will underline the effectiveness of the velocity of money. In order to calculate the efficiency of an economy you must arbitrarily assign a weight to each term then multiply by the difference in effectiveness of each weighted term, we use a total of 100. Then you use an exact value per term, empirically found and verified that will then be multiplied by a weight and the weights will add up to Economic Efficiency. So, one can start with an exact value per term, weighed by importance, and compared between economies to finally add up to a given number for Economic Efficiency.
First we will use the normal values, then a difference, for a bird’s eye view of the innerworkings of any given economy. We will include a weight as well to stratify the data!
The Planet Has:
Term 1 Velocity Of Money:
Economy A:
Dollars: $100,000 People: 1,000 Average Dollars $100 and Gini: 0.25.
Economy B:
Dollars: $120,000 People: 1,500 Average Dollars $80 and Gini: 0.14. This is better.
First, we find the difference in the Gini Coefficient using and absolute value.
(0.25 – 0.14) / (0.25) = 0.44 This is awfully high, so we put on our wizard hat and choose to divide it by the ratio of Average Dollars 100 / 80 so we get 0.352. We multiply 1.35 by $80 to get our new AVG Dollar amount of $108 for Economy B and stay with $100 for Economy A.
Economy A: $50,000 circulate with $100,000 Total for a Velocity Of Money of 0.5. We add this to the AVG dollars for $150 on average earned for each person.
Economy B: $70,000 circulate with $120,000 Total for a Velocity Of Money of 0.58. We add this to the AVG dollars for $166.
The difference between the terms shall be expressed as a percentage at $166 - $150 / $150 = 0.106.
The weight for this variable is set to 30 so. A = 27 B = 30.
The difference between this term shall be expressed as a percentage and it is 0.0005 – 0.00034 / 0.00034 = 0.47 Or absolutely at 0.0005 – 0.00034 / 0.0005 = 0.32, we choose the latter.
The weight for this is 15 so A = 15 B = 10.2
Term 3 International Exchange:
Economy A:
In: 10,000 Out: 5,000
(A + B / B) * (A + B) =
(10,000 + 5,000 / 5,000) * (15,000) = 45,000
Economy B:
In: 7,000 Out: 4,000
(7,000 + 4,000 / 4,000) * (11,000) = 30,250
The difference here is 45,000 – 30,250 / 30,250 = 0.48 or absolutely at 45,000 – 30,250 / 45,000 = 0.32
The weight is 15 so A = 15 B = 10.2
Term 4 Housing Effectiveness:
Economy A:
AVG Home Price: $350,000 AVG Income: ($50,000 / 1,000) = 50,000 % Home Owners: 30 Percent.
(AVG Home Price / AVG Income = n – 1 (% of Home Owners)
$350,000 / $50,000 = 7 – 0.30 = 6.7
Economy B:
AVG Home Price: $200,000 AVG Income: ($70,000 / 1,500) = 46,666 % Home Owners: 80 Percent.
$200,000 / $70,000 = 2.85 – 0.80 = 2.05
The difference is 6.7 – 2.05 / 6.7 = 0.69
The weight is 10 so A = 3.1 B = 10
Note: we could fudge the numbers and have this item as value out of a total of ten giving us A = 3.1 and B = 6.9 giving us a closer ratio, if we agreed to make it so!
Term 5 Unemployment:
Economy A:
Population 1,000 Unemployment 0.04 AVG Unemployment 0.03
(AVG Unemployment / Yours) * Population
(0.3/0.4) * 1,000 = 750
Economy B:
Population 1,500 Unemployment 0.02 AVG Unemployment 0.03
(0.3/0.2) * 1,500 = 2,250
The difference is 2,250 / 750 = 3 or 2,250 – 750 / 750 = 2 or 2,250 – 750 / 2,250 = 0.66
The weight is 10 so A = 3.4 B = 10
Note: we could fudge the numbers and have this item as value out of a total of ten giving us A = 3.4 and B = 6.6 giving us a closer ratio, if we agreed to make it so!
Term 6 Consumer Price Index:
Economy A:
Basket in Current Year: 135 Basket in Base Year: 100
CPI = Cost In Current Year / Basket in Base Year X 100 =
135 / 100 = 1.35 X 100 = 135
Economy B:
Basket in Current Year: 115 Basket in Base Year: 100
115 / 100 = 1.15 X 100 = 115
The difference is 135 / 115 = 1.17 or 135 – 115 / 115 = 0.17 or 135 -115 / 135 = 0.14 we will use the percentage.
So, the difference in the economies and exchange rates could be expressed as 90.4 / 79.1 = 1.14 or 90.4 – 79.1 / 79.1 = 0.14 or 14% difference in exchange rates! So, Economy A trades at $1 and B at $1.14. If we used our absolute value method 90.4 – 79.1 / 90.4 = 0.125 or 12.5% difference in exchange rates. Perhaps for international exchange we can take Economic Points and multiply by the % out of 100 of global demand of one’s dollars! Perhaps we can take Economic Points and multiply by the total dollars moved for a currency to find a de facto exchange rate! We would like to challenge the typical concession that having a stronger dollar is better. A lower dollar leaves money on the table from foreign investors, and options to provide more liquidity, diversify and spend that extra money on other things. It promotes the business cycle and injects new money into a homeland!
The Results and the Future
Hopefully, with this grand math in mind we would be able to find more fair exchange rates that are not rigged by an overlord. At least we can get individuals thinking about freedom in a worldwide democracy sandbox. Perhaps, it will lead to more attention to detail as we have an army of accountants scouring the numbers looking to find meaning, potential, and the hands of intelligent design, aliens and the illuminati within each economy and within the world. Perhaps we can put every nation on an even footing, without looting our planet for gold. Perhaps we will be able to let underdeveloped nations determine their own fate. Perhaps the business cycle will start to support the developing nations. Perhaps we can decentralize thought and action with people working and defending their own backyard without the rich superseding their sovereignty. Perhaps we can return value to the workers and cater to transparency. Perhaps we can make inflation responsible. Perhaps we can remove the ideal of fear from the masses and replace it with a trophy. Perhaps we can dismantle outdated government and cater to democracy. Perhaps we can find more prosperity where people feel their lives matter and can contribute to the cultural mosaic.
Thank you for reading about the revolution in this manifesto, and remember it’s not just good math, business and philosophy, it is good freedom. We dove deep into the detail; we garnished them with creativity and created a meal worthy of mankind. The value of the dollar should be flexible, it should be the future, and it should matter to you! We hope what we have done is taken subjective value and given it objective value. We have turned a vase from pottery to art and we know exactly what age and realm it came from. We admit some limitations of our explorations have been imposed and arbitrarily created. Yet, we hope it is that we interface and not just how. We try to provide a free-flowing dialogue between math and reason, the dollar and its worth. Perhaps you will have more tomorrow and perhaps they will be worth it blowing in the wind.
By pushing the theory to the limit and bringing it back again, it is proven to be incorrect. Ultimately, if you used this term it would be a conspiracy to let the rich, larger nations off the hook. So, let us do the math to simply bring this theory back to earth and lift off to our next term that works within our model.
Term 6 CPI Consumer Price Index:
A lot of what we are working with is a bird’s eye view, yet we want to bring all the economists and accountants down to earth with a term that spreads across every economy and represents the cost of an average bundle of household items and then blast off with our next related term and expand to inflation. Both grow over time, and affect the poorest the most. We aim to hit two birds with one stone, so hopefully you can believe in the CPI index and inflation and rebel against them by using this part of our equation! This term is about rebelliousness so, believe in the system or don’t trust it; the bottom line is we included this term for the regular people and not for the rich printing money or driving up prices with inflation. We also aim to have a transparent view into tariffs that is non-bias, and that everyday consumer can take action on and bring to the bank!
Term 6 CPI Consumer Price Index
A lot of what we are working with is a bird’s eye view; yet we want to bring all the economists and accountants down to earth with a term that spreads across every part of the economy and represents the cost of an average bundle of household items and then expand to our next and term inflation. Both grow over time, and affect the poorest the most. We aim to hit two birds with one stone, so hopefully you can believe in the CPI index and inflation, and at the same time rebel against them by using this part of our equation. This term is about rebelliousness so, believe in the system or don’t trust it; the bottom line is we included this term for the regular people and not for the rich printing money or driving up prices with inflation. It is their responsibility to help us. We also aim to have a transparent view into tariffs that is non-bias, and hopefully everyday consumer can take action on this part of the revolution and bring the battle to the bank!
Our specialty is to modify the data and bring ratios together while cutting through the propaganda. Our other specialty is to define what the Consumer Price Index actually is.
The Consumer Price Index (CPI) is a measure that examines the average change over time in the prices paid by consumers for a regular basket of goods and services. It's a key indicator used to assess inflation, or the rate at which the general level of prices for goods and services is rising, and, subsequently, how purchasing power is being eroded. This includes categories like food, housing, clothing, transportation, medical care, education, and entertainment.
If one economy is 200 and another 125 one could say 200 / 125 = 1.6X difference. Or one could do a percent difference and go 200 – 125 / 125 = so 125 grew by 0.6 or 1.6 to get there. If you wanted to include our tricks to specially modify the data we would say 200 – 125 / 200 = 0.375 or only 37% instead of 60% or 1.6! How fun. Now we can compare between economies and give weight to the terms that matter. The next term to explore is inflation.
Term 7 Inflation:
We have heard about inflation here and there, but the reality is it only helps the rich who can invest. It is not in some obscure corner it is right in front of your face and nose! It can be regulated by governments limiting prices or imposing tariffs. It can be created by banks with interest rates. Interest should not scare you; it should inspire you to work, and put your money to work. It was previously seen in the CPI equation and now can be glimpsed from a bird’s eye view. We are counting on responsibility winning the day, but the government does like to print money. All over the world we hear stories of runaway inflation from Brazil to Venezuela. If your currency dips, look for foreign investment and tight fiscal policies. Of course, Bitcoin and gold can be a heaven, and in Bitcoins case a solution to inflation, yet the concept should not be taken lightly. It is easy for the government to print money, but it is hard for the poor to earn it!
Inflation is not a bad thing. Perhaps it can bring the underbanked into the economy or provide credit where it is due. It can get you chasing more dollars and provide liquidity. It is flexible and can balance the debt. The future will know inflation, but from the past it has shot up quite significantly, with no harm done. $1 in 1970 is $8.11 Today. However, the little trickle of 0.0388 percent increase did add up! So, you must learn about compound interest and keep your eyes on the prize! What we must do is track inflation and where the dollars go to ensure our government is not squandering them our using our dollars to fund secret black budget programs to promote the contras in South America or fund proxy wars. As a disclaimer, inflation sounds bad, but it is not. Debt sounds bad, but is a form of credit. So, for all the reasons above look to your government to keep providing inflation and we will keep providing wisdom! So, the math we use is simple:
Now we have completed our final term! We hoped not to be authoritarian and to be flexible and insightful instead. We want to use the options to inspire creative thought and hopefully reach to the highest levels of government where a true formula for the future can be created. As it stands, the formula looks as below, and we shall use the formula to compare 2 different economies for fun and fortitude.
