Stock to flow model concept is particularly used in relation to BTC and it is a way for the measurement of scarcity of a particular cryptocurrency by making a comparison in between the current and existing supply with the rate at which the new supply or tokens are being created.We can also say it in other words that it is a model that is used for explaining that how much amount or a token is available to market and how much are new or being created still.
Scarcity is one of the major concept that we can apply in this model as main idea because concept of scarcity let us determine the value or worth of a particular cryptocurrency.Scarcity of an asset have direct relationship with value or worth of an asset so it means that the more scarcity is present in a particular assets the more valuable it is and vice versa.
When we apply working of stock to flow model at BTC then this model taking to account existing supply of the BTC and then it place a role in dividing it by its annual production of new creation of BTC. The ratio that I have described is help in the determination of the scarcity of this token at any given time so the higher the ratio is the most scarcer a particular token is.
When we talk about advocates of this model then it argue that this model is a useful way for understanding the value of BTC and its potential regarding the field of price appreciation. It means and it believes that as the stop to flow ratio would increase in the BTC with the passage of time then more scarcity would be introduced in it which drive up its price automatically because it's demand would increase in market.
Most important thing to consider is that this is a model which is nothing if there is no critics on it. There are some people that argue about its over simplification of the factors which are influential in driving up the price and value of a particular token and they also argue that this is a model which cannot predict price of a particular asset in a more precise way. In addition when we talk about the model that what it assumes then it has assumption about the relationship between the scarcity and value that it would remain constant.
I am describing here list of advantages and disadvantages of stock to flow model.
Advantages of STOCK -FLOW MODEL
• Scarcity can be measured by the use of stock to flow model and it permits investors and other analysts for assessing the rarity of an asset.It can be used and useful for asset like Bitcoin.
• Stock to flow model proponents argue that this model is helpful in showing some of the predictive values of particular token and they have believe that when the ratio of stock to flow increase than it will indicate that price appreciation is increasing in the market and vice versa.
• Framework of stock to flow model is very straight forward because it is very easy to apply and there are many basic calculations that are used for the determination of stock to flow ratio so it becomes accessible to experts and newcomers both to predict prices.
• Stock to flow model has gained a lot of attention and popularity in the Bitcoin especially.Results of this is that it has become a market sentiment indicator so in this way it is helpful in influencing the behaviour and decision of those who participate in market.In this way it creates self-fulfilling prophecy in which predictions that are done by market impacts dynamics(Supply and demand)
Disadvantages of STOCK -FLOW MODEL
• There is an disadvantage regarding stock to flow model because many critics argue that the model simplifies more complex factors so in this way worth and value of an asset also affects.This is because it remains more focused on scarcity and don't focus on market demands and other technological advancements.
• It is a model which assumes a relationship between scarcity and value from time to time so these assumptions may not be true in future,there is a possibility of this also.Market dynamics and external factors can impact value of a particular cryptocurrency so it is very tough to depend upon scarcity just as predictor of price.
• When I talk about Stock to flow model then it's relies upon past data which is historical data for the purpose of making price predictions of future and there are different cryptocurrencies for which this model don't seems to be much reliable because they don't have long history so if there would be lack of long term data then definitely it would introduce different type of uncertainties.
• When I talk about cryptocurrency market then it is highly volatile and highly dynamic so rapid changes can occur and there is a high possibility of this but stock to flow model doesn't account for dynamic factors that limits effectiveness of this model in the prediction of future movements in the price.
https://www.lookintobitcoin.com/charts/stock-to-flow-model
While making the analysis we should know that from my above words now you understand that tokens that are available in the market are remained stored and these are called stock.If there is any asset which is available suppose Ethereum that it is available in market then it is stock.
If there is mining of newly created tokens Ethereum and as they are newly created so they can be regarded as flow of Ethereum token.If miners would stop or reduces the mining then supply of Ethereum would cut off from market and scarcity which type of the price of this token increasing its demand in market.
In this way stock to flow model let us know that what would happen if Ethereum would be available in high or low amount.
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When I share my analysis then according to stock to flow model graph BTC according to me could be predicted at around $55000.But in reality situation is going on different somehow because there is a lot of difference in between the price which is predicted and which is real because today price is around $41000.
That was my overall analysis in which you can clearly understand the difference between predicted and real price so we can apply a statement that it is not guarrenteed that the things which seems to us would actually be like this as I have shown also.....
Stick to flow model could be applied to STEEM blockchain but I think it should not be applied to STEEM due to list of reasons.
When I talk about stock to flow model then it mostly relies on scarcity and it ignore other factors that are also essential in influencing the tokens of crypto.These factor are market sentiment and their dynamics as well as technological advancements and developments.STEEM supply mechanism is very different because there is inflationary supply model STEEM have where through proof of brain mechanism these tokens are continuously created.Thats why this model is not applicable at steem.
When I talk about effect of utility and demand on the price on particular cryptocurrencies then these are factors that also have great impact.STEEM is used for content creation rewarding and for engagement rewarding so STEEM is related to utility regarding its value that's why this model is not applicable to it.
- Stock to flow model describes relationship between Scarcity and value over time so market dynamics significantly affect worth of cryptocurrencies.BTC have more liquidity and market acceptance than STEEM so it affects the preciseness of model when applied to STEEM.
- STEEM Blockchain was created around 2015 so definitely there is no more history available but stock to flow model predict prices mostly on past basis that's why this is not applicable and much reliable for STEEM.
@khursheedanwar
When the flow model is used to apply the workings of Bitcoin, it is clearly seen and takes into account the supply of Bitcoin, how much is the current supply and how much is the new supply. The price decrease is determined by the flow model which is developed by an anonymous person that all bitcoin predictions from 2009 to 2020 have come true and this flow model was discovered in 2019. Shortages are measured by the stock-to-flow model. Pricing on the stock-to-flow frame model is very easy because it is simple. Going to talk about the downside, it's a lot of complicated stuff that makes it very easy, which means that in all of your posts we've clearly understood the bit about the stock-to-flow model. Any comments regarding steam and using it, your activity is great and all the posts are appreciated, surely we get new lessons and best wishes for the competition. God bless you.
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Your comment is very extensive and first of all I want to appreciate your effort in writing this command and then I agree with you that I tried my best to give you the answer of stop to flow model that how it is important in predicting the future by keeping in mind the past and historical as well as I have also explained some of its purpose and it's functioning that how it's working occurs.
After that I tried my best to explain in front of you some of the historical data and then I show my analysis that what is actually happening and what is the prediction so there is a lot of difference in it you can see through my analysis and their can be multiple reasons of this difference as well as I have tried my best to explain the implementation of this model is not directly implemented at steem.
I am happy that you are wishing me good luck for the competition I also wish you good luck and I would love to visit your entry also
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Upvoted. Thank You for sending some of your rewards to @null. It will make Steem stronger.
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Thanks for invite me..
Goodluck for the contest..
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My pleasure 😊
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Masha'Allah gOod post. Keep on working like thus.
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I am very happy that you like my post. Always try to share your comment more than 50 words so that it may look more justified
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Ok brother I will keep it in my mind next time.
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Your post contributes valuable considerations for those engaging with the Stock to Flow model, emphasizing the importance of recognizing its limitations in the crypto market. Well articulated!
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My post you consider is a detailed explanation of stock to flow model understanding and I agree that it focus on the importance of recognizing its limitations in market and at last I am happy with your comment that you think about my post that is very well articulated and organised.
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Knowledgeable enough that scarcity of commodity leads to increase price. But using the right tool and strategy to analyze and understand perfectly the movement is worth why stock to Flow model stand incredible.
It one among the best topic organize by the community to help advance our crypto knowledge.
You've indeed explore the concept to it best.
It's very easy to understand and apply from your perspective written.
Good luck and looking forward to reading more from you.
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Thank you so much for leaving a valuable comment at my post I am very happy that you understand the concept of scarcity in stock to flow model through my post because this model mostly focus on scarcity rather than focusing on other things that can also play great role in fluctuating the prices of cryptocurrencies.
You like my analysis but I have analysed as well as I have explored the concept in my best way I agree with you because I have put a lot of efforts to write it and thanks for wishing me good luck I also wish you good luck and I also wish to see more good content from you day by day.
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Thanks for breaking down the Stock to Flow Model! Your explanation is clear making a complex concept easy to grasp. I appreciate your insights on both the advantages and disadvantages providing a well-rounded view. Best of luck in the engagement challenge and I hope your analysis continues to spark interesting discussions.
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Thank you so much for commenting at my post I am very happy that my explanation about stock to flow model makes you happy. Thanks so much for wishing me best luck. I would also like to visit your entry
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Wow, I am really grateful for your breakdown of the Stock-to-Flow Model as you made it so clear and easy to understand, even though it's a complex concept. I really value your insights on both the upsides and downsides, which gave me a well-rounded perspective. Wishing you the best of luck in the engagement challenge.
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Thank you so much for your valuable comment at my post and I am very happy that the way in which I broke down talk to flow model in my simpler and clear understanding very easy to understand about my insights for all of you as well as I agree with you that just like other things stock to flow model also have up sides and down sides. I wish you good luck also and thanks for wishing me best.
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Greetings, my friend @khursheedanwar! Your breakdown of the Stock-to-Flow Model is impressive, simplifying a complex concept. 🌟 It's insightful to see the upsides and downsides you've highlighted. All the best in the contest, success for you! 👍
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Greetings to you also...
My friend I am happy that my post is informative and impressive for you as well as agree with you that I tried my best to break down complex terms into simpler so that you all may understand everything either it is about pros and cons of this model or it is about its implementation at this blockchain. Thanks for wishing me all the best and success I also wish same for you.
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Hello dear friend greetings to you, Hope you are having good days there.
You say that stock to flow model concept we particularly use in relation with BTC and it is a way for measuring the scarcity of a particular cryptocurrency by making a comparison between it's current or existing commodity with the rate at which the new supply or tokens are being created. Yes you are true. We make comparison of to find out scarcity of the stock. If the commodity is scarce it's price always goes up.
The best post dear, best wishes for the contest.
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Your post is always been very lengthy and very good to read and a quality content creator you are and whenever I see the questions you have answered our in so much that we can fully under stand and the last question you have answerd very well that we cannot implement over it and the reason you have given I think I just spend it the whole date find out these reason and you have written so much well best of luck
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Good friend thank you for sharing such qualities post on this platform I must say to you you are such a very good content creator especially when it comes to crypto related knowledge at this stage we could become a teacher of crypto in any institution you choose 😆.
Thanks for sharing Please engage on my entry too https://steemit.com/hive-108451/@starrchris/eng-esp-steemit-crypto-academy-contest-s15w2-stock-to-flow-model-or-or-modelo-stock-to-flow, remember starrchris cares
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En BTC la escasez se puede determinar al dividir el stock existente por el flujo anual de la producción. Ambos valores estan disponibles por lo que calcular la escasez es realmente sencillo.
El modelo S2F tiene su base fundamental en la escasez, lo que lo convierte en un aplicación simplista por lo que ha ganado detractores, pero al ver las gráficas demuestra que ha sido bastante asertivo en sus pronósticos.
Es un modelo enfocado en la escasez y resulta difícil considerar solo de este análisis para realizar una predicción por lo que es necesario contar con otras herramientas que midan la volatilidad, el sentimiento del mercado y cualquier otra que no señale el camino correcto para decidir una inversión informada.
Gracias por compartir, has abordado muy bien las pautas del tema con sabiduría.
Saludos y muchos éxitos.
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