Bitcoin Meets Google Trends And Wikipedia

Posted: Dec 24 2013, 10:46am CST | by , in News

 
Bitcoin Meets Google Trends and Wikipedia
Photo Credit: Forbes

Don't Miss: This How to find Fingerlings in Stock

Bitcoin, the digital currency du jour, is a bit of an economic curiosity. Unlike gold, it has no intrinsic value. Unlike a currency issued by a country, its price is not affected by GDP, inflation, interest rates or any other typical macroeconomic indicator. So what gives Bitcoin value, and what is behind its incredible price volatility? Supply and demand. And since supply is already predetermined by an algorithm, demand is the biggest factor driving both its value and volatility.

Thus, understanding Bitcoin demand is central to analyzing the currency. But how exactly do you measure demand? Economist Ladislav Krištoufek from Charles University in Prague thinks he has an answer: Use Google Trends and Wikipedia to determine how many times people search for the term “Bitcoin.”

Plotting Internet searches against the value of Bitcoin, Dr. Krištoufek found a strong correlation between the two. (See figure.)

Furthermore, Dr. Krištoufek found that the variables were linked by a bidirectional causation; that is, Bitcoin’s price influenced search queries and search queries, in turn, influenced Bitcoin’s price. This leads to both “virtuous circles” (in which good news drives Bitcoin’s price even higher) and “vicious circles” (in which bad news drives Bitcoin’s price even lower).

Dr. Krištoufek believes such volatility is the natural consequence of speculators chasing after an asset with no inherent value. Therefore, he concludes, “The market is thus dominated by short-term investors, trend chasers, noise traders and speculators.”

This article was originally posted on RealClearScience.

Source: Ladislav Krištoufek. “BitCoin meets Google Trends and Wikipedia: Quantifying the relationship between phenomena of the Internet era.” Scientific Reports 3, Article number: 3415. Published 04-December-2013. doi:10.1038/srep03415

Source: Forbes

Holiday Gift Guides and Deals

Get your Holiday gifting inspired by Best Toy Gifts with High STEM Value and the Top 10 toy gifts under $10 if you are on budget. The most popular Holiday 2017 toy list include Fingerlings, Crate Creatures and more. Don't miss the new Holiday deals on Amazon Devices, including $29.99 Fire tablet.

This story may contain affiliate links.

This free App Solves You Holiday Shopping Problem


Download the free Tracker app now to get in-stock alerts on Fingerling, Luvabella, SNES Classic and more.

Latest News

Comments

The Author


Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

 

Advertisement

comments powered by Disqus