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Title: Quantity theory of money and cryptocurrencies Authors:  Ladislav Kristoufek - Institute of Information Theory and Automation, Czech Academy of Sciences (Czech Republic) [presenting]
Abstract: Dynamics of major cryptocurrencies is studied in the light of two fundamental economic laws - the law of one price and the equation of exchange. We perform the analysis in two steps. First, utilizing the unprecedented data availability of Bitcoin (and cryptocurrencies in general) statistics, we are able to construct its theoretical appreciation with respect to the US dollar. If the (hard-) fork of March 2013 is taken as a starting point of Bitcoin stability, our results suggest that the cryptocurrency was well within the theory-implied appreciation until the end of 2016. It is only the time starting in 2017 that can be considered as a period of large deviation from fundamental equilibrium dynamics implied by the economic laws. And second, we build on these promising results and utilize the economic laws for the relationship between Bitcoin and other major cryptocurrencies. We show that most of the currency pairs are well described within the logic of the economic laws. Both these main results can be seen as evidence of existing fundamental value of cryptocurrencies.