Gold supply grows ~3,000 tonnes yearly from mining. But ~90% of gold's value is monetary/jewelry (not industrial "intrinsic use"). Bitcoin reaches 21M maximum at a fixed, declining rate. Both have highly constrained supply relative to existing stock. Why does Stock-to-Flow emphasize this scarcity principle?

Stock-to-Flow argues assets with high existing stock and low new supply (high S2F) tend to hold value. Both gold and Bitcoin share this property: constrained new supply vs. massive existing reserves.

Metcalfe’s Law links value to…

Network value scales with user connections.

Treat models as guides, not guarantees.

Economic Models

10 min readarticleIncludes quiz · 3 questions

No model perfectly predicts Bitcoin's price — but several capture important truths. Stock-to-Flow measures scarcity. Metcalfe's Law measures network effects. Production cost sets a floor. Each is a lens, not a crystal ball.

Models help explain or estimate value, but none are perfect. Use them as lenses, not crystal balls.

Simple definitions:

•Stock-to-Flow (S2F): Values scarcity—higher S2F may imply higher value.
•Metcalfe’s Law: Network value grows with the square of users.
•Production Cost: Mining cost can act as a long-term floor.
•TAM (Total Addressable Market): How big Bitcoin could be if it captures parts of gold, money, or payments.

Key Takeaway

Use models as frameworks for thinking, not as price predictors. The most honest answer about Bitcoin's future price is: nobody knows, but the supply is fixed and adoption is growing.

Test Your Knowledge

3 questions · Passing score: 75%

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