Ethereum Founder Vitalik Buterin Talks Stock-to-Flow, PlanB Responds

Alt heading: Has The Stock-to-Flow Model Lived Out Its Days? Ethereum Founder Shares Thoughts /// PlanB Finally Agrees with Ethereum Founder that S2F May Be Outdated ///

Ethereum co-founder Vitalik Buterin took to Twitter and told his 4 million followers about what he thought of the stock-to-flow (S2F) concept. In the words of the 28-year-old programmer, S2F is “really not looking good right now.”

For the uninitiated, the stock-to-flow model is a concept that predicts the future price of a commodity-based on its scarcity. This concept was applied to predict the price of precious metals such as gold and silver. However, it was used to Bitcoin by the famous anonymous trader, Plan B, who has since been credited as the creator of Bitcoin’s S2F model. According to reports, PlanB is a former Dutch institutional trader with more than 20 years of expertise in the financial industry.

Stock-to-flow is really not looking good now.

I know it's impolite to gloat and all that, but I think financial models that give people a false sense of certainty and predestination that number-will-go-up are harmful and deserve all the mockery they get. https://t.co/hOzHjVb1oq pic.twitter.com/glMKQDfSbU

— vitalik.eth (@VitalikButerin) June 21, 2022

This is not the first time the Ethereum chief has shot at the S2F concept. In June 2020, exactly two years ago, Buterin dubbed the model “unfalsifiable,” contending that its sheer construction rendered it difficult to refute. He later affirmed his position by saying that he disagreed with the model in its entirety.

Some people replied to the Ethereum founder’s post by saying that a significant issue with the S2F model is that it does not consider demand, although it is a good measure for scarcity.

S2F model won't predict the price because it doesn't include demand. But stock-to-flow is still helpful in explaining the value of #Bitcoin as a scarce asset and hard money.

BTC's predictable hardening and supply inelasticity increase its value relative to other assets.

— Stack Hödler (@stackhodler) June 21, 2022

Another user pointed out that the S2F model did not anticipate an inflation period like the one we find ourselves in currently.

Bitcoin’s S2F creator also shared his thoughts on Twitter. The anonymous trader said that S2F had a good run from March 2019 to March 2022. Right now, either BTC is drastically undervalued and will quickly recover, or S2F won’t be as valuable going forward, the trader said.

#bitcoin S2F original 2019 model (grey) and newest fit on most recent data (white dots). S2F model certainly had a good run from Mar2019 (BTC 4K) to Mar2022 (BTC 45K). For now: either BTC is extremely undervalued and will bounce back soon, or S2F will be less useful in the future pic.twitter.com/JdnLINpzTV

— PlanB (@100trillionUSD) June 20, 2022

However, regarding the Ethereum co-founder’s comments, Plan B did not take them all too lightly. He quickly responded that some individuals hunt for scapegoats after a crisis for their failing ventures or poor investment choices.

After a crash aome people are looking for scapegoats for their failed projects or wrong investment decisions. Not only newbies but als "leaders" fall victim to blaming others and playing the victim. Remember those who blame others and those who stand strong after a crash. https://t.co/4nJdHq84pm

— PlanB (@100trillionUSD) June 21, 2022

The S2F model predicts that Bitcoin could soar to $288,000 by 2024. This number is very close to what many BTC maximalists envision the currency will touch. However, many do not share the same opinion.

At press time, Bitcoin (BTC) traded at $21,350.11, up by 3.8% in the last 24 hours. Meanwhile, Ethereum (ETH) traded at $1,167.91, up by 3.5% in the previous 24 hours.