PlanB is an individual who is known only by his pseudonym in the crypto community. He is the originator of the Stock-to-Flow model applied to bitcoin, which estimates the value that 1 BTC should reach over time. His model was particularly effective and predicted reality with more than acceptable accuracy.
In this article, we will try to know a little about PlanB and its famous Stock-to-Flow model . In this way, we will find out who this individual really is, and if this model is the most suitable for predicting the evolution of the price of bitcoin in the future.
What exactly do we know about PlanB?
PlanB is one of those players in the crypto world whose identity we do not know, like Satoshi Nakamoto, the founder of Bitcoin. However, in the case of PlanB, we know a little more about him, although it is not possible to know his exact identity.
Our individual would be from the Netherlands and would have fairly advanced knowledge of law and quantitative finance. This means that he probably worked for trading companies or is close to certain politicians. This hypothesis would explain the fact that he does not wish to reveal his identity to the general public.
From what we know, PlanB would also be an asset manager who would take care of the fortunes of wealthy people. According to him, he would be a member of a team that manages several billion dollars. Obviously, this information is impossible to verify. They could still be true, given his skills that allowed him to create the Stock-to-Flow model applied to bitcoin.
What is the Stock-to-Flow model ?
Without wanting to go into too complex details, we can explain the concept of the Stock-to-Flow model by taking the example of raw materials. The latter need to be extracted to be available and join those already present on the market. We will take the example of silver, but any other raw material could have been used.
The “ stock ” represents the quantities of silver which have already been extracted from the mines and which are in circulation on the market. The “ flow “, meanwhile, represents the quantities that are extracted over a given period, such as a month or a year. When we divide the value of the “ stock ” by that of the “ flow “, we obtain a number. The higher it is, the more the resource is rare and the more its price will appreciate over time if the growth in demand is greater than that of supply.
In the case of bitcoin, the “ stock ” represents approximately 19 million BTC and the “ flow “, over a year, represents 6.25 ( mining reward ) X 96 (15-minute blocks created per day) X 365 (days over the year) = 219,000. The Stock-to-Flow ratio is therefore almost 100 in the case of bitcoin. This is an absolutely huge value that will increase sharply over time, as there cannot be more than 21 million bitcoins in total.
What should bitcoin be worth in the long term?
The Stock-to-Flow model allows us to estimate the value that bitcoin may have in the future. However, it does not allow to evaluate it with precision. Indeed, it depends on many factors that are difficult to quantify and on the different legislation that countries could create on cryptocurrencies in the future.
However, PlanB’s Stock-to-Flow model has worked more or less well since he made it public. Although this does not mean that it will continue to function in the years to come, it is the best model that we have at the moment to have a rough idea of the unit value of a bitcoin in the future.
According to PlanB, the total capitalization of bitcoin is expected to be greater than that of gold somewhere between 2021 and 2024. Thereafter, the market cap of BTC will become larger than that of real estate between 2024 and 2028. These are quite large periods, but it is difficult to be able to design a more precise model to estimate the price of bitcoin in the future.
Conclusion on PlanB
Although there is no evidence that the Stock-to-Flow model developed by PlanB will continue to be reliable in the future, it has so far not been wrong in predicting the price of bitcoin in previous years.
However, it should be kept in mind that the Stock-to-Flow model only gives us indications of what the price of a bitcoin should be , for example “ between 50,000 and 250,000 dollars ”. The room for maneuver is therefore quite wide. This provides a relatively accurate idea of the value that Bitcoin will have in the future.
