Yale economists answer how likely it is that Bitcoin becomes WORTHLESS

Bitcoin captured the attention of investors, celebrities and even NFL playersin 2017, as its price soared from below $1,000 for a single coin at the start of the year to over $19,000 in December.

The digital currency underpinned by blockchain technology — a decentralized ledger managed by a network of computers through complex math problems — has since fallen to trade near $6,430 at 10:00 a.m. EST Thursday morning according to Coindesk. For long term holders of bitcoin, that price is still a huge gain; a single coin was worth less than $100 in 2013.

However, it’s important to remember that its value can fall all the way back to zero. In fact, there is a 0.4 percent chance bitcoin will become worthless, according to a new report by two Yale University economists.

“The current implied daily disaster probability is about 0.4 percent for Bitcoin, 0.6 percent for Ripple, and 0.3 percent for Ethereum,” according to the report by Yale University economics professor Aleh Tsyvinski and economics Ph.D. candidate Yukun Liu.

By studying the price data for bitcoin from 2011 to 2018, along with that of Ripple’s XRP and Ethereum’s ether from the newer currencies’ inceptions in 2012 and 2015 respectively, Tsyvinski and Liu were able to calculate the probability that the price of a cryptocurrency would…

Continue reading at CNBC.com

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