The Bitcoin Layer
97% Of Bitcoin’s Price Is Explained By The Power Law | Santostasi & Perrenod
- Bitcoin price follows a power law relationship with time, displaying a straight line on a log-log chart with an R² of 0.97, meaning only 3% of historical price data falls outside the trend.
- Two underlying power laws drive the price-to-time relationship: adoption (addresses) grows as the cube of time (~3.05), and value grows with the square of users (~1.84–1.92), mirroring Metcalfe's law for networks.
- The cube-of-time adoption pattern is universal across natural phenomena including the internet, viruses, and even a 200-year catalog of movie reviews, suggesting a common underlying mechanism in contact networks.
- Bitcoin's exponent of approximately 2 for the price-to-addresses relationship is the signature of a true peer-to-peer network, distinguishing it empirically from centralized or hybrid network topologies.
- The Scientific Bitcoin Institute is launching an open observatory dashboard with 75 reproducible power law indicators and plans to host an annual scientific conference on Bitcoin research starting next year.
- Dr. Giovanni Santostasi has authored *The Physics of Bitcoin*, a peer-reviewed paper was published in the El Salvador Journal of Non-Linear Science in October, and the institute welcomes student and researcher participation through membership and fellowship positions.