•Cryptocurrency relative value formation occurs at the margin.•Relative cost of production is the main determinant for prices.•Electricity consumption is the main cost of production.•Altcoin ...production is only an intermediary means to Bitcoin production.•Bitcoin price can be described by its cost of production.
This paper aims to identify the likely determinants for cryptocurrency value formation, including for that of bitcoin. Due to Bitcoin’s growing popular appeal and merchant acceptance, it has become increasingly important to try to understand the factors that influence its value formation. Presently, the value of all bitcoins in existence represent approximately $7 billion, and more than $60 million of notional value changes hands each day. Having grown rapidly over the past few years, there is now a developing but vibrant marketplace for bitcoin, and a recognition of digital currencies as an emerging asset class. Not only is there a listed and over-the-counter market for bitcoin and other digital currencies, but also an emergent derivatives market. As such, the ability to value bitcoin and related cryptocurrencies is becoming critical to its establishment as a legitimate financial asset.
Using cross-sectional empirical data examining 66 of the most widely used cryptocurrencies, a regression model was estimated that points to three main drivers of cryptocurrency value: the level of competition in the network of producers, the rate of unit production, and the difficulty of algorithm used to “mine” for the cryptocurrency. These amount to relative differences in the cost of production of one digital currency over another at the margin, pointing to differences in relative cost of production – electricity goes in, cryptocurrency comes out. Using that as a starting point, a no-arbitrage situation is established for Bitcoin-like cryptocurrencies followed by the formalization of a cost of production model to determine the fair value of a bitcoin.
This study back-tests a marginal cost of production model proposed to value the digital currency Bitcoin. Results from both conventional regression and vector autoregression (VAR) models show that ...the marginal cost of production plays an important role in explaining Bitcoin prices, challenging recent allegations that Bitcoins are essentially worthless. Even with markets pricing Bitcoin in the thousands of dollars each, the valuation model seems robust. The data show that a price bubble that began in the Fall of 2017 resolved itself in early 2018, converging with the marginal cost model. This suggests that while bubbles may appear in the Bitcoin market, prices will tend to this bound and not collapse to zero.
This paper explores the intersection of time and relational economic sociology. Building on Viviana Zelizer’s relational framework, I argue that analyzing the temporal dimensions of exchange provides ...insight into how social ties gain meaning through economic practices. The paper shows time’s dual role as both an organizing structure bounding action, and a dynamic element that actors leverage to shape transactional contexts. As structure, time offers culturally-available templates like schedules and rhythms that facilitate coordination and signify predictable social meanings befitting particular relational categories. Yet time also constitutes relational work itself; strategic timing, duration, pacing, and sequencing of interactions signal context, manage expectations, and sustain bonds amidst entanglements. Synchronization through temporal agency prevents mismatches between transactions and social contexts that could strain ties. This agency in time ranges from passive adherence to dominant structures to active assertions of power resistance, enabling both domination and defiance across economic contexts. Analyzing shared temporal infrastructure within circuits of commerce further illuminates how actors distinguish those spheres of exchange at various scale from the impersonal market. Ultimately, incorporating temporality strengthens relational economic sociology by identifying a key mechanism through which practices of exchange become relationally meaningful.
A growing body of research demonstrates that believing action to reduce the risks of climate change is both possible (self‐efficacy) and effective (response efficacy) is essential to motivate and ...sustain risk mitigation efforts. Despite this potentially critical role of efficacy beliefs, measures and their use vary wildly in climate change risk perception and communication research, making it hard to compare and learn from efficacy studies. To address this problem and advance our understanding of efficacy beliefs, this article makes three contributions. First, we present a theoretically motivated approach to measuring climate change mitigation efficacy, in light of diverse proposed, perceived, and previously researched strategies. Second, we test this in two national survey samples (Amazon's Mechanical Turk N = 405, GfK Knowledge Panel N = 1,820), demonstrating largely coherent beliefs by level of action and discrimination between types of efficacy. Four additive efficacy scales emerge: personal self‐efficacy, personal response efficacy, government and collective self‐efficacy, and government and collective response efficacy. Third, we employ the resulting efficacy scales in mediation models to test how well efficacy beliefs predict climate change policy support, controlling for specific knowledge, risk perceptions, and ideology, and allowing for mediation by concern. Concern fully mediates the relatively strong effects of perceived risk on policy support, but only partly mediates efficacy beliefs. Stronger government and collective response efficacy beliefs and personal self‐efficacy beliefs are both directly and indirectly associated with greater support for reducing the risks of climate change, even after controlling for ideology and causal beliefs about climate change.
This article builds the argument that Bourdieu’s dispositional theory of practice can help integrate the sociological tradition with three prominent strands of behavioral economics: bounded ...rationality, prospect theory, and time inconsistency. I make the case that the habitus provides an alternative framework to show how social and mental structure constitute one another, where cognitive tendencies toward irrationality can be either curtailed or amplified based on one’s position in the economic field and a person’s corresponding set of dispositions, ranging from more rational doxic dispositions to irrational allodoxic tendencies. Bridging economic sociology and behavioral economics, this work also bears on issues of persistent financial inequality reproduced through self-defeating patterns of economic behavior inculcated into individuals who occupy dominated positions in the social structure. Bourdieu’s thought, and in particular his conception of field+habitus, can usefully be applied to the empirical findings of behavioral economics to understand deviations from rational action as not only cognitive but also socially structured.
Abstract
How does algorithmic finance operate in society as it crosses the threshold into the hands of lay investors? This article builds on original ethnographic research into a new class of ...algorithmic trading programs known as ‘roboadvisors’—inexpensive, automated, digital financial platforms that enable ordinary people to invest very small minimum amounts and that rely to a large extent on passive, index strategies that follow the prescripts of Modern Portfolio Theory. The main argument of the article is that roboadvisors, representing an ethos of ‘low-finance’, are actively constructing passive investors by disciplining them through technologies that embody canonical models of financial economics. Roboadvisors and their algorithms reconfigure their users and objectify them through automating investment decisions and enforcing a principle of ‘don’t do’ vis-à-vis the market. Implications that bear on agency, market structure and regulatory regimes are discussed.
Abstract
This essay makes the case that current debates about the ‘moneyness’ of Bitcoin and other cryptocurrencies are occurring at the incorrect scale. Rather than being some form of transnational ...digital money to be used alongside or compete with national fiat currencies, I argue that, instead, each cryptocurrency represents its own self-contained ‘money-world’. Put differently, a cryptocurrency is the uniquely specified unit of account and medium of exchange within the socio-technical bounds of its own blockchain. This new perspective can open new lines of intellectual dialogue and inform better policy choices for regulating cryptocurrencies.
Abstract
Behavioral economics has become a dominant set of theories in explaining economic behavior, yet such behavior remains under the limited purview of psychological, cognitive, or neural ...approaches. This article draws on and extends Viviana Zelizer's social meaning of money framework in conjunction with new work in ‘relational accounting’ to suggest a sociological counterpoint, focusing in particular on the social and symbolic meaning attached to individual 401(k) retirement accounts. Following a market downturn, neoclassical and behavioral economics predict various types of behavioral responses, in particular loss aversion - where investors seek to increase risk-taking rather than locking in a sure loss (a loss is more painful to bear than an equivalent gain). A sociological theory that understands the shared meaning of retirement saving would predict something different, a behavior I call
durable conservatism.
In this article, I show how this concept better explains observed risk behavior in Americans’ 401(k) accounts following the 2002 and 2008 bear markets in stocks, and how that response differed from the behavior documented in non-retirement brokerage accounts.
Abstract
Housing wealth is the single largest portion of household wealth in most Western societies today, yet little research has examined how individuals make decisions regarding the use of the ...housing wealth that they possess. In this article, we leverage insights from relational economic sociology to understand how individuals’ subjective valuations and other economic judgments are influenced when space in a home is relationally earmarked. Using a series of original vignette experiments and survey tasks in conjunction with qualitative responses, we find that earmarking a room for a close social tie does indeed matter for valuation. Furthermore, we reveal that individual economic judgments are strongly influenced by different relational content associated with relational earmarks compared to a control. Put differently, we systematically show how modifying the constitution of an earmark strengthens or lessens the appropriateness of its match and prompts distinct patterns of economic decision-making. Our analyses extend relational economic sociology to studies of housing while also building intellectual bridges with research on judgment and decision-making (JDM).
Believing action to reduce the risks of climate change is both possible (self‐efficacy) and effective (response efficacy) is essential to motivate and sustain risk mitigation efforts, according to ...current risk communication theory. Although the public recognizes the dangers of climate change, and is deluged with lists of possible mitigative actions, little is known about public efficacy beliefs in the context of climate change. Prior efficacy studies rely on conflicting constructs and measures of efficacy, and links between efficacy and risk management actions are muddled. As a result, much remains to learn about how laypersons think about the ease and effectiveness of potential mitigative actions. To bring clarity and inform risk communication and management efforts, we investigate how people think about efficacy in the context of climate change risk management by analyzing unprompted and prompted beliefs from two national surveys (N = 405, N = 1,820). In general, respondents distinguish little between effective and ineffective climate strategies. While many respondents appreciate that reducing fossil fuel use is an effective risk mitigation strategy, overall assessments reflect persistent misconceptions about climate change causes, and uncertainties about the effectiveness of risk mitigation strategies. Our findings suggest targeting climate change risk communication and management strategies to (1) address gaps in people's existing mental models of climate action, (2) leverage existing public understanding of both potentially effective mitigation strategies and the collective action dilemma at the heart of climate change action, and (3) take into account ideologically driven reactions to behavior change and government action framed as climate action.
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