Crypto-currencies in general and bitcoin in particular are rapidly becoming a subject that economists are starting to give serious thought to. Quandl provides a powerful new platform to enable this research.
Human history is economic history, and economic history is largely about currency policy. Fortunes have been made and thrown away; elections have been won and lost; wars have been declared and peace has been forged – all on the basis of currencies, exchange rates, trade and commerce.
Naturally, there’s a massive amount of brainpower that has gone into deciphering the intricacies of ‘traditional’ currencies. Verifying the purity of gold has been the subject of investigation for over 2000 years; the original ‘Eureka!’ moment occurred when Archimedes figured out a new method to solve this knotty problem. Issues around coinage, counterfeit and fungibility have occupied the minds of thinkers since the time of Copernicus (who formulated the fundamental economic principle that “bad money drives out good”) and Newton (who, after solving the laws of gravity, spent the latter half of his career as Master of the Royal Mint). More recently, economists and politicians of all stripes have debated the ‘correct’ fiscal and monetary policies to apply in a world of currency wars, growing government debt and slowing aggregate demand.
Where does Bitcoin fit into all of this? Bitcoin is something that is genuinely new: the first and, to date, most successful ‘digital’ currency. As such it has many properties that are wholly different from traditional currencies. Unlike paper money, Bitcoin is unforgeable; unlike gold, its supply is perfectly verifiable. It is immune to the inflation that plagues all fiat currencies: governments cannot simply print Bitcoins to pay off their debts. It is perfectly secure: all transactions are monitored collectively by the Bitcoin network. Bitcoin payments can be made at any time, to anyone, with minimal fees and no dependence on financial intermediaries. Bitcoin transaction histories are distributed and decentralized, making the system robust and resilient. And Bitcoin minimizes the amount of personal information that users have to disclose, in order to transact.
A whole new economics needs to evolve to correctly account for all these unique features of Bitcoin. And economists are rising to the challenge: every month sees new theoretical papers and new discussion forums devoted solely to the economics of Bitcoin.
But theory alone is not enough: any economic study must incorporate empirical data to be truly useful. And this is where Quandl comes in.
Quandl is an aspirational “Wikipedia for numerical data.” The site offers about 7 million different datasets on various subjects in finance and economics, including exchange rates, inflation rates, asset prices, growth and production data, and much much more. Quandl adopts Wikipedia’s principles of openness and transparency, applying them to numbers instead of words.
This week we added over 40 Bitcoin datasets to Quandl. We now have Bitcoin data ranging from price and market capitalization to transaction volumes and block sizes, to the economics of Bitcoin mining, to friction and distribution.
All these datasets are neatly organized on our main Bitcoin page. On this page you can see current values for various Bitcoin indicators. You can click through to any particular dataset and then, of course, download the data for analysis (or graph it). Of interest to more technical users, is the Quandl API, which empowers users to grab any Bitcoin data (or any data at all for that matter) direct from Quandl programmatically.
Best of all, all the Bitcoin data on Quandl is instantly compatible and integratable with all of Quandl’s 7 million other datasets. So economists can look at the relationship between Bitcoins and inflation, or economic growth, or other currencies, or really anything under the sun. As the Bitcoin market grows and matures, huge insights can accrue from this exercise.
So this little Bitcoin data page is Quandl’s small contribution to the Bitcoin effort which we hope very much continues to flourish. We welcome feedback on our Bitcoin page or any other part of our site.
This is a guest post submitted by Tammer Kamel of Quandl