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Vitalik Buterin calls Plan B’s Stock to Flow Bitcoin model “harmful”

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Ethereum (ETH) co-founder Vitalik Buterin has criticized the Stock-to-Flow (S2F) model for predicting and measuring the value of bitcoin (BTC), arguing that it creates a false sense of financial security regarding the digital asset’s value.

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According to Buterin, financial models such as S2F give people false confidence that “the number will rise” before adding that such models are “harmful and deserve all the ridicule they receive.”

What is the Plan B stock-to-flow model?

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Cryptanalyst Plan B developed the now infamous Stock-to-Flow model. The model quantifies the value of an asset based on its rarity. While it was originally used for precious metals like silver and gold, Plan B used it to predict that the value of bitcoin would increase 10x every four years.

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He gained wide attention last year when he correctly predicted the future prices of bitcoin during a bull market despite minor deviations. But critics argue that the main problem with the theory is that it only looks at the supply side of BTC, assuming demand will continue to rise.

Using the model, Plan B predicted that Bitcoin will hit $100k by the end of 2021; however, the coin only hit an all-time high of $69,000 in November before crashing.

Bitcoin Fall Sheds Light on S2F Model

As the price of Bitcoin recovers from the crash to below $20,000, cryptanalysts are starting to look at the S2F model more superficially.

The S2F model was an “epic failure,” Sassal said, adding that Plan B should delete his Twitter account.

FatManTerra also took the opportunity to criticize “mathematical” models that predicted LUNA could cost as much as $1,000.

Plan B answers

Plan B responded to numerous criticisms of its S2F model by stating that “people are looking for scapegoats.”

Plan B continued that “leaders” in the space, such as Vitalik Buterin, “blame others and play the victim.”

June 20, plan B general a chart showing that the S2F model was accurate between March 2019 and March 2022 and says “Either BTC is grossly undervalued and will recover soon, or S2F will be less useful going forward.”

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