This analysis dates from December 2017. In the light of the recent
downfalls of the Bitcoin one would need to read this blog with this in mind.

Fiat money has no intrinsic value – it is not backed up by the equal value of a commodity, but is made legal tender due to government decree. Bitcoin is a virtual cryptocurrency and worldwide payment system.

Bitcoin is a virtual cryptocurrency and worldwide payment system. It is the first decentralized digital currency – the system works without a central repository or single administrator – and has been introduced in 2009. Bitcon has been recently rated for the first time, receiving a very high, five-star Resistance to Shocks (RtS) Rating. But how does that compare to the RtS ratings of the major fiat currencies such as the British Pound, the Yen and the Euro? Let us see what happened over the past four years. All currencies are priced with respect to the US Dollar.

Jacek Marczyk
Complexity Management

Bitcoin

Yen

Pound

Euro

As may be observed, the Bitcoin has a significantly less rugged, more stable and high rating than the other currencies. At the time of writing (December 10-th, 2017), the RtS ratings are as follows:

Bitcoin – 99.3% (five stars)

Pound – 78.8% (three stars)

Yen – 87.7% (four stars)

Euro – 87.4% (four stars)

The RtS rating of the pound is the result of the recent Brexit negotiations. In terms of RtS rating distribution, the following plots indicate how of the three fiat currencies the Yen has the highest most likely value of approximately 94% (four stars), while the Pound and Euro rating is around 89% and 87% (three star) respectively. The most likely RtS rating of the Bitcoin is 99% (five stars). The plots illustrating the distributions are shown below

Bitcoin

Yen

Pound

Euro

It is important to keep in mind that RtS ratings do not reflect the value of a particular currency – they merely convey the degree of chaoticity, or disorder, in the dynamics of its price variation.

Jacek Marczyk

Author of nine books on uncertainty and Complexity Management, Jacek has developed in 2003 the Quantitative Complexity Theory (QCT), a new complexity-based theory of risk and rating. In 2005 he founded Ontonix, a company delivering complexity-based early-warning solutions with particular emphasis on systemic aspects and turbulent economic regimes. Read more publications by Jacek

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