The Rise of Bitcoin

The Rise of Bitcoin

If you are a teacher then please also visit my new site: intermathematics.com for over 2000+ pdf pages of resources for teaching IB maths!

Bitcoin is in the news again as it hits $10,000 a coin – the online crypto-currency has seen huge growth over the past 1 1/2 years, and there are now reports that hedge funds are now investing part of their portfolios in the currency.   So let’s have a look at some regression techniques to predict the future price of the currency.

Here the graph has been inserted into Desmos and the scales aligned.  1 on the y axis corresponds to $1000 and 1 on the x axis corresponds to 6 months.  2013 is aligned with  (0,0).

Next, I plot some points to fit the curve through.

Next, we use Desmos’ regression for y = ae^bx+d. This gives the line above with equation:

y = 5.10 x 10^-7 e^1.67x + 0.432.

I included the vertical translation (d) because without it the graph didn’t fit the early data points well.

So, If I want to predict what the price will be in December 2019, I use x = 12

y = 5.10 x 10^-7 e^1.67(12) + 0.432 = 258

and as my scale has 1 unit on the y axis equal to $1000, this is equal to $258,000.

So what does this show?  Well it shows that Bitcoin is currently in a very steep exponential growth curve – which if sustained even over the next 12 months would result in astronomical returns.  However we also know that exponential growth models are very poor at predicting long term trends – as they become unfeasibly large very quickly.   The two most likely scenarios are:

1. continued growth following a polynomial rather than exponential model
2. a price crash

Predicting which of these 2 outcomes are most likely is probably best left to the experts!  If you do choose to buy bitcoins you should be prepared for significant price fluctuations – which could be down as well as up.  I’ll revisit this post in a few months and see what has happened.

If you are interested in some more of the maths behind Bitcoin, you can read about the method that is used to encrypt these currencies (a method called elliptical curve cryptography).

Essential Resources for IB Teachers

1) Intermathematics.com

If you are a teacher then please also visit my new site.  This has been designed specifically for teachers of mathematics at international schools.  The content now includes over 2000 pages of pdf content for the entire SL and HL Analysis syllabus and also the SL Applications syllabus.  Some of the content includes:

1. Original pdf worksheets (with full worked solutions) designed to cover all the syllabus topics.  These make great homework sheets or in class worksheets – and are each designed to last between 40 minutes and 1 hour.
2. Original Paper 3 investigations (with full worked solutions) to develop investigative techniques and support both the exploration and the Paper 3 examination.
3. Over 150 pages of Coursework Guides to introduce students to the essentials behind getting an excellent mark on their exploration coursework.
4. A large number of enrichment activities such as treasure hunts, quizzes, investigations, Desmos explorations, Python coding and more – to engage IB learners in the course.

There is also a lot more.  I think this could save teachers 200+ hours of preparation time in delivering an IB maths course – so it should be well worth exploring!

Essential Resources for both IB teachers and IB students

1) Exploration Guides and Paper 3 Resources

I’ve put together a 168 page Super Exploration Guide to talk students and teachers through all aspects of producing an excellent coursework submission.  Students always make the same mistakes when doing their coursework – get the inside track from an IB moderator!  I have also made Paper 3 packs for HL Analysis and also Applications students to help prepare for their Paper 3 exams.  The Exploration Guides can be downloaded here and the Paper 3 Questions can be downloaded here.