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Traders calculated the profitability of bitcoin using the Keynes method

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Even before bitcoin was invented, the British economist John Maynard Keynes developed a technique of calculation the annual interest rate of the crypto currency. According to experts, now it is about 57%. Born June 5, 1883 in English Cambridge, Keynes witnessed a tumultuous period in British history. After passing through the Boer War, both world wars and the world economic depression, he passed away on April 21, 1946. During his life he became famous as one of the world's leading economists. His most famous work is The General Theory of Employment, Interest and Money, which was published in 1936 and became a model for future economic thought.


 But how does this relate to bitcoin? According to a report by Bloomberg Businessweek, Keynes was able to predict the rate of the currency, which may be invented. He discovered that the Italian academician Piero Sraffa put forward a proposal that each product has its own loan interest. Keynes subsequently borrowed this idea for his 1936 book.For example, if a person has 100 Singapore dollars and he sells them for $ 73 on November 9, will make money into his account for 50 days until December 29, will buy more Singapore dollars through a fixed-term contract on December 29, he will get $ 100.15 Singapore dollars , the report says. It also states:

"Currency traders deal with implied interest rates all the time, [so] in 50 days, you effectively earned an annualized interest rate of 1.11 percent."

 Pelham Smithers Associates then took the information from Sraffa and Keynes, and futures prices on Deribit, a European bitcoin futures and options exchange, to extract bitcoin interest rates. It determined it to be around 50 percent.

The report adds:

"Retracing that analysis, I compute that selling 1 bitcoin for $7,220 on Nov. 4 and simultaneously investing $7,235 ($7,220 plus Libor interest of $15) in a Dec. 29 futures contract would allow for nearly 1.1 bitcoin to be purchased. That's an annualized interest rate of 57 percent."

 These high rates represent extreme price volatility, Pelham Smithers suggests. Even though the currency has reached a new stage of maturity it still undergoes wide price swings. Last week, bitcoin rose to a new all-time high of $7,800 after Mike Belshe, BitGO CEO, announced that the planned SegWit2x upgrade had been suspended. Since then the digital currency has fallen below $7,000 to $6,888, according to CoinMarketCap.

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