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I emphasized so much that the power law is not a curve fitting exercise as some pseudo-analysts claim. It is about scaling laws and consistency of behavior of Bitcoin.
What scaling means?
In physics, scaling means that a system looks the same — statistically or structurally — when you zoom in or out by any factor. More precisely, a relationship is scale-invariant if multiplying the independent variable by any constant λ changes the dependent variable by a predictable power of λ, with no preferred scale breaking the symmetry.
Formally: a function f(x) obeys scaling if
f(λx) = λ^β · f(x) for all λ
The only function that satisfies this for all λ is a power law: f(x) = C · x^β. So power laws and scaling are not just related — they are the same statement. A power law is a scaling law, and the exponent β is the scaling exponent.
Do not even use the word power law if you don't understand this concept.
Does Bitcoin follow the law above? Can we test this directly. Yes, and Bitcoin passes with flying colors.
We even try different β to see if there is a particular one that reduces the difference between the left and right side of the scaling equation for many scaling factors (many times in the history of Bitcoin).
Notice this optimal parameter gives a perfectly flat zero difference between the left and right side of the equation for many values of λ revealing that the power law has been true and true in time.
You just need to know what you are doing.