5 ms·

Irrelevant. The sole criterion for viability of a currency is acceptance.

by cynoclast 10y ago

cyber_mango 10y ago
I call this false. Got proof?
- rail2rail 10y ago
  AZERBAIJAN MANAT ZAMBIAN KWACHA BELARUSIAN RUBLE All currencies, all are as volatile as can be.
  - tekklloneer 10y ago
    And those three markets also accept (and even more highly value) stable currencies. Bring a Euro to any store in Belarus and it'll be accepted at a greater value than the listed exchange rate.
    - thinkloop 10y ago
      > it'll be accepted at a greater value than the listed exchange rate. Didn't realize how dire the listing situation was there :-p
      - tekklloneer 10y ago
        It's simpler than that, currency exchanging costs money. If you're using a foreign currency, then you don't have to pay those fees. If, that currency is even available in your country (in some, using certain countries is prohibited)
  - FabHK 10y ago
    Those currencies you list might be volatile vis-a-vis some foreign currency (and thus vis-a-vis "foreign products"), but they're presumably somewhat stable vis-a-vis "domestic products" (you might have inflation, but that typically goes up only, so it's drift, not volatility). Bitcoin doesn't really have "domestic products", that is things that are denominated in it. So, low volatility is a quality criterion for money, and those currencies fulfil it (domestically). In time of war or hyper inflation, domestic currency might get too volatile, and that's when people switch to other money, such a cigarettes or foreign currency.
    - hisham_hm 10y ago
      Hyperinflation needs to go really off the charts for people to switch to other currency. Source: lived under a hyperinflation of 1900%/year and people did not switch currencies.
clock_tower 10y ago
That's true, but non-volatility counts for something there. Money classically has three roles, as a medium of exchange, a measure of value, and a store of value; when something's value fluctuates dramatically over time, it's failing to fulfill the second and third roles. Measure of value is unimportant for day-to-day use (although vital for accounting), but store of value is indispensable. I'm guessing that we're secretly talking about Bitcoin here; I think that what BTC needs is some organization that controls a lot of capital, and is willing to underwrite the value of the bitcoin. Fiat currencies work to the extent that their issuing countries can underwrite their value (by accepting the currency in payment of debts, primarily); precious metals work to the extent that there's non-monetary demand for them (so gold isn't actually very valuable in an apocalypse -- look at prices in the Siege of Sarajevo, discussed in a survivalist blog a few years back). Bitcoin doesn't really have either of these. It's a sort of fiscal hot potato -- good for exchange, certainly, but you wouldn't want to be the last person with all the world's bitcoin if everyone else lost interest in it.
- ekianjo 10y ago
  Fiat currencies can also suffer from hyperinflation so the second and third problems are not unique to BTC at all.
  - notahacker 10y ago
    Sure, but avoiding hyperinflation is Monetary Policy 101. Most currencies in developed countries have never experienced a hyperinflation and never will because money is created via the fractional reserve banking system as credit for which there is a definite future demand for repayment and taxes denominated in that currency create additional future demand[1]. People are prepared to accept currency because they have future debts and expected future debts denominated in it, and that confidence is boosted because whenever the central bank sees price rises above the level it's prepared to tolerate it steps in to adjust the supply. The BTC mechanism for attempting price stability on the other hand does the opposite: the supply is designed to grow very steadily, but with no reason whatsoever to believe a stable and sustainable demand for that particular cryptocurrency exists in future. [1]Hyperinflations occur when the supply of money grows steadily without even bigger growth in future demand obligations, which in practice invariably happens because the government has resorted to printing it to discharge debts and release people from future tax obligations. This actually looks more like a Bitcoin economy (albeit with more potential for the money supply to grow really, really quickly) in that what the government is doing is decoupling supply from demand.

Irrelevant. The sole criterion for viability of a currency is acceptance.

cyber_mango 10y ago

I call this false. Got proof?

rail2rail 10y ago
AZERBAIJAN MANAT ZAMBIAN KWACHA BELARUSIAN RUBLE All currencies, all are as volatile as can be.
- tekklloneer 10y ago
  And those three markets also accept (and even more highly value) stable currencies. Bring a Euro to any store in Belarus and it'll be accepted at a greater value than the listed exchange rate.
  - thinkloop 10y ago
    > it'll be accepted at a greater value than the listed exchange rate. Didn't realize how dire the listing situation was there :-p
    - tekklloneer 10y ago
      It's simpler than that, currency exchanging costs money. If you're using a foreign currency, then you don't have to pay those fees. If, that currency is even available in your country (in some, using certain countries is prohibited)
- FabHK 10y ago
  Those currencies you list might be volatile vis-a-vis some foreign currency (and thus vis-a-vis "foreign products"), but they're presumably somewhat stable vis-a-vis "domestic products" (you might have inflation, but that typically goes up only, so it's drift, not volatility). Bitcoin doesn't really have "domestic products", that is things that are denominated in it. So, low volatility is a quality criterion for money, and those currencies fulfil it (domestically). In time of war or hyper inflation, domestic currency might get too volatile, and that's when people switch to other money, such a cigarettes or foreign currency.
  - hisham_hm 10y ago
    Hyperinflation needs to go really off the charts for people to switch to other currency. Source: lived under a hyperinflation of 1900%/year and people did not switch currencies.

clock_tower 10y ago

That's true, but non-volatility counts for something there. Money classically has three roles, as a medium of exchange, a measure of value, and a store of value; when something's value fluctuates dramatically over time, it's failing to fulfill the second and third roles. Measure of value is unimportant for day-to-day use (although vital for accounting), but store of value is indispensable. I'm guessing that we're secretly talking about Bitcoin here; I think that what BTC needs is some organization that controls a lot of capital, and is willing to underwrite the value of the bitcoin. Fiat currencies work to the extent that their issuing countries can underwrite their value (by accepting the currency in payment of debts, primarily); precious metals work to the extent that there's non-monetary demand for them (so gold isn't actually very valuable in an apocalypse -- look at prices in the Siege of Sarajevo, discussed in a survivalist blog a few years back). Bitcoin doesn't really have either of these. It's a sort of fiscal hot potato -- good for exchange, certainly, but you wouldn't want to be the last person with all the world's bitcoin if everyone else lost interest in it.

ekianjo 10y ago
Fiat currencies can also suffer from hyperinflation so the second and third problems are not unique to BTC at all.
- notahacker 10y ago
  Sure, but avoiding hyperinflation is Monetary Policy 101. Most currencies in developed countries have never experienced a hyperinflation and never will because money is created via the fractional reserve banking system as credit for which there is a definite future demand for repayment and taxes denominated in that currency create additional future demand[1]. People are prepared to accept currency because they have future debts and expected future debts denominated in it, and that confidence is boosted because whenever the central bank sees price rises above the level it's prepared to tolerate it steps in to adjust the supply. The BTC mechanism for attempting price stability on the other hand does the opposite: the supply is designed to grow very steadily, but with no reason whatsoever to believe a stable and sustainable demand for that particular cryptocurrency exists in future. [1]Hyperinflations occur when the supply of money grows steadily without even bigger growth in future demand obligations, which in practice invariably happens because the government has resorted to printing it to discharge debts and release people from future tax obligations. This actually looks more like a Bitcoin economy (albeit with more potential for the money supply to grow really, really quickly) in that what the government is doing is decoupling supply from demand.