11 ms·

Yup. Any "currency" that can plummet in value by 25% because of a minor SEC ruling is not ready to be a store of value.

Taek 10y ago
Well, it can't compete with the USD. But plenty of nations like Venezuela have citizens that would happily take a >25% haircut to escape their governments capital controls. When Greece went bankrupt, life was much easier for anyone with Bitcoin than for anyone without it. As many issues as Bitcoin has today, it has clear use cases.
- sanswork 10y ago
  >When Greece went bankrupt, life was much easier for anyone with Bitcoin than for anyone without it. How? Bitcoin atms were basically non-existent there and from what I read on /r/bitcoin at the time from Greeks no one there was accepting it in stores.
  - drcross 10y ago
    There were capital controls restricting more than 100 euro worth of withdrawals from banks per day. Sure it's not helping you if you are buying a coffee but if it's saving parts of your pension that you worked your whole life to earn then it becomes very important.
    - sanswork 10y ago
      This is a non-answer. >There were capital controls restricting more than 100 euro worth of withdrawals from banks per day. Yes and bitcoin didn't help this since the ways to get cash for your bitcoin involved international transfers which exposed you to those restrictions. >Sure it's not helping you if you are buying a coffee but if it's saving parts of your pension that you worked your whole life to earn then it becomes very important. I'm not sure what this has to do with the question above. Could you expand on it some more?
      - ajmurmann 10y ago
        Not the parent, but what's going on right now in Venezuela speaks to this nicely: http://www.econtalk.org/archives/2017/02/turning_sociali.html http://www.econtalk.org/archives/2017/02/turning_sociali.htm...
        sanswork 10y ago
        First up the government there have already started arresting the mining operators so probably no longer looking like that wise of an investment on their parts. Other than that it's a much safer bet in Venezuela to buy USD than bitcoin though and that is generally what happens. If you're poor in a country with a government like the Venezuelan one betting your limited funds on a speculative investment that requires an active internet connection to use doesn't seem wise or helpful.
        LyndsySimon 10y ago
        > Other than that it's a much safer bet in Venezuela to buy USD than bitcoin though and that is generally what happens. How?
        sanswork 10y ago
        Black market currency exchanges if you need to convert otherwise you just take payment in USD only and basically treat it as your currency instead of the Bolivar.
        LyndsySimon 10y ago
        I sent someone in Venezuela about USD 40 in Bitcoin in October or November. They were able to convert half of it into more local currency (Bolivares?) than they made in a month at their full-time job. He said physical US currency was at a huge premium in the country because there wasn't nearly enough of it to go around, and the official exchange rate was clown shoes.
danielweber 10y ago
Eehhh, I've been skeptical of Bitcoin in the past because of its volatility, but this is very unusual. It's been rather stable on a week-to-week basis for a long time.
- Analemma_ 10y ago
  The SEC declining to approve some investment vehicle is not unusual at all. Compare that to the USD, where nothing short of global nuclear war is going to cause a 10-minute 25% swing.
  - danielweber 10y ago
    "This is unusual" is "the 25% drop." Over the past year, it's been pretty boring.
  - cestith 10y ago
    On 2001-09-11 gasoline tripled, food doubled, and bottled water as much as quadrupled or quintupled in dollar pricing in parts of the US in less than a day. Yes, there were in fact $4/gallon, $5/gallon, and even $8/gallon gasoline and diesel prices posted, many by noon. This also increased the price of everything shipped by truck for a while, too. Prices came off that peak quickly, but took months to years to revert completely.
    - eli 10y ago
      I don't think storing value in diesel fuel is a good idea either.
      - shitgoose 10y ago
        you'll be surprised to find out where your pension fund stores your money.
    - slg 10y ago
      Gas prices actually dropped in the months after 9/11 [1]. Any place that was charging $8 per gallon day of was guilty of price gouging. Either way, you are comparing an SEC decision to the aftermath of the largest terrorist attack in history. Don't you think the scale of these two events is a little different? [1] - https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPMR_PTE_NUS_DPG&f=W https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=E...
olegkikin 10y ago
It's not minor. If the ETF were approved, billions of dollars would flow into bitcoin through the retirement funds, which now can't. So that +25% was baked in, that was the expectation of the appoval. Lots of people were hoping for it. Oh well.
bogomipz 10y ago
I am not sure why you put the word currency in quotes. There have also been many state issued currencies that have done similar - see Thai Baht, Argentine Peso, Russian Ruble, Venezuelan Bolivar etc.
- srssays 10y ago
  Pound sterling...
  - dmoy 10y ago
    Woah wait when did the pound lose 25% of its value due to a SEC ruling?
    - srssays 10y ago
      There were two separate events, adding up to 25%. The first happened instantly as the Brexit result became known. The second happened on Oct 7 at the opening of trading when there was nobody around who wanted to buy... I find that Bitcoins are an effective hedge against conventional wisdom.
      - guiambros 10y ago
        I wouldn't call Brexit a "minor ruling".
    - alexeldeib 10y ago
      Could be a reference to Brexit? The pound suffered pretty severely after the referendum.
      - conanbatt 10y ago
        To be fair, sec ruling is a much smaller measure than country-wide referendum on economicy policy
    - arthurcolle 10y ago
mrb 10y ago
You must be unfamiliar with financial markets. Many assets have lost 25% in minutes and still considered perfectly acceptable store of value: stocks, commodities, etc.
- LoSboccacc 10y ago
  Don't forget the euro a couple years ago reached parity with dollars in a couple months and people like ma that were saving to emigrate got thousands dollars in flames.
  - throwaway12486 10y ago
    The Indian Rupee ha lost ~40% of its value after 2011.
- Spooky23 10y ago
  Few viable currencies do so.
thescriptkiddie 10y ago
Generally speaking, it's a bad idea to use currency as a store of value. The unwavering stability of the almighty US Dollar is a massive historical outlier. For most of history the wealthy didn't keep Scrooge McDuckian piles of cash around, they converted their cash into hard goods and investments like loans, which won't evaporate if hyperinflation occurs. Even today, the smart thing to do is to store most of your value in liquid and semi-liquid assets.
- jon_richards 10y ago
  >investments like loans, which won't evaporate if hyperinflation occurs. Loans absolutely will evaporate if hyperinflation occurs. Lets say you give a $1000 loan that pays out $2000 after two years and the value of the dollar drops 50% over the first year. You will still get $2000 in 1 year. Assuming the value of the dollar holds, you won't have made an actual profit. But what if the value of the dollar continues to drop? If you think its going to drop another 50%, you'd be better off selling your loan for $1000 now, in which case you've already lost half your value, assuming you can find a buyer.
- megous 10y ago
  Except it's not stable at all. If you hold USD long term, because of the inflation target of the FED, you'll be able to buy less and less. USD lost a massive amount of value in the previous century alone, despite the massive advances in every field of human activity. https://www.measuringworth.com/uscompare/relativevalue.php https://www.measuringworth.com/uscompare/relativevalue.php
  - hossbeast 10y ago
    Warning: Division by zero in /home2/sam/public_html/m/calculators/uscompare/relativevalue.php on line 156
    - deleted 10y ago
      [deleted]
    - fennecfoxen 10y ago
jasonlingx 10y ago
Those who stored some value when it was below $1 are not doing too bad...
- sanswork 10y ago
  Unless they were storing that value on MtGox or one of the many other early exchanges that were robbed. Or if they themselves got hacked as happened in many cases. I suspect you could probably put all the people in the world that got rich from buying at $1 and holding in a school classroom together for a chat and not be very crowded.
oelmekki 10y ago
995 is the lowest price it was sold for, not the bottom of averaged price. If you look at graphs now, you'll see that price is considered not having been under ~ 1050. Those kind of statistical anomalies happen all the time, you must be aware of them if you look at real time chart. The bottom line is that you can't really know what the price is before a 30min period ends. That being say, I expect the price to go down further after a bounce (disclaimer : I'm not a financial adviser, this is an opinion). Bitcoin was already at its all time high, and then there was the rumor of ETF, promising it will go even higher and will reach the moon. That's a big red flag to me. What seems the most plausible to me is that it will now enter a downtrend until it finds its support, then only start a new uptrend. I may be wrong, but at least I won't loose money. I totally agree we can't use btc as a currency, though. I have a prepaid visa card that I can load with btc, but I only use it very rarely because it's annoying to have to look at chart to know when is the good time to load my card for this week's grocery. Things are settled, now, bitcoin is a speculative asset. It would be more interesting if cryptocurrencies like tether, which provide USDTether and EURTether, crypto currencies always indexed against their fiat counterpart, were finally available at scale.
kennethh 10y ago
Therese Weiss currency siden something simulator a few years ago. Increased 25 % against the dollar. http://www.cnbc.com/2015/01/15/swiss-franc-sours-stocks-tank-as-euro-peg-scrapped.html http://www.cnbc.com/2015/01/15/swiss-franc-sours-stocks-tank...
blunte 10y ago
Not to mention the relative consolidation of players in China. Some reports have suggested that well over 51% of mining hash power is consolidated amongst three organizations in China. My last look didn't agree with that number, but still it appears that it may be much easier to control consensus than was intended. Thus, "anything can happen" if a few key players agree behind closed doors and change the rules. I think bitcoin is a quite useful transfer platform, but I think it would be foolish to store much of one's assets in BTC.
- Natanael_L 10y ago
  Note that pools != miners. A pool might set the policy for their blocks, but miners can swap pools whenever they feel like it. Large pools have had individual miners abandon them in masses before.
  - blunte 10y ago
    True. Actually I was referring to the manufacturers of ASICs who are running huge mining operations. I'm not sure if they operate in their own pools or if they distribute their efforts across multiple pools. But they do have a critical mass of hash power.
kordless 10y ago
This is an irrational argument.

Taek 10y ago

Well, it can't compete with the USD. But plenty of nations like Venezuela have citizens that would happily take a >25% haircut to escape their governments capital controls. When Greece went bankrupt, life was much easier for anyone with Bitcoin than for anyone without it. As many issues as Bitcoin has today, it has clear use cases.

sanswork 10y ago
>When Greece went bankrupt, life was much easier for anyone with Bitcoin than for anyone without it. How? Bitcoin atms were basically non-existent there and from what I read on /r/bitcoin at the time from Greeks no one there was accepting it in stores.
- drcross 10y ago
  There were capital controls restricting more than 100 euro worth of withdrawals from banks per day. Sure it's not helping you if you are buying a coffee but if it's saving parts of your pension that you worked your whole life to earn then it becomes very important.
  - sanswork 10y ago
    This is a non-answer. >There were capital controls restricting more than 100 euro worth of withdrawals from banks per day. Yes and bitcoin didn't help this since the ways to get cash for your bitcoin involved international transfers which exposed you to those restrictions. >Sure it's not helping you if you are buying a coffee but if it's saving parts of your pension that you worked your whole life to earn then it becomes very important. I'm not sure what this has to do with the question above. Could you expand on it some more?
    - ajmurmann 10y ago
      Not the parent, but what's going on right now in Venezuela speaks to this nicely: http://www.econtalk.org/archives/2017/02/turning_sociali.html http://www.econtalk.org/archives/2017/02/turning_sociali.htm...
      - sanswork 10y ago
        First up the government there have already started arresting the mining operators so probably no longer looking like that wise of an investment on their parts. Other than that it's a much safer bet in Venezuela to buy USD than bitcoin though and that is generally what happens. If you're poor in a country with a government like the Venezuelan one betting your limited funds on a speculative investment that requires an active internet connection to use doesn't seem wise or helpful.
        LyndsySimon 10y ago
        > Other than that it's a much safer bet in Venezuela to buy USD than bitcoin though and that is generally what happens. How?
        sanswork 10y ago
        Black market currency exchanges if you need to convert otherwise you just take payment in USD only and basically treat it as your currency instead of the Bolivar.
      - LyndsySimon 10y ago
        I sent someone in Venezuela about USD 40 in Bitcoin in October or November. They were able to convert half of it into more local currency (Bolivares?) than they made in a month at their full-time job. He said physical US currency was at a huge premium in the country because there wasn't nearly enough of it to go around, and the official exchange rate was clown shoes.

danielweber 10y ago

Eehhh, I've been skeptical of Bitcoin in the past because of its volatility, but this is very unusual. It's been rather stable on a week-to-week basis for a long time.

Analemma_ 10y ago
The SEC declining to approve some investment vehicle is not unusual at all. Compare that to the USD, where nothing short of global nuclear war is going to cause a 10-minute 25% swing.
- danielweber 10y ago
  "This is unusual" is "the 25% drop." Over the past year, it's been pretty boring.
- cestith 10y ago
  On 2001-09-11 gasoline tripled, food doubled, and bottled water as much as quadrupled or quintupled in dollar pricing in parts of the US in less than a day. Yes, there were in fact $4/gallon, $5/gallon, and even $8/gallon gasoline and diesel prices posted, many by noon. This also increased the price of everything shipped by truck for a while, too. Prices came off that peak quickly, but took months to years to revert completely.
  - eli 10y ago
    I don't think storing value in diesel fuel is a good idea either.
    - shitgoose 10y ago
      you'll be surprised to find out where your pension fund stores your money.
  - slg 10y ago
    Gas prices actually dropped in the months after 9/11 [1]. Any place that was charging $8 per gallon day of was guilty of price gouging. Either way, you are comparing an SEC decision to the aftermath of the largest terrorist attack in history. Don't you think the scale of these two events is a little different? [1] - https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPMR_PTE_NUS_DPG&f=W https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=E...

olegkikin 10y ago

It's not minor. If the ETF were approved, billions of dollars would flow into bitcoin through the retirement funds, which now can't. So that +25% was baked in, that was the expectation of the appoval. Lots of people were hoping for it. Oh well.

bogomipz 10y ago

I am not sure why you put the word currency in quotes. There have also been many state issued currencies that have done similar - see Thai Baht, Argentine Peso, Russian Ruble, Venezuelan Bolivar etc.

srssays 10y ago
Pound sterling...
- dmoy 10y ago
  Woah wait when did the pound lose 25% of its value due to a SEC ruling?
  - srssays 10y ago
    There were two separate events, adding up to 25%. The first happened instantly as the Brexit result became known. The second happened on Oct 7 at the opening of trading when there was nobody around who wanted to buy... I find that Bitcoins are an effective hedge against conventional wisdom.
    - guiambros 10y ago
      I wouldn't call Brexit a "minor ruling".
  - alexeldeib 10y ago
    Could be a reference to Brexit? The pound suffered pretty severely after the referendum.
    - conanbatt 10y ago
      To be fair, sec ruling is a much smaller measure than country-wide referendum on economicy policy
  - arthurcolle 10y ago

mrb 10y ago

You must be unfamiliar with financial markets. Many assets have lost 25% in minutes and still considered perfectly acceptable store of value: stocks, commodities, etc.

LoSboccacc 10y ago
Don't forget the euro a couple years ago reached parity with dollars in a couple months and people like ma that were saving to emigrate got thousands dollars in flames.
- throwaway12486 10y ago
  The Indian Rupee ha lost ~40% of its value after 2011.
Spooky23 10y ago
Few viable currencies do so.

thescriptkiddie 10y ago

Generally speaking, it's a bad idea to use currency as a store of value. The unwavering stability of the almighty US Dollar is a massive historical outlier. For most of history the wealthy didn't keep Scrooge McDuckian piles of cash around, they converted their cash into hard goods and investments like loans, which won't evaporate if hyperinflation occurs. Even today, the smart thing to do is to store most of your value in liquid and semi-liquid assets.

jon_richards 10y ago
>investments like loans, which won't evaporate if hyperinflation occurs. Loans absolutely will evaporate if hyperinflation occurs. Lets say you give a $1000 loan that pays out $2000 after two years and the value of the dollar drops 50% over the first year. You will still get $2000 in 1 year. Assuming the value of the dollar holds, you won't have made an actual profit. But what if the value of the dollar continues to drop? If you think its going to drop another 50%, you'd be better off selling your loan for $1000 now, in which case you've already lost half your value, assuming you can find a buyer.
megous 10y ago
Except it's not stable at all. If you hold USD long term, because of the inflation target of the FED, you'll be able to buy less and less. USD lost a massive amount of value in the previous century alone, despite the massive advances in every field of human activity. https://www.measuringworth.com/uscompare/relativevalue.php https://www.measuringworth.com/uscompare/relativevalue.php
- hossbeast 10y ago
  Warning: Division by zero in /home2/sam/public_html/m/calculators/uscompare/relativevalue.php on line 156
  - deleted 10y ago
    [deleted]
  - fennecfoxen 10y ago

jasonlingx 10y ago

Those who stored some value when it was below $1 are not doing too bad...

sanswork 10y ago
Unless they were storing that value on MtGox or one of the many other early exchanges that were robbed. Or if they themselves got hacked as happened in many cases. I suspect you could probably put all the people in the world that got rich from buying at $1 and holding in a school classroom together for a chat and not be very crowded.

oelmekki 10y ago

995 is the lowest price it was sold for, not the bottom of averaged price. If you look at graphs now, you'll see that price is considered not having been under ~ 1050. Those kind of statistical anomalies happen all the time, you must be aware of them if you look at real time chart. The bottom line is that you can't really know what the price is before a 30min period ends. That being say, I expect the price to go down further after a bounce (disclaimer : I'm not a financial adviser, this is an opinion). Bitcoin was already at its all time high, and then there was the rumor of ETF, promising it will go even higher and will reach the moon. That's a big red flag to me. What seems the most plausible to me is that it will now enter a downtrend until it finds its support, then only start a new uptrend. I may be wrong, but at least I won't loose money. I totally agree we can't use btc as a currency, though. I have a prepaid visa card that I can load with btc, but I only use it very rarely because it's annoying to have to look at chart to know when is the good time to load my card for this week's grocery. Things are settled, now, bitcoin is a speculative asset. It would be more interesting if cryptocurrencies like tether, which provide USDTether and EURTether, crypto currencies always indexed against their fiat counterpart, were finally available at scale.

kennethh 10y ago

Therese Weiss currency siden something simulator a few years ago. Increased 25 % against the dollar. http://www.cnbc.com/2015/01/15/swiss-franc-sours-stocks-tank-as-euro-peg-scrapped.html http://www.cnbc.com/2015/01/15/swiss-franc-sours-stocks-tank...

blunte 10y ago

Not to mention the relative consolidation of players in China. Some reports have suggested that well over 51% of mining hash power is consolidated amongst three organizations in China. My last look didn't agree with that number, but still it appears that it may be much easier to control consensus than was intended. Thus, "anything can happen" if a few key players agree behind closed doors and change the rules. I think bitcoin is a quite useful transfer platform, but I think it would be foolish to store much of one's assets in BTC.

Natanael_L 10y ago
Note that pools != miners. A pool might set the policy for their blocks, but miners can swap pools whenever they feel like it. Large pools have had individual miners abandon them in masses before.
- blunte 10y ago
  True. Actually I was referring to the manufacturers of ASICs who are running huge mining operations. I'm not sure if they operate in their own pools or if they distribute their efforts across multiple pools. But they do have a critical mass of hash power.

kordless 10y ago

This is an irrational argument.