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Currency isn't SUPPOSED to be this volatile. Currency is NOT supposed to be an investment mechanism in and of itself. If I buy a loaf of bread for $1 now, I s

Currency isn't SUPPOSED to be this volatile. Currency is NOT supposed to be an investment mechanism in and of itself. If I buy a loaf of bread for $1 now, I should be able to buy a loaf of bread for $1, 10 years from now. Currency inflation is BAD, and so is currency deflation. Stability is GOOD. The fact that bitcoin's value keeps skyrocketing proves that it is a speculative currency which is too volatile for use. The only way I would trust bitcoin for anything would be for short-term holding to transfer value from point a to b, and then convert it back into a stable currency. The only way I would invest in Bitcoin is if I was totally okay with potentially losing every penny I invested. It could literally drop to zero tomorrow if something happened to it (like a major country making it illegal, for example).

hartator 9y ago
Why stability is better than volatility? It doesn't seem that obvious to me. Every time price stability is forced onto something, it just destroyed its market.
- dxhdr 9y ago
  > Why stability is better than volatility? It's self-evident that a stable currency is preferable to volatile, though I'm interested in reading an argument to the contrary. volatile: liability to change rapidly and unpredictably, especially for the worse. stable: not likely to change or fail; firmly established.
  - chii 9y ago
    Let me play the devil's advocate, and day that volatility is an enabler for gambling or betting, and people are known to want to bet.
- Avshalom 9y ago
  If you buy in today and it drops to $1.7 tomorrow, do you spend or do you hope that it'll get back near $1700.00 soon? how much are you willing to do with out for how long? that's the question that volatility is constantly asking and it depresses the velocity of money, depressing whatever economy is based on it.
- s73ver 9y ago
  Suppose I get paid in BTC, and have a landlord that accepts BTC in rent. Let's say my rent is $2000/month. I get paid X amount of BTC a month for my job. If the price of BTC drops below where my X Bitcoin is not enough to pay my rent, that illustrates volatility being a bad thing.
  - wolco 9y ago
    When you sell the coin for cash you know exactly the amount you will have. Bitcoin needs a stable secondary currency or an exchange that will process the transaction immediately but sent payment at a later date.
deleted 9y ago
[deleted]
narrator 9y ago
It's kind of lost to history, but in the 1930s when Nobel Prize winner F.A Hayek was lecturing at the London School of Economics and arguing with Keynes he made some pretty good arguments against a constant increase in the quantity of currency in his critique of Keynes' Paradox of Savings: https://www.mises.org/library/hayek-paradox-saving https://www.mises.org/library/hayek-paradox-saving
- 1001101 9y ago
  Keynes would have thought Bitcoin a barbarous relic.
placeybordeaux 9y ago
> The fact that bitcoin's value keeps skyrocketing proves that it is a speculative currency which is too volatile for use. Or it shows that the market still hasn't figured out a reasonable price for it. > It could literally drop to zero tomorrow if something happened to it (like a major country making it illegal, for example). There are use cases for it in the illegal markets that keep it from dropping to zero IMO (holding files for ransom, moving capital out of china, buying illegal goods etc), a major fall in price is possible though.
- NicoJuicy 9y ago
  And everytimes a fall happens ( eg. 30%), it gets back up way too fast. Bitcoin seems here to stay
  - placeybordeaux 9y ago
    In my opinion the market is still very much in price discovery, but the month to month price is entirely dominated by short term speculation.
omginternets 9y ago
>If I buy a loaf of bread for $1 now, I should be able to buy a loaf of bread for $1, 10 years from now. I'm no economist, but can't it be argued that moderate inflation is a good thing? The reasoning, as I understand it, is that it maintains liquidity since the progressive loss of values nudges towards expenditure. Inversely, massive deflation means you're "making money" just by saving it, ergo people would rather save than spend. Again, I'm no economist, but assuming I'm not wrong in my understanding of inflation/deflation, I'm going to doubt the rest of your claims on the grounds that they smell like oversimplification.
- foota 9y ago
  Inflation and deflation do benefit some people, but in general it makes it more difficult to conduct business when the value of a currency is not stable.
- stupidhn 9y ago
  >but can't it be argued that moderate inflation is a good thing? Better in relation to deflation. Money works like any other commodity; there is supply and demand. We hedge towards inflation to ensure that the currency circulates (holding it is "bad") and to ensure there is no excess demand that prevents financial transactions.
banach2 9y ago
Yeah, I just opened HN to waste a few seconds and saw this on the front page and my jaw literally dropped. If all my money was invested here I couldn't imagine what I would be thinking. This currency could probably make me bipolar all by itself.
gnaritas 9y ago
> Currency isn't SUPPOSED to be this volatile. Currency is NOT supposed to be an investment mechanism in and of itself. Agreed. > If I buy a loaf of bread for $1 now, I should be able to buy a loaf of bread for $1, 10 years from now. Don't agree. > Currency inflation is BAD, and so is currency deflation. Don't agree. > Stability is GOOD. Agree. But stability doesn't mean the value of currency doesn't change, it only means the value is predictable. A currencies value need only be predictable, not stable. Stable value of a currency is impossible, you cannot keep the loaf of break the same price over a decade and you certainly can't even attempt to do it without the power to inflate or deflate the currency. The things you want from a currency, i.e. unchanging value without inflation or deflation is simply not possible. Wealth isn't fixed in supply, it fluctuates drastically over time and thus so much the supply of money if you want to attempt to keep the value stable and that's why we inflate the value of our money ever so slightly each year, to maintain predictable value over long periods of time while avoiding the negative feedback cycle inherent to deflating it. We had a currency that relatively stable in supply, gold, it made a horrible currency because as wealth fluctuated in supply, and there was no ability to manage the supply of gold, the only natural thing that could happen did, the value of the gold supply fluctuated wildly, exactly what you see happening in bitcoin. If you want stable value from a currency, you need the ability to inflate and deflate it to maintain parity with the fluctuating supply of wealth in the world.
Mendenhall 9y ago
Depends on what you are doing. Is it really a currency? I dont personally treat it as such no matter what anyone says. I enjoy and profit off the volatility, at this point its impossible for me to lose any money if it crashes to zero even while I am holding botcoins. If I want "stable" I have stock market etc.
clarkmoody 9y ago
> too volatile for use Yeah, nobody is using Bitcoin... > The only way I would trust bitcoin for anything would be for short-term holding to transfer value from point a to b, and then convert it back into a stable currency. So use Bitcoin that way yourself. And as more and more people with this mindset use Bitcoin, the price will rise due to increased demand, even if only to hold for a short duration.
Taek 9y ago
Bitcoin has value because it can do things that no other money can do. It won't drop to zero because people need it for things they can't get anywhere else. If you want money that can't be seized, can't be frozen, can't be manipulated, Bitcoin is your asset. If you want to be able to send money across continents, bitcoin is your asset. If you want to hedge against USD risk, bitcoin is a great choice (very very different fundamentals, and almost always rises with political instability). Some people want that badly enough for at least some of their portfolio that they are willing to accept the volatility risks. The volatility is a detractor, but that definitely doesn't mean it's good only for speculation. Bitcoin keeps coming back crash after crash because there is real value in owning some.
- stupidhn 9y ago
  >If you want money Bitcoin certainly isn't useless, but "money" is something that is widely acceptable in exchange for goods and services. Living in the tech bubble might skew your view somewhat, but I don't think Bitcoin is more widely accepted than tons of other commodities.
occsceo 9y ago
bring on the downvotes, but my loaf of bread costs $2.99 now and was $1.19 twenty years ago. Why hasn't inflation affected your bread? Can I get some of your bread shipped in bulk?
- petre 9y ago
  Bakers have adjusted the supply of bread accordingly. If there's massive drought/volcanoes erupting/disruptive event the price of bread will likely go up.
kristofferR 9y ago
"SUPPOSED", according to which authority? Let's be real, the vast majority of the development into crypto currencies is due to the speculative qualities that comes from having a limited supply of coins. Stable currencies works fine only in cases where there's significant power structures/momentum behind them. If Bitcoin didn't increase in value with increased usage, barely nobody would use it (since nobody/nothing would support it). Bitcoin had neither when it launched.
cocktailpeanuts 9y ago
People used to say the "world is SUPPOSED to be flat." It is natural that Bitcoin works differently than our existing notion of currency because it IS new. So when you say "Currency isn't SUPPOSED to be this volatile", that's nothing more than saying the currency you know works that way. I also think it's inconvenient, but I don't think that's how it's "SUPPOSED" to work.
- dragonwriter 9y ago
  > So when you say "Currency isn't SUPPOSED to be this volatile", that's nothing more than saying the currency you know works that way. No, the point of currency, as a medium of exchange and more particularly a unit of account, is that it should be stable (it can have a long term change trend, but it should not be volatile.) Volatile but appreciating may be an acceptable thing in a store of value, but not a currency.
  - cocktailpeanuts 9y ago
    My point was that when a disruptive new idea comes along, it is natural that everything people thought they knew about something can completely change overnight. Of course I know the qualities of a currency. But that's what we've learned in classes. But is this some absolute law of nature that's been around since the beginning of universe? No, it's just a man-made concept. And man-made concepts change along with human evolution. You can choose to believe whatever you want, but your belief doesn't change the fact that people are actually spending bitcoins to make transactions online.
    - dragonwriter 9y ago
      > My point was that when a disruptive new idea comes along, it is natural that everything people thought they knew about something can completely change overnight. Volatile currency isn't a disruptive new thing; many past currencies have been volatile. One might, perhaps, reasonably argue that Bitcoin has other features which warrant using it as a currency despite its volatility, but that volatility is bad for the purposes which define currency isn't mere conventional wisdom born from ignorance of anything different than the modern dominant forms of currency.
9BillionMistake 9y ago
Having fun laughing all the way to the bank at idiots like you. Just as an example. I saw what Bitcoin was right way and invested a few thousand. That couple thousand has since netted me more than $200,000. I now have much more in Bitcoin than I ever put in and have withdrawn more than I put in. Sorry, but you are naive. New things happen, nations change, "money" has not always been USD. I am having fun laughing at fools like you work your life away because you are too proud to try and understand a new paradigm. In my early 30's I am financially secure for life, have a happy family and am working on a PhD, all because of what Bitcoin has allowed. And its still going up. Good luck at your 9-5 and with your employee matched Roth IRA.
- itazula 9y ago
  You do understand that there is such a thing as karma, don't you?
  - jungletek 9y ago
    Care to wager some BTC on your ability to prove that statement?
- dang 9y ago
  Incivility like this will get your account banned on HN regardless of how much money you've made, so please don't post like this again.
deleted 9y ago
[deleted]
dwaltrip 9y ago
Bitcoin is not a "normal" currency. It's a new kind of digital asset with unique properties. It doesn't fit into the boxes you are trying to shove it into. You may argue that it is not fulfilling the role it was intended too, but the discussion around what bitcoin is "supposed to be" is a complex one.
altern8tif 9y ago
I suspect most Bitcoin holders view bitcoin as an investment or an asset with extrinsic value (whether consciously or subconsciously). Somewhat like what gold is.

hartator 9y ago

Why stability is better than volatility? It doesn't seem that obvious to me. Every time price stability is forced onto something, it just destroyed its market.

dxhdr 9y ago
> Why stability is better than volatility? It's self-evident that a stable currency is preferable to volatile, though I'm interested in reading an argument to the contrary. volatile: liability to change rapidly and unpredictably, especially for the worse. stable: not likely to change or fail; firmly established.
- chii 9y ago
  Let me play the devil's advocate, and day that volatility is an enabler for gambling or betting, and people are known to want to bet.
Avshalom 9y ago
If you buy in today and it drops to $1.7 tomorrow, do you spend or do you hope that it'll get back near $1700.00 soon? how much are you willing to do with out for how long? that's the question that volatility is constantly asking and it depresses the velocity of money, depressing whatever economy is based on it.
s73ver 9y ago
Suppose I get paid in BTC, and have a landlord that accepts BTC in rent. Let's say my rent is $2000/month. I get paid X amount of BTC a month for my job. If the price of BTC drops below where my X Bitcoin is not enough to pay my rent, that illustrates volatility being a bad thing.
- wolco 9y ago
  When you sell the coin for cash you know exactly the amount you will have. Bitcoin needs a stable secondary currency or an exchange that will process the transaction immediately but sent payment at a later date.

deleted 9y ago

[deleted]

narrator 9y ago

It's kind of lost to history, but in the 1930s when Nobel Prize winner F.A Hayek was lecturing at the London School of Economics and arguing with Keynes he made some pretty good arguments against a constant increase in the quantity of currency in his critique of Keynes' Paradox of Savings: https://www.mises.org/library/hayek-paradox-saving https://www.mises.org/library/hayek-paradox-saving

1001101 9y ago
Keynes would have thought Bitcoin a barbarous relic.

placeybordeaux 9y ago

> The fact that bitcoin's value keeps skyrocketing proves that it is a speculative currency which is too volatile for use. Or it shows that the market still hasn't figured out a reasonable price for it. > It could literally drop to zero tomorrow if something happened to it (like a major country making it illegal, for example). There are use cases for it in the illegal markets that keep it from dropping to zero IMO (holding files for ransom, moving capital out of china, buying illegal goods etc), a major fall in price is possible though.

NicoJuicy 9y ago
And everytimes a fall happens ( eg. 30%), it gets back up way too fast. Bitcoin seems here to stay
- placeybordeaux 9y ago
  In my opinion the market is still very much in price discovery, but the month to month price is entirely dominated by short term speculation.

omginternets 9y ago

>If I buy a loaf of bread for $1 now, I should be able to buy a loaf of bread for $1, 10 years from now. I'm no economist, but can't it be argued that moderate inflation is a good thing? The reasoning, as I understand it, is that it maintains liquidity since the progressive loss of values nudges towards expenditure. Inversely, massive deflation means you're "making money" just by saving it, ergo people would rather save than spend. Again, I'm no economist, but assuming I'm not wrong in my understanding of inflation/deflation, I'm going to doubt the rest of your claims on the grounds that they smell like oversimplification.

foota 9y ago
Inflation and deflation do benefit some people, but in general it makes it more difficult to conduct business when the value of a currency is not stable.
stupidhn 9y ago
>but can't it be argued that moderate inflation is a good thing? Better in relation to deflation. Money works like any other commodity; there is supply and demand. We hedge towards inflation to ensure that the currency circulates (holding it is "bad") and to ensure there is no excess demand that prevents financial transactions.

banach2 9y ago

Yeah, I just opened HN to waste a few seconds and saw this on the front page and my jaw literally dropped. If all my money was invested here I couldn't imagine what I would be thinking. This currency could probably make me bipolar all by itself.

gnaritas 9y ago

> Currency isn't SUPPOSED to be this volatile. Currency is NOT supposed to be an investment mechanism in and of itself. Agreed. > If I buy a loaf of bread for $1 now, I should be able to buy a loaf of bread for $1, 10 years from now. Don't agree. > Currency inflation is BAD, and so is currency deflation. Don't agree. > Stability is GOOD. Agree. But stability doesn't mean the value of currency doesn't change, it only means the value is predictable. A currencies value need only be predictable, not stable. Stable value of a currency is impossible, you cannot keep the loaf of break the same price over a decade and you certainly can't even attempt to do it without the power to inflate or deflate the currency. The things you want from a currency, i.e. unchanging value without inflation or deflation is simply not possible. Wealth isn't fixed in supply, it fluctuates drastically over time and thus so much the supply of money if you want to attempt to keep the value stable and that's why we inflate the value of our money ever so slightly each year, to maintain predictable value over long periods of time while avoiding the negative feedback cycle inherent to deflating it. We had a currency that relatively stable in supply, gold, it made a horrible currency because as wealth fluctuated in supply, and there was no ability to manage the supply of gold, the only natural thing that could happen did, the value of the gold supply fluctuated wildly, exactly what you see happening in bitcoin. If you want stable value from a currency, you need the ability to inflate and deflate it to maintain parity with the fluctuating supply of wealth in the world.

Mendenhall 9y ago

Depends on what you are doing. Is it really a currency? I dont personally treat it as such no matter what anyone says. I enjoy and profit off the volatility, at this point its impossible for me to lose any money if it crashes to zero even while I am holding botcoins. If I want "stable" I have stock market etc.

clarkmoody 9y ago

> too volatile for use Yeah, nobody is using Bitcoin... > The only way I would trust bitcoin for anything would be for short-term holding to transfer value from point a to b, and then convert it back into a stable currency. So use Bitcoin that way yourself. And as more and more people with this mindset use Bitcoin, the price will rise due to increased demand, even if only to hold for a short duration.

Taek 9y ago

Bitcoin has value because it can do things that no other money can do. It won't drop to zero because people need it for things they can't get anywhere else. If you want money that can't be seized, can't be frozen, can't be manipulated, Bitcoin is your asset. If you want to be able to send money across continents, bitcoin is your asset. If you want to hedge against USD risk, bitcoin is a great choice (very very different fundamentals, and almost always rises with political instability). Some people want that badly enough for at least some of their portfolio that they are willing to accept the volatility risks. The volatility is a detractor, but that definitely doesn't mean it's good only for speculation. Bitcoin keeps coming back crash after crash because there is real value in owning some.

stupidhn 9y ago
>If you want money Bitcoin certainly isn't useless, but "money" is something that is widely acceptable in exchange for goods and services. Living in the tech bubble might skew your view somewhat, but I don't think Bitcoin is more widely accepted than tons of other commodities.

occsceo 9y ago

bring on the downvotes, but my loaf of bread costs $2.99 now and was $1.19 twenty years ago. Why hasn't inflation affected your bread? Can I get some of your bread shipped in bulk?

petre 9y ago
Bakers have adjusted the supply of bread accordingly. If there's massive drought/volcanoes erupting/disruptive event the price of bread will likely go up.

kristofferR 9y ago

"SUPPOSED", according to which authority? Let's be real, the vast majority of the development into crypto currencies is due to the speculative qualities that comes from having a limited supply of coins. Stable currencies works fine only in cases where there's significant power structures/momentum behind them. If Bitcoin didn't increase in value with increased usage, barely nobody would use it (since nobody/nothing would support it). Bitcoin had neither when it launched.

cocktailpeanuts 9y ago

People used to say the "world is SUPPOSED to be flat." It is natural that Bitcoin works differently than our existing notion of currency because it IS new. So when you say "Currency isn't SUPPOSED to be this volatile", that's nothing more than saying the currency you know works that way. I also think it's inconvenient, but I don't think that's how it's "SUPPOSED" to work.

dragonwriter 9y ago
> So when you say "Currency isn't SUPPOSED to be this volatile", that's nothing more than saying the currency you know works that way. No, the point of currency, as a medium of exchange and more particularly a unit of account, is that it should be stable (it can have a long term change trend, but it should not be volatile.) Volatile but appreciating may be an acceptable thing in a store of value, but not a currency.
- cocktailpeanuts 9y ago
  My point was that when a disruptive new idea comes along, it is natural that everything people thought they knew about something can completely change overnight. Of course I know the qualities of a currency. But that's what we've learned in classes. But is this some absolute law of nature that's been around since the beginning of universe? No, it's just a man-made concept. And man-made concepts change along with human evolution. You can choose to believe whatever you want, but your belief doesn't change the fact that people are actually spending bitcoins to make transactions online.
  - dragonwriter 9y ago
    > My point was that when a disruptive new idea comes along, it is natural that everything people thought they knew about something can completely change overnight. Volatile currency isn't a disruptive new thing; many past currencies have been volatile. One might, perhaps, reasonably argue that Bitcoin has other features which warrant using it as a currency despite its volatility, but that volatility is bad for the purposes which define currency isn't mere conventional wisdom born from ignorance of anything different than the modern dominant forms of currency.

9BillionMistake 9y ago

Having fun laughing all the way to the bank at idiots like you. Just as an example. I saw what Bitcoin was right way and invested a few thousand. That couple thousand has since netted me more than $200,000. I now have much more in Bitcoin than I ever put in and have withdrawn more than I put in. Sorry, but you are naive. New things happen, nations change, "money" has not always been USD. I am having fun laughing at fools like you work your life away because you are too proud to try and understand a new paradigm. In my early 30's I am financially secure for life, have a happy family and am working on a PhD, all because of what Bitcoin has allowed. And its still going up. Good luck at your 9-5 and with your employee matched Roth IRA.

itazula 9y ago
You do understand that there is such a thing as karma, don't you?
- jungletek 9y ago
  Care to wager some BTC on your ability to prove that statement?
dang 9y ago
Incivility like this will get your account banned on HN regardless of how much money you've made, so please don't post like this again.

deleted 9y ago

[deleted]

dwaltrip 9y ago

Bitcoin is not a "normal" currency. It's a new kind of digital asset with unique properties. It doesn't fit into the boxes you are trying to shove it into. You may argue that it is not fulfilling the role it was intended too, but the discussion around what bitcoin is "supposed to be" is a complex one.

altern8tif 9y ago

I suspect most Bitcoin holders view bitcoin as an investment or an asset with extrinsic value (whether consciously or subconsciously). Somewhat like what gold is.