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I do not fully understand the cryptocurrency domain but have always wanted to gain a better understanding of it so am hoping for some insight. I thought that on

I do not fully understand the cryptocurrency domain but have always wanted to gain a better understanding of it so am hoping for some insight. I thought that one advantage of Bitcoin was that it cannot lose value?

afterburner 9y ago
What, its value in dollars? Its value in dollars is however many dollars someone is willing to pay for it.
- test6554 9y ago
  An extremely large number of people do not understand this... Take for example people who want to buy a nintento switch for $299. But it's $415 and in stock on Amazon and sold out everywhere else that is listing it for $299. Well I guess it doesn't actually cost $299 then does it? It actually costs $415 or so based on what people are willing to pay.
Rmilb 9y ago
The majority of cryptocurrencies value is derived from what the market thinks it is worth. The market can deem any coin's value to be worth 0 at any time. The value is extremely volatile and can lose and gain value quickly. There are some projects like Tether and Bitshares who have tried to create a stable digital asset. I don't know how successful they have been. https://tether.to/ https://tether.to/
quantdev 9y ago
Yeah, this is definitely false, as the other guy said -- its value in USD is whatever you're willing to pay for it in USD. Maybe what you're thinking of is the fact that it's deflationary unlike fiat: there's a finite number of coins that will ever be created. In other words, if you own exactly one dollar, over time, the percentage of total dollars you own will decrease, whereas with bitcoin, one bitcoin represents a constant fraction of the total bitcoin that will be created. This says nothing about how many gallons of milk one dollar or one bitcoin will buy you though.
anothercomment 9y ago
The number of Bitcoins that will ever be in existence is fixed, so I guess there can be no inflation in the classical sense. Value is another question altogether.
squeaky-clean 9y ago
On the short scale, Bitcon is extremely volatile. Long-term, it's been trending up heavily, but it's not even a decade old yet, so making long term predictions isn't a good idea. The main benefits to bitcoin as I see it are It's decentralized nature That it can be anonymous, and by default is more "anonymous" than other online payments. For example, you would only know my wallet address, while something like Paypal/Venmo would give you my full name and email and maybe even physical address. You could probably do some digging with that wallet address and find my real info, but it's certainly tougher than having it emailed to you. That payments work like a "push" rather than "pull". A store/vendor gives you an address and you send them BTC, they then wait for the funds to land in their wallet. But with a credit card, I give the store my credentials and trust them to only take as much as promised and not charge me multiple times. Also, it's definitely used more for investing/hoarding at the moment than it is as an actual currency, though more and more companies and payment processors are beginning to accept bitcoin as payment.

afterburner 9y ago

What, its value in dollars? Its value in dollars is however many dollars someone is willing to pay for it.

test6554 9y ago
An extremely large number of people do not understand this... Take for example people who want to buy a nintento switch for $299. But it's $415 and in stock on Amazon and sold out everywhere else that is listing it for $299. Well I guess it doesn't actually cost $299 then does it? It actually costs $415 or so based on what people are willing to pay.

Rmilb 9y ago

The majority of cryptocurrencies value is derived from what the market thinks it is worth. The market can deem any coin's value to be worth 0 at any time. The value is extremely volatile and can lose and gain value quickly. There are some projects like Tether and Bitshares who have tried to create a stable digital asset. I don't know how successful they have been. https://tether.to/ https://tether.to/

quantdev 9y ago

Yeah, this is definitely false, as the other guy said -- its value in USD is whatever you're willing to pay for it in USD. Maybe what you're thinking of is the fact that it's deflationary unlike fiat: there's a finite number of coins that will ever be created. In other words, if you own exactly one dollar, over time, the percentage of total dollars you own will decrease, whereas with bitcoin, one bitcoin represents a constant fraction of the total bitcoin that will be created. This says nothing about how many gallons of milk one dollar or one bitcoin will buy you though.

anothercomment 9y ago

The number of Bitcoins that will ever be in existence is fixed, so I guess there can be no inflation in the classical sense. Value is another question altogether.

squeaky-clean 9y ago

On the short scale, Bitcon is extremely volatile. Long-term, it's been trending up heavily, but it's not even a decade old yet, so making long term predictions isn't a good idea. The main benefits to bitcoin as I see it are It's decentralized nature That it can be anonymous, and by default is more "anonymous" than other online payments. For example, you would only know my wallet address, while something like Paypal/Venmo would give you my full name and email and maybe even physical address. You could probably do some digging with that wallet address and find my real info, but it's certainly tougher than having it emailed to you. That payments work like a "push" rather than "pull". A store/vendor gives you an address and you send them BTC, they then wait for the funds to land in their wallet. But with a credit card, I give the store my credentials and trust them to only take as much as promised and not charge me multiple times. Also, it's definitely used more for investing/hoarding at the moment than it is as an actual currency, though more and more companies and payment processors are beginning to accept bitcoin as payment.