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The most important uses in mind are that you can use Bitcoin to hedge against your own currency and as a way to diversify your portfolio in the same way you mig
by codewithcheese 9y ago
The most important uses in mind are that you can use Bitcoin to hedge against your own currency and as a way to diversify your portfolio in the same way you might hold stocks, bonds, cash and gold.
- nwah1 9y agoYou don't hedge a stable currency with a volatile currency.
- jobeirne 9y agoStable according to whom? Check out all that stability in Venezeula.
- cjlars 9y agoThat's not quite true, the underlying volatility doesn't matter as long as the position sizes (as part of a basket of currencies) are correct and the relationships between the currencies are well understood.
- nnfy 9y agoI dont know why you're being down voted. You can diversify into high and low risk assets. Btc is a valid but high risk asset, with a future that one could at least rationally make a case for.
- nwah1 9y agoHedging is about reducing risk. You can definitely argue that people shouldn't keep all their wealth stashed as dollar bills under their mattress, and that they should diversify. Indeed, absolutely nobody advocates doing that. Everyone says to diversify, except for goldbugs and bitcoin extremists. The question of whether it would be a good idea diversifying in that direction is still unanswered, as there's plenty of real productive assets to invest in that contribute tangible goods and services to the world. When people are in a frenzy bidding up the prices of things that aren't providing goods and services to anyone, then you should worry.
- mrb 9y agoWho said stable? Many fiat currencies are unstable and/or have very high inflation: https://en.wikipedia.org/wiki/List_of_countries_by_inflation_rate https://en.wikipedia.org/wiki/List_of_countries_by_inflation...
- nwah1 9y agoBitcoin has larger price fluctuations than any country on that list, except Venezuela.
- mrb 9y agoFor hedging against fiat currencies, short-term price fluctuations are irrelevant. Long-term price trend is what matters, and Bitcoin gained 4×/7×/18×/32× over the last 6/12/24/48 months, far beating the inflation of all world's fiat currencies. Also note that volatility is quickly decreasing: https://twitter.com/lsukernik/status/864920873718951937 https://twitter.com/lsukernik/status/864920873718951937
- prostoalex 9y agoThose same countries will also have exchanges with huge spreads or money transmitters charging exorbitant fees for converting in and out of bitcoin.
- nnfy 9y agoYou do if youre a 20-something software developer who can afford to lose a couple thousand dollars and take the risk of hitting it big. While in theory it is probable that btc growth will never be as astronomic as it has been in the past, you can't time the market, and there's no telling where the true ceiling is because this market is so inneficient. Aside: the inneficiency I think comes from ignorance and manipulation of btc, not a flaw in btc itself.
- nosuchthing 9y agoBTC minted the vast majority of its coin supply to a tiny group of users. Worth considering, especially now that there are better alternative blockchains.