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I have stopped looking at bitcoin as a currency and have started looking at it as a stock or bond without any backing collateral or assets. The only particular
by Joeri 9y ago
I have stopped looking at bitcoin as a currency and have started looking at it as a stock or bond without any backing collateral or assets. The only particular properties are that it trades in a special way (in fractional quantities and round the clock) and that the number of shares is known in advance.
Otherwise it has the same volatility as a stock. It can gain or lose half its value in a few hours. Just like a stock the way to take volatility out of it is to diversify.
The volatility has nothing to do in my opinion with the lack of a central authority distributing it. It has to do with heavy speculation of this particular stock. Central banks can only correct for long term price evolutions, not for short term fluctuations.
- tbabb 9y ago> The volatility has nothing to do with the lack of a central authority distributing it If you know/believe that supply will generally adjust to cancel demand, then you have much less incentive to speculate.
- Joeri 9y agoNot if you make short term plays. Stock shares are also distributed by a central authority incentivized to make the price go up and therefore constrain supply, yet stocks are volatile.
- aphextron 9y ago>Just like a stock the way to take volatility out of it is to diversify. The problem here though, is that every crypto valuation is linked directly to the value of Bitcoin. It's as if the entire S&P tracked the price of Apple.