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I agree that Bitcoin remains volatile. It will never stabilize. But there's a misunderstanding that Bitcoin will replace fiat. It doesn't have to compete direct

I agree that Bitcoin remains volatile. It will never stabilize. But there's a misunderstanding that Bitcoin will replace fiat. It doesn't have to compete directly. Bitcoin is an alternative money. It's volatile but predictable issuance. Fiat is stable but has unpredictable inflation (debasement). They co-exist. From a philosophical perspective, Bitcoin and fiat are the two extremes of Yin and Yang. They're both necessary for a functional money system. https://bitflate.org/post/2020/08/24/yi-ching-and-cryptocurrency.html https://bitflate.org/post/2020/08/24/yi-ching-and-cryptocurr...

morpheos137 6y ago
The relatively predictable deflation rate of Bitcoin is completely swamped by Bitcoin's extremely high exchange rate volatility versus other assets. Inflation for the dollar and other major currencies is not really a problem anymore because when money supply increases or money becomes less scarce that excess is now absorbed by speculative increases in asset prices rather than CPI inflation. Thus housing and stocks, and Bitcoin go up in value but by definition these prices don't matter for inflation. Bitcoin's run up in recent years is almost entirely due to easy money (low interest rates) not due to increased usage in commerce or intrinsic factors like Bitcoin's endogenous deflationary tendency. There is no reason, why in the face of a general financial crisis, where asset prices are generally falling, prices of houses and stocks, etc, are falling, that bitcoin would not also crash. Its current price is not supported by internal deflation or increased usage. Its current price is part of a broader asset price bubble that can and will pop someday, probably soon. There is no reason why sub $100 Bitcoin is not possible a year or two from now. Bitcoin is not really like digital gold because gold has unique properties that can not be duplicated. Anybody can create a new cryptocurrency at any time. There is no scarcity of cryptocurrency as a whole.
- gruez 6y ago
  >Inflation for the dollar and other major currencies is not really a problem anymore because when money supply increases or money becomes less scarce that excess is now absorbed by speculative increases in asset prices rather than CPI inflation. It's "not a problem" in the sense that you won't be struggling to buy food with your worthless dollars, but it's still problematic because it exacerbates inequality (rich people tend to have more assets that would appreciate in value).
  - swader999 6y ago
    Well this recent time you have massive inflation in speculative assets being offset by deflationary forces from massive layoffs so not much inflation overall. A huge transfer of wealth is occurring.
- swader999 6y ago
  Many here would find ampleforth.org's redbook fascinating.
- dmichulke 6y ago
  Anybody can create a new Facebook or Amazon at any time. Yet somehow it doesn't happen, why? Network effect. Same with Bitcoin.
  - thisisnotclear 6y ago
    Over a long enough timeline Facebook and Amazon will also reach very low valuations.

morpheos137 6y ago

The relatively predictable deflation rate of Bitcoin is completely swamped by Bitcoin's extremely high exchange rate volatility versus other assets. Inflation for the dollar and other major currencies is not really a problem anymore because when money supply increases or money becomes less scarce that excess is now absorbed by speculative increases in asset prices rather than CPI inflation. Thus housing and stocks, and Bitcoin go up in value but by definition these prices don't matter for inflation. Bitcoin's run up in recent years is almost entirely due to easy money (low interest rates) not due to increased usage in commerce or intrinsic factors like Bitcoin's endogenous deflationary tendency. There is no reason, why in the face of a general financial crisis, where asset prices are generally falling, prices of houses and stocks, etc, are falling, that bitcoin would not also crash. Its current price is not supported by internal deflation or increased usage. Its current price is part of a broader asset price bubble that can and will pop someday, probably soon. There is no reason why sub $100 Bitcoin is not possible a year or two from now. Bitcoin is not really like digital gold because gold has unique properties that can not be duplicated. Anybody can create a new cryptocurrency at any time. There is no scarcity of cryptocurrency as a whole.

gruez 6y ago
>Inflation for the dollar and other major currencies is not really a problem anymore because when money supply increases or money becomes less scarce that excess is now absorbed by speculative increases in asset prices rather than CPI inflation. It's "not a problem" in the sense that you won't be struggling to buy food with your worthless dollars, but it's still problematic because it exacerbates inequality (rich people tend to have more assets that would appreciate in value).
- swader999 6y ago
  Well this recent time you have massive inflation in speculative assets being offset by deflationary forces from massive layoffs so not much inflation overall. A huge transfer of wealth is occurring.
swader999 6y ago
Many here would find ampleforth.org's redbook fascinating.
dmichulke 6y ago
Anybody can create a new Facebook or Amazon at any time. Yet somehow it doesn't happen, why? Network effect. Same with Bitcoin.
- thisisnotclear 6y ago
  Over a long enough timeline Facebook and Amazon will also reach very low valuations.