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Everytime I see news like this I imagine a lot of economists laughing. From an economist perspective, price fluctuations on money is not a feature it is a very

Everytime I see news like this I imagine a lot of economists laughing. From an economist perspective, price fluctuations on money is not a feature it is a very serious bug. There is a whole lot of economic theory worried on preventing it. "Good" money should avoid being the target of speculation, it should be stable, boring, predictable. Money that changes their prices is like an unit of measure (meters, quilos) that stretches and shrinks unexpectedly. There was a long time ago when I could use bitcoins to buy web templates. Today almost no one accepts it as payment. Exactly because it is unstable.

insertnickname 6y ago
>Today almost no one accepts it as payment. Exactly because it is unstable. Or because transactions became too expensive.
- jkhdigital 6y ago
  It’s like using a wire transfer (~$30 fee) for every transaction. Most people use credit cards or other “delayed settlement” payment methods even with existing fiat currency, so it’s not really fair to compare Bitcoin blockchains transactions to this. Sidechains and other enhancements can easily make low-risk Bitcoin transactions as fast as existing fiat payments.
cblconfederate 6y ago
maybe it's not "good" money. Bitcoin is a store of value and it's volatile, much like e.g. the stock of tesla. Conventional money is protected from speculation and swings by guns. Bitcoin is not going to have such protection, but it doesn't seem people who invest in it mind very much. Maybe the concept of what is "good money" has shifted.
- SpicyLemonZest 6y ago
  Maybe. But the alternative hypothesis we have to evaluate against is that people don't expect Bitcoin to be good money in the first place, and their investments are driven by a desire to be part of the movement or a hope that they'll be able to get rich off of it. A sudden spike and then fall in Dogecoin, which was never intended to be taken seriously, is a pretty strong pointer in that direction.
- sanp 6y ago
  Agreed. Store of value with as much "intrinsic" value (i.e., no one knows and determined by supply / demand) as any other asset.
- robjan 6y ago
  Tesla is a company which produces goods and services in return for money. When you own stock in Tesla you own part of the company so it's not something that would be classified as a store of value since it's economically productive.
mlthoughts2018 6y ago
On the other hand, precious metal prices fluctuate quite a bit and it’s a normal part of assessing and valuing them as stores of value.
jkhdigital 6y ago
I think it’s misleading to view a currency’s price “stability” as some intrinsic quality that determines whether or not it is suitable for broad adoption. Wild price fluctuations are a consequence of incomplete adoption, relative to the quote currency. Higher adoption leads to less fluctuation as the demand is more constant from day to day. If we judged the stability of a currency by its supply stability, then Bitcoin would be the most stable currency ever to exist. But for now, it must compete with sovereign fiat currencies and everything is priced in those currencies, so it will appear extremely unstable and perhaps unusable for most transactions.
puranjay 6y ago
I used to be very bearish on crypto because all I saw was scam after scam and an unstable "currency" (Bitcoin) that no one used. But as I've been getting more and more into crypto, especially DeFi, it's clear to me that we are on the cusp of something incredibly revolutionary. Right now, DeFi is to finance what the world wide web was to communication and content in 1993 The internet managed to break every established industry that relied on network effects and scale - media, commerce, communication. But it didn't do much for finance. The world's biggest banks are still the same as they used to be 30 years ago (whereas internet based companies have taken over media and commerce). DeFi is going to change that. If you rummage through the scams (and there are a LOT of them), there are some truly exciting ideas being explored in this space. It legitimately feels like the internet in 1994. Heck, even the web design is wild and adventurous as it used to be instead of the boring, tame "professional startup" crap we see everywhere now.
- throw0101a 6y ago
  I am still skeptical about crypto, at least in its current form: What problem does it solve? It has failed as a payment system, as a currency, as a reserve currency, a remittance channel, a timestamping service, a settlement layer, a bank for the "unbanked", a cypherpunk liberator, a money laundering tool, a drugs-by-mail tool, a unit of accounting, a store of value, and as a "disruptive" fintech technology. When I think of crypto/Bitcoin, I am reminded of Warren Buffett's view on gold: > Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A. > Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B? […] > A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond. * https://www.berkshirehathaway.com/letters/2011ltr.pdf https://www.berkshirehathaway.com/letters/2011ltr.pdf Perhaps it's just the current implementations of 'crypto' that are lacking, and a Crypto 4.0 will get the details right at some point in the future so that it because useful.
deepsun 6y ago
Well, real money really trades. 5 billion is nothing for the scale of US population or GDP.

insertnickname 6y ago

>Today almost no one accepts it as payment. Exactly because it is unstable. Or because transactions became too expensive.

jkhdigital 6y ago
It’s like using a wire transfer (~$30 fee) for every transaction. Most people use credit cards or other “delayed settlement” payment methods even with existing fiat currency, so it’s not really fair to compare Bitcoin blockchains transactions to this. Sidechains and other enhancements can easily make low-risk Bitcoin transactions as fast as existing fiat payments.

cblconfederate 6y ago

maybe it's not "good" money. Bitcoin is a store of value and it's volatile, much like e.g. the stock of tesla. Conventional money is protected from speculation and swings by guns. Bitcoin is not going to have such protection, but it doesn't seem people who invest in it mind very much. Maybe the concept of what is "good money" has shifted.

SpicyLemonZest 6y ago
Maybe. But the alternative hypothesis we have to evaluate against is that people don't expect Bitcoin to be good money in the first place, and their investments are driven by a desire to be part of the movement or a hope that they'll be able to get rich off of it. A sudden spike and then fall in Dogecoin, which was never intended to be taken seriously, is a pretty strong pointer in that direction.
sanp 6y ago
Agreed. Store of value with as much "intrinsic" value (i.e., no one knows and determined by supply / demand) as any other asset.
robjan 6y ago
Tesla is a company which produces goods and services in return for money. When you own stock in Tesla you own part of the company so it's not something that would be classified as a store of value since it's economically productive.

mlthoughts2018 6y ago

On the other hand, precious metal prices fluctuate quite a bit and it’s a normal part of assessing and valuing them as stores of value.

jkhdigital 6y ago

I think it’s misleading to view a currency’s price “stability” as some intrinsic quality that determines whether or not it is suitable for broad adoption. Wild price fluctuations are a consequence of incomplete adoption, relative to the quote currency. Higher adoption leads to less fluctuation as the demand is more constant from day to day. If we judged the stability of a currency by its supply stability, then Bitcoin would be the most stable currency ever to exist. But for now, it must compete with sovereign fiat currencies and everything is priced in those currencies, so it will appear extremely unstable and perhaps unusable for most transactions.

puranjay 6y ago

I used to be very bearish on crypto because all I saw was scam after scam and an unstable "currency" (Bitcoin) that no one used. But as I've been getting more and more into crypto, especially DeFi, it's clear to me that we are on the cusp of something incredibly revolutionary. Right now, DeFi is to finance what the world wide web was to communication and content in 1993 The internet managed to break every established industry that relied on network effects and scale - media, commerce, communication. But it didn't do much for finance. The world's biggest banks are still the same as they used to be 30 years ago (whereas internet based companies have taken over media and commerce). DeFi is going to change that. If you rummage through the scams (and there are a LOT of them), there are some truly exciting ideas being explored in this space. It legitimately feels like the internet in 1994. Heck, even the web design is wild and adventurous as it used to be instead of the boring, tame "professional startup" crap we see everywhere now.

throw0101a 6y ago
I am still skeptical about crypto, at least in its current form: What problem does it solve? It has failed as a payment system, as a currency, as a reserve currency, a remittance channel, a timestamping service, a settlement layer, a bank for the "unbanked", a cypherpunk liberator, a money laundering tool, a drugs-by-mail tool, a unit of accounting, a store of value, and as a "disruptive" fintech technology. When I think of crypto/Bitcoin, I am reminded of Warren Buffett's view on gold: > Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A. > Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B? […] > A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond. * https://www.berkshirehathaway.com/letters/2011ltr.pdf https://www.berkshirehathaway.com/letters/2011ltr.pdf Perhaps it's just the current implementations of 'crypto' that are lacking, and a Crypto 4.0 will get the details right at some point in the future so that it because useful.

deepsun 6y ago

Well, real money really trades. 5 billion is nothing for the scale of US population or GDP.