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"A new domain name has been 10 USD from Namecheap for the last decade. A new domain name in BTC however, has varied between 1 BTC and 0.1 BTC in just the past t

by nawitus 14y ago

"A new domain name has been 10 USD from Namecheap for the last decade. A new domain name in BTC however, has varied between 1 BTC and 0.1 BTC in just the past two months." I agree that the value of bitcoins changes faster than other currencies. However, the fact remains that the prices for all currencies change. Domain names are the exception, but inflation adjusts prices upwards of almost all commodities. "BTC as a proxy for USD is still useful IMO, it gives us a way to avoid Paypal and other online processors. But for it to be a USD replacement, it needs to first settle down and stabilize." I disagree with your definition of "proxy". Bitcoin fits the definition of currency, not "proxy-currency" in my opinion. It's true that the currency will benefit when it's value will stabilize, as the currency is currently being adopted.

dragontamer 14y ago
USD changes at a rate of 3% per year, according to the CPI. Bitcoin is currently changing at a rate of 50% per month. Volatility is a bad thing for currency. Bitcoin has too much of it right now. And sorry, as long as BTC keeps changing by 50%+ per month, it will only be a proxy currency. If BTC is to become a true currency, it will need to settle down to ~3% / year volatility, like the other major currencies of the world.
- unclebucknasty 14y ago
  Yeah, this. Right now, BTC is more of a speculative investment than it is a currency. You just can't have insane volatility or even too much uni-directional movement in your medium of exchange. For a merchant to offer something at a particular BTC price, that merchant would have to update its prices at least daily, if not more so. This to avoid losing money or overcharging himself out of the market, depending on the direction of the currency. It's just not practical at this point. And, it's a catch-22: As long as it's a speculative investment, it's likely to remain volatile. And, as long as it remains volatile, it's likely to remain a speculative investment vs. a "true" currency.
- BrianEatWorld 14y ago
  Thats a bit of a logical fallacy. Just because modern currencies tend to not exhibit volatility, doesn't mean its a bad trait for a currency. In the past, ideas like "menu costs" might make it less favorable because of sticky prices not aligning with a free floating currency, but that isn't as much of an issue anymore. The real issue would be if the underlying fundamentals, IE the supply and demand of the currency, didn't align, making the volatility due to human expectations and not genuine factors. While I think that a good deal of the BTC volatility is due to human expectations, it just bothers me when people try and use older macro ideas when explaining Bitcoin.
  - dragontamer 14y ago
    Have you even read the parent post? https://news.ycombinator.com/item?id=5473508 https://news.ycombinator.com/item?id=5473508 Scribophile cannot sell services based on BTC at the moment, because the BTC market keeps swinging by 50% or more each month. It is impossible to peg the price of anything to BTC right now.
    - BrianEatWorld 14y ago
      Have you read my post? I even mentioned "menu costs" in my response. The issue is not that the currency has volatility, but that they refuse to peg the value. Scribophile is facing menu costs, but the menu costs are of their own creation. Simply allowing their prices to fluctuate with value would solve the problem. My point was that technology can make volatility a much smaller issue than it was in the past, hence why using old currency paradigms hinders thoughtful examination of the costs and benefits of a currency like bitcoin.
      - millstone 14y ago
        How would you suggest Scribophile allow their prices to fluctuate with a bitcoin's value? How should they measure the value of a bitcoin? Setting a target price in USD is the obvious answer, but then bitcoin becomes merely a way of exchanging dollars, not a currency in its own right.
  - 14y ago

by nawitus 14y ago

dragontamer 14y ago

USD changes at a rate of 3% per year, according to the CPI. Bitcoin is currently changing at a rate of 50% per month. Volatility is a bad thing for currency. Bitcoin has too much of it right now. And sorry, as long as BTC keeps changing by 50%+ per month, it will only be a proxy currency. If BTC is to become a true currency, it will need to settle down to ~3% / year volatility, like the other major currencies of the world.

unclebucknasty 14y ago
Yeah, this. Right now, BTC is more of a speculative investment than it is a currency. You just can't have insane volatility or even too much uni-directional movement in your medium of exchange. For a merchant to offer something at a particular BTC price, that merchant would have to update its prices at least daily, if not more so. This to avoid losing money or overcharging himself out of the market, depending on the direction of the currency. It's just not practical at this point. And, it's a catch-22: As long as it's a speculative investment, it's likely to remain volatile. And, as long as it remains volatile, it's likely to remain a speculative investment vs. a "true" currency.
BrianEatWorld 14y ago
Thats a bit of a logical fallacy. Just because modern currencies tend to not exhibit volatility, doesn't mean its a bad trait for a currency. In the past, ideas like "menu costs" might make it less favorable because of sticky prices not aligning with a free floating currency, but that isn't as much of an issue anymore. The real issue would be if the underlying fundamentals, IE the supply and demand of the currency, didn't align, making the volatility due to human expectations and not genuine factors. While I think that a good deal of the BTC volatility is due to human expectations, it just bothers me when people try and use older macro ideas when explaining Bitcoin.
- dragontamer 14y ago
  Have you even read the parent post? https://news.ycombinator.com/item?id=5473508 https://news.ycombinator.com/item?id=5473508 Scribophile cannot sell services based on BTC at the moment, because the BTC market keeps swinging by 50% or more each month. It is impossible to peg the price of anything to BTC right now.
  - BrianEatWorld 14y ago
    Have you read my post? I even mentioned "menu costs" in my response. The issue is not that the currency has volatility, but that they refuse to peg the value. Scribophile is facing menu costs, but the menu costs are of their own creation. Simply allowing their prices to fluctuate with value would solve the problem. My point was that technology can make volatility a much smaller issue than it was in the past, hence why using old currency paradigms hinders thoughtful examination of the costs and benefits of a currency like bitcoin.
    - millstone 14y ago
      How would you suggest Scribophile allow their prices to fluctuate with a bitcoin's value? How should they measure the value of a bitcoin? Setting a target price in USD is the obvious answer, but then bitcoin becomes merely a way of exchanging dollars, not a currency in its own right.
- 14y ago