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> Even the US dollar and euro, supposedly bastions of stability, have seen their exchange rate jump from US$0.80 per euro in 2002 to US$1.60 in 2008 (100% jump)

> Even the US dollar and euro, supposedly bastions of stability, have seen their exchange rate jump from US$0.80 per euro in 2002 to US$1.60 in 2008 (100% jump), only to drop back down to US$1.20 in 2010 (25% drop), then jump to US$1.45 in 2011 (20% jump), only to drop back down to around US$1.29 today.[3] The USD and the Euro, in comparison to BTC, are magnificently stable. Sure USD/Eur changed in relative value by 100% over the course of 6 years after the inception of the Euro. That's very stable for a new currency, especially in contrast to bitcoin. The BTC/USD rate has changed by 400% over the past 30 days.

ok_craig 14y ago
I don't think even bitcoin enthusiasts are saying bitcoin will be stable in the near future. Only that once it's widely adopted and reaches its growth potential or near it, it will then be stable. If it is to be adopted widely, at some point it has to go from being distributed among a few million, to being distributed among a few billion. The continual price rise will correlate with that adoption continuing to happen. So yeah, I understand all these arguments about volatility, but the reason they don't bother me is because they don't seem to point out anything bad about bitcoin in principle, in the long-term, they only point out the negative aspects of using it as a currency while its undergoing its adoption phase. I don't think there's actually any argument that using bitcoin as a currency right now isn't going to work as well as dollars/euros.
- DavidSJ 14y ago
  In the short term, 90% of bitcoin's value is driven by speculation of future adoption, as you say. If it does become widely adopted, it should be far less volatile than it is today, but it will remain more volatile than well-managed fiat like the dollar, since the supply of bitcoin is inelastic and therefore cannot react to fluctuations in demand. So, it might end up looking more like gold, rather than a "demented Internet stock", but it'll never be as stable as the dollar is today.
  - fnordfnordfnord 14y ago
    >but it'll never be as stable as the dollar is today. That's right, and it's a feature, not a bug.
    - knowaveragejoe 14y ago
      That's really not a feature for anyone.
      - taligent 14y ago
        Except speculators and day traders.
      - fnordfnordfnord 14y ago
        Then hold Dollars.
    - BrokenPipe 14y ago
      Well said. I've had enough of this inflation. The poorer you are, the less likely you have money in any investment that is yields better results that inflation. The richer you are, the more likely you have your money both diversified and invested with good ROI.
      - redblacktree 14y ago
        The poorer you are, the less likely you are to have wealth to protect from inflation. If wages would keep pace with inflation, there would be no problem at all. To my mind, there is a wage problem for the poor, not an inflation problem. Those that do have wealth to protect should be encouraged to use it for productive investments. Mild inflation is one way to do that, and it is healthy. Massive inflation to fund overseas adventurism on the other hand, is not healthy. As the author of this piece correctly points out, deflation leads to hording behavior. In a world where everyone used bitcoin, the wealth disparity would only grow faster.
        14y ago

ok_craig 14y ago

I don't think even bitcoin enthusiasts are saying bitcoin will be stable in the near future. Only that once it's widely adopted and reaches its growth potential or near it, it will then be stable. If it is to be adopted widely, at some point it has to go from being distributed among a few million, to being distributed among a few billion. The continual price rise will correlate with that adoption continuing to happen. So yeah, I understand all these arguments about volatility, but the reason they don't bother me is because they don't seem to point out anything bad about bitcoin in principle, in the long-term, they only point out the negative aspects of using it as a currency while its undergoing its adoption phase. I don't think there's actually any argument that using bitcoin as a currency right now isn't going to work as well as dollars/euros.

DavidSJ 14y ago
In the short term, 90% of bitcoin's value is driven by speculation of future adoption, as you say. If it does become widely adopted, it should be far less volatile than it is today, but it will remain more volatile than well-managed fiat like the dollar, since the supply of bitcoin is inelastic and therefore cannot react to fluctuations in demand. So, it might end up looking more like gold, rather than a "demented Internet stock", but it'll never be as stable as the dollar is today.
- fnordfnordfnord 14y ago
  >but it'll never be as stable as the dollar is today. That's right, and it's a feature, not a bug.
  - knowaveragejoe 14y ago
    That's really not a feature for anyone.
    - taligent 14y ago
      Except speculators and day traders.
    - fnordfnordfnord 14y ago
      Then hold Dollars.
  - BrokenPipe 14y ago
    Well said. I've had enough of this inflation. The poorer you are, the less likely you have money in any investment that is yields better results that inflation. The richer you are, the more likely you have your money both diversified and invested with good ROI.
    - redblacktree 14y ago
      The poorer you are, the less likely you are to have wealth to protect from inflation. If wages would keep pace with inflation, there would be no problem at all. To my mind, there is a wage problem for the poor, not an inflation problem. Those that do have wealth to protect should be encouraged to use it for productive investments. Mild inflation is one way to do that, and it is healthy. Massive inflation to fund overseas adventurism on the other hand, is not healthy. As the author of this piece correctly points out, deflation leads to hording behavior. In a world where everyone used bitcoin, the wealth disparity would only grow faster.
      - 14y ago