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TFA's author really needs to state what correlation coefficient [1] they're using if they're going to throw out numbers. Primary research like this, apparently
by AnIrishDuck 13y ago
TFA's author really needs to state what correlation coefficient [1] they're using if they're going to throw out numbers. Primary research like this, apparently done without a solid knowledge of statistics, always sets off my alarm bells.
> The predictive nature of USD for bitcoin may surprise some, but the underlying fundamentals of their high correlation may make sense, at least for the time being. Historically, the US dollar has served as a risk-averse asset, gaining value as traders pull out of other financial products during periods of uncertainty and doubt. Bitcoin seems to be following the same path.
A far more likely hypothesis is that the vast majority of bitcoin users simply want a proxy for USD for doing business on e.g. the silk road.
1. http://en.wikipedia.org/wiki/Correlation_and_dependence http://en.wikipedia.org/wiki/Correlation_and_dependence
- datamonger 13y agoIt's denominated in USD already, so increases in USD should be priced in. Also, Silk Road has become a small part of bitcoin transactions.
- superprime 13y agoIt is not denominated in USD. It's a currency, and like any other currency you can exchange it for others, including USD, which is why you often see exchange spot prices in USD.
- datamonger 13y agoThe exchange rate is denominated in USD. It's the BTC/USD rate... What's in the denominator
- AnIrishDuck 13y agoOne exchange rate is BTC - USD. That does not make the currency itself USD denominated. Bitcoin is almost always denominated in BTC these days. There are other bitcoin denominations, like the Satoshi [1], but these are rarely used as BTC has not appreciated enough in value for them to be useful. You seem to be confused about what denomination means in the context of currency, see [2]. 1. https://en.bitcoin.it/wiki/FAQ#What_do_I_call_the_various_denominations_of_bitcoin.3F https://en.bitcoin.it/wiki/FAQ#What_do_I_call_the_various_de... 2. http://en.wikipedia.org/wiki/Denomination_(currency) http://en.wikipedia.org/wiki/Denomination_(currency)
- ronaldx 13y agoOn the contrary: you have confused 'denomination' and 'denominated': http://www.thefreedictionary.com/denominated http://www.thefreedictionary.com/denominated
- AnIrishDuck 13y ago> It's denominated in USD already, so increases in USD should be priced in. No, as explained in the other comment. > Also, Silk Road has become a small part of bitcoin transactions. Citation? Also, I was using Silk Road as an example; any transaction which is denominated in USD and simply uses bitcoin as a proxy would further this phenomena. Many places that "accept" bitcoin only do so temporarily. They immediately convert any received bitcoins into USD. The EFF is one such example [1]. 1. https://www.eff.org/deeplinks/2013/05/eff-will-accept-bitcoins-support-digital-liberty https://www.eff.org/deeplinks/2013/05/eff-will-accept-bitcoi...