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With this level of volatility, no one would be using BTC for anything except for pure speculation. Who would dare purchase anything for 1 BTC when the value of

by steven2012 13y ago

With this level of volatility, no one would be using BTC for anything except for pure speculation. Who would dare purchase anything for 1 BTC when the value of that BTC could go up 10% the next day? When there is no inherent use of something other than pure speculation, then it will end badly. This is 21st century tulip bulbs, but I cheer on anyone who has the balls to jump in and make money on BTC while there's money to be made. But holding on long term is seriously a fool's game, this is a trading instrument, not something with any long term value.

ziadbc 13y ago
You could just as well say that your dollar lost 10% against bitcoin in a day, who would dare buy something with a dollar with it fluctuating so much so often.
- dllthomas 13y ago
  Except my rent and my paycheck are fluctuating 10% in bitcoin, and 0% in dollars.
- Kronopath 13y ago
  Because with dollars I can go and buy a loaf of bread today and a loaf of bread tomorrow, and be assured that it'll still be the same price.
- jmduke 13y ago
  In that scenario, you'd want to spend as many dollars as you have since you think they're going to rapidly depreciate in value.
thejosh 13y ago
Ahhh the days where 1 domain was selling for 10 btc, and I thought "what a waste".
moe 13y ago
I'm always amused when I come across comments like this. Yes, bitcoin could be our tulip bulbs. Or history might not be repeating this time and we might actually be looking at something new that is here to stay. Nobody knows, I wonder why so many people have that reflex to pretend they do.
- TylerE 13y ago
  History does give a hint as to which is more likely.
  - deleted 13y ago
    [deleted]
- steven2012 13y ago
  I've seen a lot of bubbles since graduating college, surviving through the dot-com boom and bust, through the housing bubble and bust, the financial crisis, etc. In addition, I've read spent a lot of time reading about it, my favorite book being "Devil Take the Hindmost" by Edward Chancellor. It talks about all of the largest bubbles in the past few hundred years. Whenever people say "This time it's different", it never is. BTC is a bubble. But I don't admonish anyone for trying to make money off of it. I don't have the balls to, but that doesn't mean people shouldn't be allowed to speculate. The ones who will lose, however, are the ones that think this is for real, and have rationalized away their common sense into thinking this is a long-term investment and sustainable.
- dllthomas 13y ago
  Bitcoin might well be here to stay in the way that tulip bulbs were here to stay - you can still buy and sell tulip bulbs, the price just isn't skyrocketing.
alste780 13y ago
"Who would dare purchase anything for 1 BTC when the value of that BTC could go up 10% the next day?" Early adopters. With the BTC/USD run-up to $550+, many early adopters who bought bitcoin when it was trading for a few dollars now have very high purchasing power; this will lead to spending, regardless of volatility. As an example, imagine you purchased 1,000BTC when they were trading at a dollar. Your purchasing power was $1,000 back then. Today, your purchasing power is around $500K. Spending a bitcoin or two on Christmas gifts would make perfect sense to you.
Aqueous 13y ago
Which is exactly what would be the case if you started a brand new currency, in the time it took for it to become an actual currency. If Canada said "fuck it" on dollars today and decided they were going to start a brand new currency (let's call it the Ford, after Toronto Mayor Rob Ford), what would it be worth initially? It would be worth $0. Any increase in value after that up until the money supply and the price stabilized enough for it to be used as actual currency would be in the thousands of percent, which would make it seem quite volatile indeed. However, the huge increase in the beginning would attract a ton of investment because of the profit incentive and soon the Ford would be worth something. It would grow until it reached a saturation point where all the people who wanted a Ford had one. At that point the price would level off to the point where investors would stop seeing it as a profit opportunity. At this point it finally starts to look attractive as a currency. In short, today's investors are tomorrow's spenders. BitCoin had to start somewhere, and it was never going to be useful as a currency until it is widespread enough for its value to stabilize. Until then all mediums of exchange are speculative instruments.
- steven2012 13y ago
  You can convince yourself that price discovery is what's causing the rise of the value of BTC. But it's not. It's rampant speculation. Why? Because there is no substantial use of BTC to buy and sell goods. And even if there were (which there isn't), the fact that the currency has doubled in the last 2 weeks suggests that there is massive hoarding going on now, and people would rather own the currency rather than exchange them for goods or services. Why would you spend 1 BTC when the price of the good or service could halve in BTC in a week? It's better to just dig out your old fiat currency and pay for it with that, since the price is much more stable.
  - saosebastiao 13y ago
    There is an incredibly suitable use for bitcoin: as an exchange currency. Its decentralized nature makes it extremely attractive to smaller nations as a way of maintaining liquidity, enabling trade, all while not propping up another nation with competing interests by making their currency arbitrarily valuable. Its digital nature makes it attractive to currency trading markets for purely logistical reasons. You are probably right about the median case, but I say there is a small chance of a >$10M value for this reason alone.

ziadbc 13y ago

You could just as well say that your dollar lost 10% against bitcoin in a day, who would dare buy something with a dollar with it fluctuating so much so often.

dllthomas 13y ago
Except my rent and my paycheck are fluctuating 10% in bitcoin, and 0% in dollars.
Kronopath 13y ago
Because with dollars I can go and buy a loaf of bread today and a loaf of bread tomorrow, and be assured that it'll still be the same price.
jmduke 13y ago
In that scenario, you'd want to spend as many dollars as you have since you think they're going to rapidly depreciate in value.

thejosh 13y ago

Ahhh the days where 1 domain was selling for 10 btc, and I thought "what a waste".

moe 13y ago

I'm always amused when I come across comments like this. Yes, bitcoin could be our tulip bulbs. Or history might not be repeating this time and we might actually be looking at something new that is here to stay. Nobody knows, I wonder why so many people have that reflex to pretend they do.

TylerE 13y ago
History does give a hint as to which is more likely.
- deleted 13y ago
  [deleted]
steven2012 13y ago
I've seen a lot of bubbles since graduating college, surviving through the dot-com boom and bust, through the housing bubble and bust, the financial crisis, etc. In addition, I've read spent a lot of time reading about it, my favorite book being "Devil Take the Hindmost" by Edward Chancellor. It talks about all of the largest bubbles in the past few hundred years. Whenever people say "This time it's different", it never is. BTC is a bubble. But I don't admonish anyone for trying to make money off of it. I don't have the balls to, but that doesn't mean people shouldn't be allowed to speculate. The ones who will lose, however, are the ones that think this is for real, and have rationalized away their common sense into thinking this is a long-term investment and sustainable.
dllthomas 13y ago
Bitcoin might well be here to stay in the way that tulip bulbs were here to stay - you can still buy and sell tulip bulbs, the price just isn't skyrocketing.

alste780 13y ago

"Who would dare purchase anything for 1 BTC when the value of that BTC could go up 10% the next day?" Early adopters. With the BTC/USD run-up to $550+, many early adopters who bought bitcoin when it was trading for a few dollars now have very high purchasing power; this will lead to spending, regardless of volatility. As an example, imagine you purchased 1,000BTC when they were trading at a dollar. Your purchasing power was $1,000 back then. Today, your purchasing power is around $500K. Spending a bitcoin or two on Christmas gifts would make perfect sense to you.

Aqueous 13y ago

Which is exactly what would be the case if you started a brand new currency, in the time it took for it to become an actual currency. If Canada said "fuck it" on dollars today and decided they were going to start a brand new currency (let's call it the Ford, after Toronto Mayor Rob Ford), what would it be worth initially? It would be worth $0. Any increase in value after that up until the money supply and the price stabilized enough for it to be used as actual currency would be in the thousands of percent, which would make it seem quite volatile indeed. However, the huge increase in the beginning would attract a ton of investment because of the profit incentive and soon the Ford would be worth something. It would grow until it reached a saturation point where all the people who wanted a Ford had one. At that point the price would level off to the point where investors would stop seeing it as a profit opportunity. At this point it finally starts to look attractive as a currency. In short, today's investors are tomorrow's spenders. BitCoin had to start somewhere, and it was never going to be useful as a currency until it is widespread enough for its value to stabilize. Until then all mediums of exchange are speculative instruments.

steven2012 13y ago
You can convince yourself that price discovery is what's causing the rise of the value of BTC. But it's not. It's rampant speculation. Why? Because there is no substantial use of BTC to buy and sell goods. And even if there were (which there isn't), the fact that the currency has doubled in the last 2 weeks suggests that there is massive hoarding going on now, and people would rather own the currency rather than exchange them for goods or services. Why would you spend 1 BTC when the price of the good or service could halve in BTC in a week? It's better to just dig out your old fiat currency and pay for it with that, since the price is much more stable.
- saosebastiao 13y ago
  There is an incredibly suitable use for bitcoin: as an exchange currency. Its decentralized nature makes it extremely attractive to smaller nations as a way of maintaining liquidity, enabling trade, all while not propping up another nation with competing interests by making their currency arbitrarily valuable. Its digital nature makes it attractive to currency trading markets for purely logistical reasons. You are probably right about the median case, but I say there is a small chance of a >$10M value for this reason alone.