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No. All significant 'real world' currencies are tied to the economy of a nation-state or nation-state-like entity. Bitcoin et al are free-floating in that rega

No. All significant 'real world' currencies are tied to the economy of a nation-state or nation-state-like entity. Bitcoin et al are free-floating in that regard. To see how this makes a difference, consider what would happen if one of the early adopters were to sell 100K bitcoins right now.

mikro2nd 13y ago
(I'm not arguing that Bitcoin is somehow less volatile than fiat currencies, here, but...) The values of "Real world" currencies is quite (not totally) decoupled from the intrinsic value of the issuing state's economy. See Zimbabwe for a recent object lesson - still plenty of economic activity and trade going on in the country, but hyperinflation happened anyway. "Real world" currencies are much more tied to emotional attachments (or lack thereof) to the currency and faith in its issuer. If you've ever tried your hand at forex speculation, you'll be very (perhaps painfully) just how much the relative values between fiat currencies is driven by emotion (and the stop-loss orders of other speculators.)
- shubb 13y ago
  Shares and currencies... In theory, analysts and professional traders incorperate everything they know into bids for shares, so that the current share price 'prices in' everything publicly known about a share at the current time. I quite often talk to people who have a share portfolio, and buy mining shares because they think international demand for mining is going to rise. But the share price already reflects that because pro investors and analysts though to it first. So really, when you buy a share, unless you have some extra information, you are making a bet on variations due to things no one knows at the time - it's simply a gamble. Don't get me wrong, it's not a terrible idea to buy shares - if the economy grows, the FTSE grows with it. If you buy luxury goods manufacturers and insolvency companies, you can hedge. But if you, as a private individual, think you can make money day trading (in your lunch break) against the highest paid experts in the world, well you are kinda nuts. A friend put together a database of tick data for every currency pair in the world, for a spread of different brokers. He examined the data, and found that at last in the 3 hour / day interval, it appeared statistically random. You can bet on a random variable if you like, sometimes you will make money. I prefer to put what little money I have in passive funds, and hope it beats inflation^. ^That said, I'm cashed out and 400% ahead following this bitcoin bubble. lol

mikro2nd 13y ago

(I'm not arguing that Bitcoin is somehow less volatile than fiat currencies, here, but...) The values of "Real world" currencies is quite (not totally) decoupled from the intrinsic value of the issuing state's economy. See Zimbabwe for a recent object lesson - still plenty of economic activity and trade going on in the country, but hyperinflation happened anyway. "Real world" currencies are much more tied to emotional attachments (or lack thereof) to the currency and faith in its issuer. If you've ever tried your hand at forex speculation, you'll be very (perhaps painfully) just how much the relative values between fiat currencies is driven by emotion (and the stop-loss orders of other speculators.)

shubb 13y ago
Shares and currencies... In theory, analysts and professional traders incorperate everything they know into bids for shares, so that the current share price 'prices in' everything publicly known about a share at the current time. I quite often talk to people who have a share portfolio, and buy mining shares because they think international demand for mining is going to rise. But the share price already reflects that because pro investors and analysts though to it first. So really, when you buy a share, unless you have some extra information, you are making a bet on variations due to things no one knows at the time - it's simply a gamble. Don't get me wrong, it's not a terrible idea to buy shares - if the economy grows, the FTSE grows with it. If you buy luxury goods manufacturers and insolvency companies, you can hedge. But if you, as a private individual, think you can make money day trading (in your lunch break) against the highest paid experts in the world, well you are kinda nuts. A friend put together a database of tick data for every currency pair in the world, for a spread of different brokers. He examined the data, and found that at last in the 3 hour / day interval, it appeared statistically random. You can bet on a random variable if you like, sometimes you will make money. I prefer to put what little money I have in passive funds, and hope it beats inflation^. ^That said, I'm cashed out and 400% ahead following this bitcoin bubble. lol