6 ms·

It seems that with every passing day, another prominent institution or business starts accepting Bitcoin for payment, Virgin Galactic being the latest example.

by cs702 13y ago

It seems that with every passing day, another prominent institution or business starts accepting Bitcoin for payment, Virgin Galactic being the latest example. In just a few years, Bitcoin has gone from experiment to global phenomenon. I wouldn't be surprised if in coming years at least some bitcoin users start measuring their wealth in bitcoins, and therefore also evaluating exchange rates, not in terms of how many US dollars, euros, etc. they can buy with a bitcoin, but the other way around: what is the cost, in bitcoins, of a single dollar, euro, etc.? Looking at exchange rates in this manner changes people's perspective on volatility, which is always a relative measure. For example, since the beginning of this year, the price of a US dollar has declined by more than 98%, from BTC 0.074 to just over BTC 0.001, which makes the dollar look extremely volatile! -- PS. I'm NOT saying the dollar is extremely volatile! I'm also NOT saying that Bitcoin is more stable! What I'm saying is that if and as Bitcoin adopters start measuring their wealth in bitcoins, their perspective on what is and isn't volatile will change, as demonstrated by my example. -- Edits: expanded second and third paragraphs; added PS.

rfnslyr 13y ago
Question: Where can a Canadian passively invest $50 - 200 a month safely and watch their investment grow?
- jzwinck 13y ago
  The TSX Composite Index: https://www.google.com/finance?cid=9291235 https://www.google.com/finance?cid=9291235 There are others if you have a more specific interest: http://web.tmxmoney.com/indices.php?locale=EN http://web.tmxmoney.com/indices.php?locale=EN
  - rfnslyr 13y ago
    I meant into Bitcoin.
    - personalcompute 13y ago
      "Safely" -> TSX Composite Index Drop that qualifier and we can talk Bitcoin.
      - rfnslyr 13y ago
        I meant safely as in I won't be keeping my funds with some shoddy company that won't ever pay out, not in terms of risk/volatility. I guess securely was what I meant. Can we talk now?
grey-area 13y ago
Since the beginning of this year, the price of a US dollar has declined by more than 98%, from BTC 0.074 to just over BTC 0.001! Consider the last month: 2013-11-01 212.87 USD = 1 BTC 2013-11-22 733.71 USD = 1 BTC If you think Bitcoin is a great investment and can sell your BTC to get other assets in at a high point, this is a good thing, though slightly worrying because of the boom and bust pattern and extreme volatility. If you think Bitcoin is a stable currency, this is a terrible thing. I'm not even sure what the implications would be if buying raw materials one day cost more than selling a finished product the next due to rapid deflation, but it surely wouldn't be much better than rapid inflation which we have seen in other currencies. Like a loaf of bread which is 1.6 trillion Zimbabwe dollars, one which cost 0.0000000001 Bitcoins would not be desirable either if that figure keeps changing rapidly and the next day becomes 0.00000000001 etc. Any extreme fluctuations in price are really undesirable for a currency, and I do think this mechanism of ratcheting up the difficulty of mining and an ever-increasing value is really damaging for Bitcoin's credibility as a currency, though presumably it was designed to boost adoption by encouraging people to see it as investment first, currency second. I like the idea of a currency which doesn't allow politicians to introduce inflation, but perhaps we should have one which has a finite set of tokens on setup, and doesn't attempt to also attract people as some sort of investment with mining etc. - is that side of Bitcoin even useful except to turn it into a sort of pyramid scheme where early adopters are rewarded disproportionately? [EDIT I am aware of the proposed 21m Bitcoin limit, which they're about half way to reaching, that's why I said on setup, which Bitcoin doesn't have]
- deletes 13y ago
  Commenting on the last paragraph; Bitcoins are limited and when they run out miners will start getting bitcoins from fees. https://en.bitcoin.it/wiki/FAQ https://en.bitcoin.it/wiki/FAQ https://en.bitcoin.it/wiki/Controlled_supply https://en.bitcoin.it/wiki/Controlled_supply
- triptychs 13y ago
  Just to comment on this part: >I like the idea of a currency which doesn't allow politicians to introduce inflation, but perhaps we should have one which has a finite set of tokens on setup, and doesn't attempt to also attract people as some sort of investment with mining etc. I'm sure someone will correct me, but as I understand it this is how Ripple[0] works. From my recollection (I haven't checked in on how Ripple has been progressing over the past 6-8 months or so), Ripple's currency (XRP) are established with a finite supply and all XRP is in reserve, not requiring any "mining" or similar. Also, it looks like Ripple is kind of an exchange as well? It seems to be able to cross-process payments between USD, EUR, BTC, LTC, XRP, and more (I believe most international currencies are supported currently)[1]. It's interesting but, like I said earlier, I'm not sure if I fully understand it. [0] https://ripple.com/ https://ripple.com/ [1] https://ripple.com/guide-to-currency-trading-on-the-ripple-network/ https://ripple.com/guide-to-currency-trading-on-the-ripple-n...
Tyrannosaurs 13y ago
> Looking at exchange rates in this manner changes one's perspective on volatility. For example, since the beginning of this year, the price of a US dollar has declined by more than 98%, from BTC 0.074 to just over BTC 0.001, which makes the dollar look like an extremely volatile currency! Sorry, that's clearly nonsense given that the dollar wasn't similarly volatile against other currencies. Would you slam on your breaks in the middle of a road full of fast moving cars and believe that it was actually them all suddenly accelerating?
- girvo 13y ago
  My physics is rusty... but yeah, it can be, depending on what you choose as your reference point. I think that's the OP's point there, too :)
  - scoot 13y ago
    bitcoin theory of relativity...
    - deleted 13y ago
      [deleted]
  - TorKlingberg 13y ago
    No, while velocity is relative, acceleration is absolute. An accelerometer does not need any reference point. Well, it cannot tell the difference between acceleration and gravity, but that's an other issue.
  - bvk 13y ago
    That's actually not the case. You can tell whether you're in an accelerating frame of reference (like a car stopping) or an inertial frame of reference (like a car cruising) by the forces you feel, so they're not really co-equal.
  - Tyrannosaurs 13y ago
    Obviously there are problems with metaphors but my point is that to say the dollar is volatile in the OPs example, he needs to say that all non-Bitcoin currencies are volatile. From the position of relative perspective that may be a valid theory, however in it's not the one best explains what is being observed.
TheCoelacanth 13y ago
The prices of most commodities have been relatively stable in USD over the last year, while the prices in bitcoins have almost universally changed greatly. Until that changes, it makes more sense to consider bitcoins volatile and USD not volatile, rather than the other way around.
aw3c2 13y ago
I would be surprised. Right now bitcoin seems like a speculative bubble with people trying to push a "it will be the best thing ever" attitude to further rise the exchange rate. Reminds me of the https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania
lambda 13y ago
No, the volatility has been entirely in BTC. Volatility should more accurately be measured against actual real-world goods that you can buy. Since pretty much all actual goods are priced in currencies other than BTC, with the BTC price merely set based on the current exchange rate with the currency that the goods are bought at, it's BTC that's volatile, not the USD. This kind of volatility is actually really harmful to it being adopted as a primary currency. It's pretty dumb to actually spend bitcoins if you could just hold onto them and sell a week or two later at twice the price, and then spend the USD for twice the goods you would have been able to buy last week with the same number of BTC. It's also pretty dumb to accept BTC as payment, especially when it's at an unsupportable high, because it's likely to crash soon and you'll now have half the value you had earlier. The volatility is valuable for speculators, but could be ruinous if you were trying to run a business based on it. Yes, you could get lucky and it could go in the direction that favors you, but that's speculation, that's not business.
- nilkn 13y ago
  > It's pretty dumb to actually spend bitcoins if you could just hold onto them A similar question can be asked about USD: why would you ever save it instead of spending it immediately, since it's only going to lose value over time due to inflation? Of course, the difference right now is that the deflation rate in bitcoin is much higher than the inflation rate in USD. But clearly, if bitcoin ever becomes a major currency and the deflation levels off, there will be plenty of motivation to spend bitcoins, the same way there is currently plenty of motivation to save USD.
  - lambda 13y ago
    Because it loses value slowly enough. That's the whole "stability" part. Holding onto USD for a year or two doesn't lose a significant amount of value, so you can save up effectively and plan on what you will be able to buy with it at the end. And you can put it in an interest bearing bank account or invest it to further offset or counteract the effect of inflation for longer-term savings. Unstable currencies you generally need to convert to a more stable currency immediately, if you don't want to be subject to the sudden swings in value.

by cs702 13y ago

rfnslyr 13y ago

Question: Where can a Canadian passively invest $50 - 200 a month safely and watch their investment grow?

jzwinck 13y ago
The TSX Composite Index: https://www.google.com/finance?cid=9291235 https://www.google.com/finance?cid=9291235 There are others if you have a more specific interest: http://web.tmxmoney.com/indices.php?locale=EN http://web.tmxmoney.com/indices.php?locale=EN
- rfnslyr 13y ago
  I meant into Bitcoin.
  - personalcompute 13y ago
    "Safely" -> TSX Composite Index Drop that qualifier and we can talk Bitcoin.
    - rfnslyr 13y ago
      I meant safely as in I won't be keeping my funds with some shoddy company that won't ever pay out, not in terms of risk/volatility. I guess securely was what I meant. Can we talk now?

grey-area 13y ago

Since the beginning of this year, the price of a US dollar has declined by more than 98%, from BTC 0.074 to just over BTC 0.001! Consider the last month: 2013-11-01 212.87 USD = 1 BTC 2013-11-22 733.71 USD = 1 BTC If you think Bitcoin is a great investment and can sell your BTC to get other assets in at a high point, this is a good thing, though slightly worrying because of the boom and bust pattern and extreme volatility. If you think Bitcoin is a stable currency, this is a terrible thing. I'm not even sure what the implications would be if buying raw materials one day cost more than selling a finished product the next due to rapid deflation, but it surely wouldn't be much better than rapid inflation which we have seen in other currencies. Like a loaf of bread which is 1.6 trillion Zimbabwe dollars, one which cost 0.0000000001 Bitcoins would not be desirable either if that figure keeps changing rapidly and the next day becomes 0.00000000001 etc. Any extreme fluctuations in price are really undesirable for a currency, and I do think this mechanism of ratcheting up the difficulty of mining and an ever-increasing value is really damaging for Bitcoin's credibility as a currency, though presumably it was designed to boost adoption by encouraging people to see it as investment first, currency second. I like the idea of a currency which doesn't allow politicians to introduce inflation, but perhaps we should have one which has a finite set of tokens on setup, and doesn't attempt to also attract people as some sort of investment with mining etc. - is that side of Bitcoin even useful except to turn it into a sort of pyramid scheme where early adopters are rewarded disproportionately? [EDIT I am aware of the proposed 21m Bitcoin limit, which they're about half way to reaching, that's why I said on setup, which Bitcoin doesn't have]

deletes 13y ago
Commenting on the last paragraph; Bitcoins are limited and when they run out miners will start getting bitcoins from fees. https://en.bitcoin.it/wiki/FAQ https://en.bitcoin.it/wiki/FAQ https://en.bitcoin.it/wiki/Controlled_supply https://en.bitcoin.it/wiki/Controlled_supply
triptychs 13y ago
Just to comment on this part: >I like the idea of a currency which doesn't allow politicians to introduce inflation, but perhaps we should have one which has a finite set of tokens on setup, and doesn't attempt to also attract people as some sort of investment with mining etc. I'm sure someone will correct me, but as I understand it this is how Ripple[0] works. From my recollection (I haven't checked in on how Ripple has been progressing over the past 6-8 months or so), Ripple's currency (XRP) are established with a finite supply and all XRP is in reserve, not requiring any "mining" or similar. Also, it looks like Ripple is kind of an exchange as well? It seems to be able to cross-process payments between USD, EUR, BTC, LTC, XRP, and more (I believe most international currencies are supported currently)[1]. It's interesting but, like I said earlier, I'm not sure if I fully understand it. [0] https://ripple.com/ https://ripple.com/ [1] https://ripple.com/guide-to-currency-trading-on-the-ripple-network/ https://ripple.com/guide-to-currency-trading-on-the-ripple-n...

Tyrannosaurs 13y ago

> Looking at exchange rates in this manner changes one's perspective on volatility. For example, since the beginning of this year, the price of a US dollar has declined by more than 98%, from BTC 0.074 to just over BTC 0.001, which makes the dollar look like an extremely volatile currency! Sorry, that's clearly nonsense given that the dollar wasn't similarly volatile against other currencies. Would you slam on your breaks in the middle of a road full of fast moving cars and believe that it was actually them all suddenly accelerating?

girvo 13y ago
My physics is rusty... but yeah, it can be, depending on what you choose as your reference point. I think that's the OP's point there, too :)
- scoot 13y ago
  bitcoin theory of relativity...
  - deleted 13y ago
    [deleted]
- TorKlingberg 13y ago
  No, while velocity is relative, acceleration is absolute. An accelerometer does not need any reference point. Well, it cannot tell the difference between acceleration and gravity, but that's an other issue.
- bvk 13y ago
  That's actually not the case. You can tell whether you're in an accelerating frame of reference (like a car stopping) or an inertial frame of reference (like a car cruising) by the forces you feel, so they're not really co-equal.
- Tyrannosaurs 13y ago
  Obviously there are problems with metaphors but my point is that to say the dollar is volatile in the OPs example, he needs to say that all non-Bitcoin currencies are volatile. From the position of relative perspective that may be a valid theory, however in it's not the one best explains what is being observed.

TheCoelacanth 13y ago

The prices of most commodities have been relatively stable in USD over the last year, while the prices in bitcoins have almost universally changed greatly. Until that changes, it makes more sense to consider bitcoins volatile and USD not volatile, rather than the other way around.

aw3c2 13y ago

I would be surprised. Right now bitcoin seems like a speculative bubble with people trying to push a "it will be the best thing ever" attitude to further rise the exchange rate. Reminds me of the https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania

lambda 13y ago

No, the volatility has been entirely in BTC. Volatility should more accurately be measured against actual real-world goods that you can buy. Since pretty much all actual goods are priced in currencies other than BTC, with the BTC price merely set based on the current exchange rate with the currency that the goods are bought at, it's BTC that's volatile, not the USD. This kind of volatility is actually really harmful to it being adopted as a primary currency. It's pretty dumb to actually spend bitcoins if you could just hold onto them and sell a week or two later at twice the price, and then spend the USD for twice the goods you would have been able to buy last week with the same number of BTC. It's also pretty dumb to accept BTC as payment, especially when it's at an unsupportable high, because it's likely to crash soon and you'll now have half the value you had earlier. The volatility is valuable for speculators, but could be ruinous if you were trying to run a business based on it. Yes, you could get lucky and it could go in the direction that favors you, but that's speculation, that's not business.

nilkn 13y ago
> It's pretty dumb to actually spend bitcoins if you could just hold onto them A similar question can be asked about USD: why would you ever save it instead of spending it immediately, since it's only going to lose value over time due to inflation? Of course, the difference right now is that the deflation rate in bitcoin is much higher than the inflation rate in USD. But clearly, if bitcoin ever becomes a major currency and the deflation levels off, there will be plenty of motivation to spend bitcoins, the same way there is currently plenty of motivation to save USD.
- lambda 13y ago
  Because it loses value slowly enough. That's the whole "stability" part. Holding onto USD for a year or two doesn't lose a significant amount of value, so you can save up effectively and plan on what you will be able to buy with it at the end. And you can put it in an interest bearing bank account or invest it to further offset or counteract the effect of inflation for longer-term savings. Unstable currencies you generally need to convert to a more stable currency immediately, if you don't want to be subject to the sudden swings in value.