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If there's one thing we learned in the last few months is how volatile BTC is. Reports of such "crashes" are really non-news.
by _ak 13y ago
If there's one thing we learned in the last few months is how volatile BTC is. Reports of such "crashes" are really non-news.
- MichaelApproved 13y agoFor financial assets, the term "crash" has typically meant a drop of 20%. This would apply to the recent bitcoin decline from $1,200+ to sub $1,000. Edit: 10% drop is considered a "correction". 20% drop is usually a bear market.
- sentenza 13y agoThese fluctuations, however, show that Bitcoin cannot fulfill one of the central functions of currency: Exchange for goods. How many of these multi-dozen-percent downward fluctuations will it take before those storeowners and shops that take bitcoin stop doing so or start maintaining an insane markup on Bitcoin prices?
- ChrisClark 13y agoThat's the thing. Bitcoin needs to grow a LOT more before it can start becoming stable.
- ok_craig 13y agoI just bought a $1000 plane ticket a few days ago for bitcoin. Seems like that's fulfilling the role of a currency. You should know that you don't actually have to hold bitcoin to accept it as a payment method. Services like Coinbase let you instantly exchange it to cash if you use their merchant tools, so the merchant is actually exposed to zero risk.
- sentenza 13y agoAh, that explains it. It would be interesting to know what mechanisms Coinbase et al use to avoid balance sheet fallout by sudden downward fluctuations.
- YourCupOTea 13y agoThey would have to employ some sort of currency risk hedge. http://en.wikipedia.org/wiki/Foreign_exchange_hedge http://en.wikipedia.org/wiki/Foreign_exchange_hedge
- jonknee 13y agoEasier said than done when you don't have an actual currency to hedge against and the complete lack of a functioning options market.