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I think we're missing the data, but I feel fairly certain that bitcoin has, on average, become less and less volatile since it started being traded. You've mis

by 001sky 13y ago

I think we're missing the data, but I feel fairly certain that bitcoin has, on average, become less and less volatile since it started being traded. You've missed the part about $100->$1,000? = Not stabile. Unfortunately.

slg 13y ago
The argument would be that going from $1 to $100 is more volatile than going from $100 to $1000 and it is therefore getting more stable. But I don't think the general public will view it that way. Normal people think on an linear and not a logarithmic scale.
- runeks 13y ago
  It's certainly possible the general public won't view it that way, but it's clearly the right way to view it. By calculating volatility using nominal values, we can conclude that the Google stock is 200 times more volatile than the AMD stock (because the Google stock has risen by $10 today ($1057 to $1067) and AMD only $0.05 ($3.64 to $3.69). And that a share of Berkshire Hathaway is 130 times more volatile than Google (and 26,000 times as volatile as AMD). We can also conclude that a company can reduce the volatility of its stock by performing a stock split. Clearly this doesn't make sense, and it doesn't serve its purpose: to assess the how much money you gain/lose when buying $x worth of something and the price changes. Whether you buy $1000 worth of bitcoins at $1 and they drop to 50 cents, or you buy $1000 worth of bitcoins at $1000 and they drop to $500, you've lost the same: $500. That's the relevant metric. Ask the general public whether they would rather hold $1000 worth of bitcoins going from $1 to $15 or $1000 worth of bitcoins going from $500 to $1000 and I'm fairly sure you'll get the right answer.
runeks 13y ago
I said more stable (over time). Not stable compared to conventional currencies.
- maratd 13y ago
  When BTC prices do not deflate in any way and only experiences inflation of 2-3% on an annual basis, call me. While I'm on the topic, you realize that because the money supply can't be increased in any meaningful way once mining is no longer viable, prices will experience constant deflation? This alone makes BTC worthless as money.
  - jordancardwell 13y ago
    I think there is a difference between an inflationary/deflationary currency and inflation/deflation of value. The USD currency experiences inflation by adding dollars to circulation which causes the value of individual dollars to drop. Bitcoin is deflationary. Bitcoin, as a currency, experiences deflation (bitcoins can only be lost, never added, over time after all bitcoins are 'found'), therefore the value of bitcoin value can only be increased as supply diminishes.
    - deleted 13y ago
      [deleted]
  - ufmace 13y ago
    I'm aware of this, and I think it's the reason that BTC will never replace any of the national currencies, but I think it still has a tremendous value for smaller-scale things and has room to get a lot more popular and widespread.
  - runeks 13y ago
    > While I'm on the topic, you realize that because the money supply can't be increased in any meaningful way once mining is no longer viable, prices will experience constant deflation? Yes. I consider an annual deflation rate of 2-3% just as stable as an annual inflation rate of 2-3%.
    - 001sky 13y ago
      but the data show rates of change at <orders of magnitude> in variation. that simply is the problem. its not that its accelerateing or not, simply absolute level is not consistent with any concept of a (stable) store of value. Its a false argument to think that because the asset itself is inflating it's "storing value"; the variance of returns to the asset in increasing and the volatility as a risk factor is agnostic to direction. If it were not, it would be a fault in any event because its value as an investment would (essentially) preclude its use as a currency (because the forecasting/bookeeping overhead).

by 001sky 13y ago

slg 13y ago

The argument would be that going from $1 to $100 is more volatile than going from $100 to $1000 and it is therefore getting more stable. But I don't think the general public will view it that way. Normal people think on an linear and not a logarithmic scale.

runeks 13y ago
It's certainly possible the general public won't view it that way, but it's clearly the right way to view it. By calculating volatility using nominal values, we can conclude that the Google stock is 200 times more volatile than the AMD stock (because the Google stock has risen by $10 today ($1057 to $1067) and AMD only $0.05 ($3.64 to $3.69). And that a share of Berkshire Hathaway is 130 times more volatile than Google (and 26,000 times as volatile as AMD). We can also conclude that a company can reduce the volatility of its stock by performing a stock split. Clearly this doesn't make sense, and it doesn't serve its purpose: to assess the how much money you gain/lose when buying $x worth of something and the price changes. Whether you buy $1000 worth of bitcoins at $1 and they drop to 50 cents, or you buy $1000 worth of bitcoins at $1000 and they drop to $500, you've lost the same: $500. That's the relevant metric. Ask the general public whether they would rather hold $1000 worth of bitcoins going from $1 to $15 or $1000 worth of bitcoins going from $500 to $1000 and I'm fairly sure you'll get the right answer.

runeks 13y ago

I said more stable (over time). Not stable compared to conventional currencies.

maratd 13y ago
When BTC prices do not deflate in any way and only experiences inflation of 2-3% on an annual basis, call me. While I'm on the topic, you realize that because the money supply can't be increased in any meaningful way once mining is no longer viable, prices will experience constant deflation? This alone makes BTC worthless as money.
- jordancardwell 13y ago
  I think there is a difference between an inflationary/deflationary currency and inflation/deflation of value. The USD currency experiences inflation by adding dollars to circulation which causes the value of individual dollars to drop. Bitcoin is deflationary. Bitcoin, as a currency, experiences deflation (bitcoins can only be lost, never added, over time after all bitcoins are 'found'), therefore the value of bitcoin value can only be increased as supply diminishes.
  - deleted 13y ago
    [deleted]
- ufmace 13y ago
  I'm aware of this, and I think it's the reason that BTC will never replace any of the national currencies, but I think it still has a tremendous value for smaller-scale things and has room to get a lot more popular and widespread.
- runeks 13y ago
  > While I'm on the topic, you realize that because the money supply can't be increased in any meaningful way once mining is no longer viable, prices will experience constant deflation? Yes. I consider an annual deflation rate of 2-3% just as stable as an annual inflation rate of 2-3%.
  - 001sky 13y ago
    but the data show rates of change at <orders of magnitude> in variation. that simply is the problem. its not that its accelerateing or not, simply absolute level is not consistent with any concept of a (stable) store of value. Its a false argument to think that because the asset itself is inflating it's "storing value"; the variance of returns to the asset in increasing and the volatility as a risk factor is agnostic to direction. If it were not, it would be a fault in any event because its value as an investment would (essentially) preclude its use as a currency (because the forecasting/bookeeping overhead).