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I can't reply to your comment for some reason, so I reply here. I bought Bitcoins more than 1 year ago. If you look at Bitcoin in terms of years, and as a long

by xiphias 12y ago

I can't reply to your comment for some reason, so I reply here. I bought Bitcoins more than 1 year ago. If you look at Bitcoin in terms of years, and as a long-term store of value, Bitcoin is not volatile: the value is increasing until total adaptation. And I don't know anybody else who bought and held his bitcoins who's complaining :) (I'm not counting people who had Bitcoins held at MtGox, as they didn't have Bitcoins, just IOUs for Bitcoins)

wpietri 12y ago
Bitcoins are way more volatile than gold: http://btcvol.info/ http://btcvol.info/ That you bought something and had it go up is great for you, but it does not mean the volatility is low. Indeed, if it went up a lot, it means volatility is high. Volatility is the inverse of stability.
- neom 12y ago
  A currency can be as volatile as it wants from day to day, but if over a very long time the value appreciates consistently then wouldn't that make it a good value store? You're hedging day to day against a long term win, surely?
  - a_c_s 12y ago
    Nope: long term appreciation may make it a good investment but a poor store of value. Lets say you have two magical safes, and you put $100 in each one. The first safe gives you the real-dollar value of what you put in, less $0.50 per-month. So a year later, you get $94 worth of inflation-adjusted dollars no matter how high or low inflation has been over the course of the year. The other safe gives you an additional dollar for each day you keep the money in it, but there is a 70% chance all but $10 catches on fire when you open the safe. So one year later you have $465 or $10, statistically averaging $149.5 . The second safe might be worth gambling on as statistically you get almost a 50% return on investment: but if you need to be certain the value you put in is maintained, the first safe is the better option. Therefore, the first safe is a far better store of value.
    - neom 12y ago
      Gotcha. I've been thinking a lot about BTC recently, but I'm useless when it comes to economics and there is a lot of "faffing" around it. Thanks for the information. :)
  - drusenko 12y ago
    how can you make the assumption that "over a very long time the value appreciates consistently"? in fact, one definition of a bubble is when people start to assume that an asset will always appreciate over time...
    - neom 12y ago
      I don't, I think it's dumb.. but I think that's how people are defining it? I'm no economics major though. Totally ignorant.
      - drusenko 12y ago
        Bitcoin has a relatively fixed supply, but that doesn't mean it's guaranteed to appreciate over time. Bitcoin is only valuable because people choose to find it valuable. One example of how it could crash in value is if a competing cryptocurrency starts to gain momentum, and people jump ship, or if a major flaw is found. There are many plausible scenarios for bitcoin going to 0.
  - wpietri 12y ago
    Nothing goes up consistently. If it did, people would invest in it until the price changed so that it didn't go up consistently.

by xiphias 12y ago

wpietri 12y ago

Bitcoins are way more volatile than gold: http://btcvol.info/ http://btcvol.info/ That you bought something and had it go up is great for you, but it does not mean the volatility is low. Indeed, if it went up a lot, it means volatility is high. Volatility is the inverse of stability.

neom 12y ago
A currency can be as volatile as it wants from day to day, but if over a very long time the value appreciates consistently then wouldn't that make it a good value store? You're hedging day to day against a long term win, surely?
- a_c_s 12y ago
  Nope: long term appreciation may make it a good investment but a poor store of value. Lets say you have two magical safes, and you put $100 in each one. The first safe gives you the real-dollar value of what you put in, less $0.50 per-month. So a year later, you get $94 worth of inflation-adjusted dollars no matter how high or low inflation has been over the course of the year. The other safe gives you an additional dollar for each day you keep the money in it, but there is a 70% chance all but $10 catches on fire when you open the safe. So one year later you have $465 or $10, statistically averaging $149.5 . The second safe might be worth gambling on as statistically you get almost a 50% return on investment: but if you need to be certain the value you put in is maintained, the first safe is the better option. Therefore, the first safe is a far better store of value.
  - neom 12y ago
    Gotcha. I've been thinking a lot about BTC recently, but I'm useless when it comes to economics and there is a lot of "faffing" around it. Thanks for the information. :)
- drusenko 12y ago
  how can you make the assumption that "over a very long time the value appreciates consistently"? in fact, one definition of a bubble is when people start to assume that an asset will always appreciate over time...
  - neom 12y ago
    I don't, I think it's dumb.. but I think that's how people are defining it? I'm no economics major though. Totally ignorant.
    - drusenko 12y ago
      Bitcoin has a relatively fixed supply, but that doesn't mean it's guaranteed to appreciate over time. Bitcoin is only valuable because people choose to find it valuable. One example of how it could crash in value is if a competing cryptocurrency starts to gain momentum, and people jump ship, or if a major flaw is found. There are many plausible scenarios for bitcoin going to 0.
- wpietri 12y ago
  Nothing goes up consistently. If it did, people would invest in it until the price changed so that it didn't go up consistently.