Bitcoin Forum

What is a better store of value in the mind of the owners?

One that gets thrown on the market after only the smallest change in the market variables? Or one that people want to hold no matter what the market does?

The price elasticity of demand for bitcoin is very small. This means the price can move a lot without leading to extra bitcoins being released from people's coffins. The bitcoin market is very shallow, which is one reason behind the relatively high price volatility.

This is a sign of strength of bitcoin, not of weakness. Bitcoin owners have no doubt about it's future!

If its price is extremely volatile its not a stable store of value. Period.

I couldn't care less what the price is doing at the moment. Doesn't rock my boat at all..
So from my perspective it is as stable as a rock.

The market price is a public weighted average of the value people give to it privately. Many people value it much higher and won't sell. Others value it lower and won't buy.

The value I give to a bitcoin hasn't budged an inch in the past months. That is the only measure of stability I care about when looking at bitcoin.

The problem is with the people. As it currently stands it cant be a good store of value simply down to the volatility.

definitely not stable if it can drop from 600 to 540 then back to 630 now 620 on bitstamp in a matter of minutes

You might as well say that it dropped to $102, because that is what btc-e shows. Still, this is one of many intra-day dips we've seen, doesnt need to change your personal view on bitcoin's future value.

Bitcoin's price volatility is caused by the simple fact that many holders are unwilling to sell at whatever price or whatever event right now. That is a sign of stability to me. It's all about it's subjective value to the market participants. If you could graph that you would see it doesnt budge much with the holders of 80% of all bitcoins.

The only reason it doesnt rise further seems to be that believers are already heavily invested in bitcoin and can't take on any more exposure to it.

this drop was accompanied by only an 8K sell order at around $105... that's a drop in the bucket compared to the massive quantities of coins the top couple percent of  holders have. Everybody is criticizing this seller but if I had 50,000 BTC from being an early adopter that I got for almost nothing and I wanted to get out fast for no other reason than to lock in real profits, setting a low price would be an easy way... though that's pretty low.. he could have set it at 300-400 instead.

Not trying to be an alarmist and perhaps I even believe in bitcoin long term but these top heavy holders need to sell or there will always be uncertainty and an alt coin with a more distributed coinbase (such as NEM New Economy Movement) will end up gaining ground.

Any coin with a top heavy concentration will have potential issues in an unregulated environment like this.   Dare I say dogecoin would be more stable simply because it has more users.

I got 8% earning this time,which satisfied me. ;D

So USD is not a stable store of value.

Within one or two hours, the USD price went up from 1.4 mBTC to 1.9 mBTC, and now down again. That's extremely volatile!

If I was an exchange and had a large sell order for 100 bucks I would have the exchange set up so that any sell orders that come in under a certain price are immediately executed and put in a pool owned by myself, the exchange operator. I could then use that pool and sell them out at 'market price' .. that would have been quite profitable, albeit greedy. The person who got them at 100 is just going to sell them back out though. An exchange wants to make a killing, what an easy way... 8000 BTC for 105 bucks.. but hey for all I know they'll be trading at 105 bucks in 12 hours (probably not)

dropped to $102? no

Some retard dumped 10,000+ coins in a no-limit order. This will simply scoop up ALL open buying orders, starting from the highest price, until the order is filled. This way some lucky bastards got their buy-orders at $150 filled.

The reverse would happen if somebody buys 10,000+ BTC in a no-limit order, people with $1,500+ sell orders would suddenly get hit.

But with the market volume, this immediately restores. By no means would these scenarios mean that 'the price has dropped to $150' or 'the price has risen to $1500'.

HAHAHAHAHA HAHAHAHA
HAHAHA

HAHAHAHAHAHAHAHAHAHA

What a bull shit.So far, Bitcoin has proved to be VERY instable. Period.
The OP needs new glasses.

WOEHAHAHAHAHAHAHAHAHAHAHA

I don't think any currencies are stable when you're playing them against each other.


LOL.

Exactly. I fail to see why that is difficult to understand. Volatile = unstable by definition

This is an interesting idea, but I still wouldn't say that Bitcoin stores value too well at the moment. Price and value are not the same thing, but when it comes to storing value, the price has to be somewhat stable aswell.

How do we express or measure price? (or value, for that matter)

What is the price of 1 USD, for example?

Yes, but while you are able to buy a loaf of bread for around $1.50 and that price remained the same during those couple of hours, the same purchase in mBTC just went from 2.1 mBTC to 2.85 mBTC.

That is actually quite a tricky question. I think the price of USD could be measured by comparing it to what you can get with it. So I'd say the purchasing power measures the price. Currencies have no value intrinsically so they should be compared to real assets instead of other currencies.
Like I said, tricky question, but that's how I see it :)

Isn't it the people who are the volatile party here? I don't think we'll ever get passed this volatility if we continue to peg it to another currency and continue to sell it for lower and lower prices. Surely if people held it rather than sold on the whiff of any bad news then this wouldn't be a problem.

interesting thread --

the dollar is actually the world's most stable 'store of value' when it comes to currencies.  Countries with much smaller economies than the U.S (e.g. CIS countries) have currencies that remain relatively stable only due to big currency manipulation (i.e. generating new currency to increase the pool of money in that country).  People often hold large amounts of dollars 'under the bed' in CIS states as they understand how stable it is compared with their own domestic fiat currency.

Gold is also a well accepted global store of value because it is rare, cannot be created out of thin air (only through mining) and can be melted down and transformed easily.  Countries fearing the long term future of the dollar are (quite sensibly) buying up huge amounts of gold, Russia for example.  Yes true that Bitcoin price is volatile if you look at short term gains and falls, but just look at the mtgox price over 2 or 3 years, smooth out the curve and you see an overall constant rise.  Its just that the Bitcoin economy is still relatively small compared with dollar, yen, gold etc and is therefore more sensitive !! 

As the Bitcoin economy increases (i.e. through price and number of coins through mining), more stable it will get I think, although it could take a long time !! 

I wrote an article recently about gold and Bitcoin if anyone interested:   http://www.itreco.net/main/bitcoin-and-gold/

It depends on the time scale.

very true, but that's just a symptom of the problem the real problem is a weak and untrustworthy infrastructure, apparently people are only here to see the market value increase, not to see the actual cryptocurrency (CC) used in industry. 

If CC btc was used in industry as much as it is traded or even half as much it would exhibit greater stability even in the face of disappointing news from a major exchange.   

Bitcoin just crashed to $102 on BTCE. Litecoin appears to be more stable.

Yeah, you need to look at the bigger picture. This is still early days for Bitcoin. Something so new is bound to have its problems before it steadies itself out.



For the time being, but Litecoins value tends or tended to follow Bitcoin. It's still pegged to BTC remember.

7% change in a day for currency is quite bad...

That doesn't really lead to working economy...

Only a complete moron would use bitcoin for storing value.
Bitcoin price is made up by pure speculation. Holding your wealth in bitcoin means that you trust your money to the bitcoin community. Trusting this flock of emus without constant supervision is beyond naive.

If you want to store value, then invest in rare earth metals or any in other resources thats demand is growing but the availability dropping.

I am all for BTC, but when you wake up and the price has dropped 10% or more, that is a little unsettling.  Its not the best store of value, but still a good idea for people in places experiencing hyperinflation

Where did this happen? Btc-e?

Yes , it's that dip at btc-e that everybody is talking about as a crash to 100.

I really doubt people in countries where there is hyperinflation have more than a few satoshi fer thousands citizen.
Just like the whole whole kenya bitcoin rush was one major myth.

Not exactly a crash, just a dip, imagine someone making an instant buy order for 10 000+ BTC, it would jump quickly before going back.

10% drop seems a splash compared to today.

That's why I said "as a " :

People love to have some other people panicking as an excuse to panic. :)

It is not stable, and it won't become any time soon. I do think it will become stable one day, at least stable enough that variations within a day won't be larger then those of regular currencies.

One day? Will that day be in our lifetime? lol.

If the present state of BitCoin was to represent the most stable store of value.... oh boy, we'd be fu*&ed. Big time.

It's a permanently endangered, unstable, volatile construction in progress and experimental way to conduct monetary transactions via internet with a still unknown background and uncertain future - nothing more.
It lacks about every single base requirement to be a store of value and in some regards even its value is highly debatable itself.

Complementary FIAT-type virtual commodity at best IMHO, which derives most of its value from the ability to conduct worldwide transactions at relatively small fee and reasonable transaction time - where accepted - and to date mostly outside of government control. Lots of variables that are subject to change without notice, hardly the "qualities" you'd need to have a store of value.

It's a new, virtual "use at your own risk" development restricted to internet use only, so never confuse it with a store of value.

It crashed for a moment. What would have happen to litecoin if somebody would have dropped 20 000 LTC on the market?
It would have been the same for any altcoin.

Except the fact that bitcoin is already recovering , many of the alt coins would have been frozen at the moment of the drop for ages.

The question is, how stable is Bitcoin when compared with the money being used in the United states in 1800. Bitcoin is about 5 years old. In 1800, following the new constitution of 1786, the United States already had 14 years to develop their currency and make it work.

I'm not into the history of the various U.S. currencies. The point is not the history. The point is the rapidity with which Bitcoin has become popular.

The world has never seen a currency that is being traded worldwide with the popularity of Bitcoin, go from zero to what it is today, all in just 5 years. Nobody knows how inherently secure and valuable Bitcoin really is. It is just too early to draw a real conclusion. However, one thing is sure, Bitcoin has risen, worldwide, way faster than the German Mark did in Germany, after Hitler rebuilt Germany prior to WWII. And that is fast.

:)

What I was trying to get at is the difference between the subjective value each individual market participant gives to bitcoin, and the objective market price that we can see on any exchange.

To me the bitcoin value is well above where it trades now, and it is pretty stable there. Today's events didn't budge my subjective value at all. And given the low turnover of bitcoins in the markets, that seems to be the case for most bitcoin holders.

So in that sense, whatever it does in price in these historically low regions is irrelevant to me. If I could buy more I would. The market price is where the amount of bitcoins sold matches the amount of bitcoins bought. It says little about the other 90% of bitcoins that don't leave their coffers.

Its definitely a great store of value, but saying that it is stable is a bit of a reach right now. Maybe in a few years it may be stable

I must have misread then. No, I do not panic. My holdings are not at risk here, even if bitcoin goes to 0.
I'm waiting for the right time to acquire more than what I had. You should see some market changes then.

Umm, any new proposed currency likely to take time to develop, people were most probably laughing their a**** off when goldsmiths started handing
people dollar bills as a promise to pay the bearer the weight in gold, this is how banknotes came about -- I'd imagine it had huge trust issues, but over time, people trusted the system.

gold is a well established store of value, i.e. people 'perceive' it as looking pretty and being valuable, but key thing is it is a finite resource, Bitcoin has all the same qualities.  Granted its got a long way to go and pretty volatile at the moment, give it time ;-)

The bad part of it was - those that laughed their a**es off actually got it right in the first place. They recognized the ponzi right at the start, because they knew the subtle but hughe difference between paper (a promise advertised as good as gold) and the real thing (which needs no stinkin' promises).

[ Bare in mind just who gave that promise and never forget that. If you trust politicians, central banks and bankers in general - you may want to reconsider. I consider these promises absolutely worthless, since they come from lying criminal snakes that I'd outright deny to even shake hands with. They're nothing but parasitic thieves that poison and exploit entire continents and generations if you let them - and they smile when they do it. These are nothing but sociopathic psychos with not a single atom of honour or honesty in their blood. Early US Presidents like Andrew Jackson fully knew that, but last century the banks won and assimilated even the United States, the rest was decades of propaganda and corruption to separate the free citizens from both real value and freedom. That's still work in progress but they already got so far, a free man of the land from the 1800's wouldn't even recognize today's "citizens" (property of the Federal corporation system) anymore for their sheer blind idiocy. He'd rather die standing upright & guns blazing than be enslaved in such a corrupt, criminal and tyrannical system. ]

Countless times in history, IOUs were broken and the bag holders had worthless paper claims in their hand. If one of your ancestors had passed on the gold he held on to (not trusting the empty promises), you'd hold a true store of value in your hands. In contrast, take a Silver certificate Dollar or earlier Dollar bills (redeemable in gold) to a bank, the FED or the State - they'll laugh right in your face.
Debasing = devaluing... De-Valuing. That's something bankers are good at when it comes to the money they want you to use. So hard, they enforced it with "legal tender for all debts" laws.

Alternatively, take a 20 British Pound bill and try to redeem that promise (after all, it's still printed on their bills).
I promise to pay the bearer on demand the sum of xxx pounds.
Try to get those 20 pounds of fine, british sterling silver for that bill. Just try that to see what that promise is worth today. And that promise was given by no other than the Queen, someone in old days usually known to rather keep a publicly issued royal promise (even inconvinient ones). Ah, the old days.

Anyway, that trust in paper IOUs was usually built in ever-complex and poisonous schemes - just to eventually collapse due to its inherent criminal design all over - fast. Very fast. And guess who got out every single time to hold actual value leaving the peasants with paper? - the banks and their owners/accomplices .

Lession learned : just because something becomes successful (widely adapted) by the masses doesn't mean it's good for you. Remember the masses are basically sheeple and their herds are too easily lured into places I'd rather not be.

Physical gold itself cannot be manipulated (finite physical resource), Bitcoin (technically) i.e. could be extended to 100 Million coins anytime needed or whatever. Almost anything can happen to a digital virtual good, no matter how secure it is deemed. Bits are easy to flip. The way it is today is no guarantee whatsoever for how it will be in a few years from now.
Bottom line : it's virtual and thus its value has been imaginary right from inception.
Physical vs. virtual in regard to value = easy choice for those that still know or re-learned what actual value is when it comes to store (rather preserve/protect) it over a long time.

To some (me included), virtual money is possibly the final, ultimate form of monetary debasement. A banker's wet dream (not really Bitcoin exclusive, digital bank accounts held on mainframes is already pretty close). Try to find average/good work that takes you without a bank account for the digital transfers today... Good luck, another banker plot went successful within a mere 50-70 years (depending on country). This used to be different, until mid last century workers were normally paid on payday in cash and didn't require a bank account.

Historical quotes :
“Give me control over a nations currency, and I care not who makes its laws.”
Mayer Amschel Bauer Rothschild

United States Coinage act of 1965 :
Some have asked whether our silver coins will disappear. The answer is very definitely-no.

Our present silver coins won't disappear and they won't even become rarities. We estimate that there are now 12 billion--I repeat, more than 12 billion silver dimes and quarters and half dollars that are now outstanding. We will make another billion before we halt production. And they will be used side-by-side with our new coins.

Since the life of a silver coin is about 25 years, we expect our traditional silver coins to be with us in large numbers for a long, long time.

If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.
Lyndon B Johnson, 23 July 1965
(today we all know what happened... those that trusted Johnson were soon left using nearly worthless base metal coins, those that did not trust him kept the silver coins and did exactly the right thing)

“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.”
John Adams, 1826

“The Central Bank is an institution of the most deadly hostility existing against the principles and form of our constitution… if the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.”
Thomas Jefferson

Someone who would want $100,000 would either buy gold, or silver. Storing value is to make sure that the amount you stored is still that amount in the future, say I stored $1000 in BTC when prices were $1000 per BTC, I'd have just lost 40% in two months, bitcoins are not good for storing value; it is good for making transactions (for use as a currency)

It takes a special kinda retard to think bitcoin is a good store of value. The writing is on the wall, bitcoin isnt a good currency and it never will be. This is how to fix it. http://www.youtube.com/watch?v=XyWfUqEyIZc    Mostly it needs a definition 1 bitcoin = something and it needs an elastic supply. Bitcoin = Shitcoin.

It cant free markets, it cant free trade, it cant avoid taxation, it cant avoid capital gains, it is no longer capable of micro transactions, the institutions that have built up around it cant be trusted, the protocol cant be trusted, the miners cant be trusted, the valuation cant be trusted, you cant trade large amounts p2p, it cant replace government issued fiat, it cant cut sending cost (I can send for free with paypal), it isnt any good for cutting remittance cost.

It is real simple, the scarcity model sucks because it is controllable. Defining the unit of the measure of value in terms of a very finite item is like defining the unit of the measure of length in terms of an inch worm.     

You are correct if we are speaking about present times.  I should have been more clear.   I more meant that bitcoin will be a good store of value over time..

Jenga is already the most stable store of board games.