High volatility and sudden crashes will kill bitcoin, unless...

[Xester]

To a degree, crypto day traders like high volatility.

More price swings over time translate to greater opportunities to generate profits.

If BTC's price moves 1% in 24 hours that means the most traders could hope to profit is 1%.

Larger and more frequent price movements make it easier to profit and also increase the maximum amount of potential profits.

Volatility isn't the cause of price decline btw.

Big BTC holders look to be cashing out & selling BTC off their crypto in high volume.

That seems to be the reason behind some of the larger BTC declines we've seen of late.

To the bitcoin holders sudden crash and volatility means opportunity and profit. To the early adopters way back to 2013 when we speak of sudden crash it would cause a big panic and many will lost their capital. But today bitcoin holders are no longer affected by sudden volatility. If they see a huge price spike it would mean time to sell and if they see a huge dip it would mean an opportunity to buy.

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[ivanpoldark]

So, I will insist that crypto needs a value reference. And as I said in my other posts, the best reference value is ENERGY. The most pure asset in the universe.
And there's got to be a way to tie the value of bitcoin to Joules. There's already SOLARCOIN, but to be honest I'm not sure how that is working.

Author, you started a good topic about volatility of bitcoin and other crypto. It`s a good question of how to tie bitcoin to real economy assets to avoid sudden ups and downs. But your idea of solar energy or other sounds little utopian. How to count energy, especially solar energy, it does not belong to anyone and is almost infinite.

[wuvdoll]

To the bitcoin holders sudden crash and volatility means opportunity and profit. To the early adopters way back to 2013 when we speak of sudden crash it would cause a big panic and many will lost their capital. But today bitcoin holders are no longer affected by sudden volatility. If they see a huge price spike it would mean time to sell and if they see a huge dip it would mean an opportunity to buy.

Yes there are people who are loving the extreme volatility of bitcoin markets. They must be traders who can enjoy the ups and downs of bitcoin price movements to make use of them for their trading.

But when we are thinking from the point of innocent investors who are entering into bitcoin and losing their investment with sudden crashes, might be leading to have negative impression about bitcoin investment and which may end up not suggesting to their friends to guide them getting into bitcoin ecosystem.

Hence I think we need bitcoin prices to be more stable like it should move up to +/- 10% per day. But I do not think it would be possible to have such ideas to be implemented.

[BitWhale]

To the bitcoin holders sudden crash and volatility means opportunity and profit. To the early adopters way back to 2013 when we speak of sudden crash it would cause a big panic and many will lost their capital. But today bitcoin holders are no longer affected by sudden volatility. If they see a huge price spike it would mean time to sell and if they see a huge dip it would mean an opportunity to buy.

Yes there are people who are loving the extreme volatility of bitcoin markets. They must be traders who can enjoy the ups and downs of bitcoin price movements to make use of them for their trading.

But when we are thinking from the point of innocent investors who are entering into bitcoin and losing their investment with sudden crashes, might be leading to have negative impression about bitcoin investment and which may end up not suggesting to their friends to guide them getting into bitcoin ecosystem.

Hence I think we need bitcoin prices to be more stable like it should move up to +/- 10% per day. But I do not think it would be possible to have such ideas to be implemented.

I agree that volatility is bad for a currency used to transact. As Dinofelis said, cash with a finite supply is inheritly volatile. Fiat is able to control giant swings with policy changes & fresh currency, this is something that bitcoin seeks to avoid. We can't add mechanisms for price control and then in the same breath call Bitcoin a "freely traded market", which imo is one of the more appetizing features of BTC.

I think the adage applies here "don't invest what you aren't willing to lose".

That being said, I definitely think it's a mistake to dislike volatility (speaking being we are all here for profit). It's more the natural progression of a trend, look how slow price started rising from $200 and how volatility (ups & downs) progressively got bigger and bigger as price rises. This is something we see repeat in nearly every market. A good example is a 10 year graph of Amazon/Google, look how slow it started and how it's basically going straight up now.

It's more about people feeling they are on the "sidelines" and buying in so they don't "miss out". Little do they realize, they were buying at the top before a very large correction. There is a reason most profitable traders on Wallstreet are contrarians. The goal is to use human psychology against your peers.

Bitcoin to me is a vehicle for speculation now a days, nothing more. If we want to talk global currencies, we got to start USING them as global currencies. Right now it's just a hoarding game.

As most people say "smart money buys bitcoins, dumb money sells bitcoins". That's a self-fulfilling prophecy for continually rising prices. That's NOT how a currency is supposed to be used, if anything we use Bitcoin more like Gold than a currency. It's a really volatile store of value (oxymoron lol)

PS - as a trader, I love the volatility, as I'm sure many of my peers do. Bitcoin has made me some of the greatest pecentage gains over the years.

[beerlover]

As Dinofelis said, cash with a finite supply is inheritly volatile. Fiat is able to control giant swings with policy changes & fresh currency, this is something that bitcoin seeks to avoid. We can't add mechanisms for price control and then in the same breath call Bitcoin a "freely traded market", which imo is one of the more appetizing features of BTC.

If limited supply is the core reason for drastic fluctuations then I guess we need to switch over to satoshi based trading instead of current doing BTC based. For example dogecoin are having lesser volatility as they are having huge number of units and no total supply cap.

[BitWhale]

As Dinofelis said, cash with a finite supply is inheritly volatile. Fiat is able to control giant swings with policy changes & fresh currency, this is something that bitcoin seeks to avoid. We can't add mechanisms for price control and then in the same breath call Bitcoin a "freely traded market", which imo is one of the more appetizing features of BTC.

If limited supply is the core reason for drastic fluctuations then I guess we need to switch over to satoshi based trading instead of current doing BTC based. For example dogecoin are having lesser volatility as they are having huge number of units and no total supply cap.

Honestly I think that's a great idea and have often wondered why we haven't started yet. I think it's a much bigger barrier for the average joe to have to put up $2000 to get 1 btc (which in their head makes them feel like small fish, not worth the time, missed the boat, etc) than volatility will ever be.

If we can get fees sorted out, which it looks like we are finally closing in on a solution, I could see trading in smaller increments as a giant boon for Bitcoin. Think of it like when Google hit's $1000 bucks then they stock split 1:10 in order to make the share price $100 again. It makes Google once again more accessible to the average joe.

We all remember as kids preferring ten $1 bills as opposed to one $10 bill. More is always better (even if it isn't actually more lol).

Nice name btw, cheers.

[pooya87]

no it won't!
the only effect that a high volatility always had and will continue to have is that it will make people think twice before using bitcoin as a currency and prefer it more as their investment and the thing they trade.

and it is not an strange or even restricted to bitcoin only thing. it happens with every new technology that has a growing demand.
someone actually posted a screenshot (that i will add if i can find it) of Apple shares and it has a very similar movement to bitcoin price.

this is how all the markets work.
smart money comes in first, then the masses find out and start FOMO buying, price go up fast. smart money sells to make profit and because they know a correction is on the way. price comes down in correction, smart money buys back more shares.
in bitcoin, unlike stock market, there are a lot more newbie wannabes that will panic easier and they make the movements even bigger.

[Omega Weapon]

Crashes like this are just mild compared to what have been witnessed in the past which in the real  sense does not kill bitcoin rather makes it come back stronger and more popular. To me, I see the crashes as lessons to both outsiders and those in the know that bitcoin is not a quick rich scheme that will just continue to increase like that but a little set back for us to go back to the drawing table and set our priorities right.

Correct, in fact I have some problems calling the reduction in price we got a crash at all, bitcoin even at the lowest did not go below the previous level, it only went as low as 1900 so that was not a crash at all that was just the market trying to find the price of bitcoin and the ups and downs were nothing but a signal the market was having some issues to find the right price

[megynacuna]

Crashes like this are just mild compared to what have been witnessed in the past which in the real  sense does not kill bitcoin rather makes it come back stronger and more popular. To me, I see the crashes as lessons to both outsiders and those in the know that bitcoin is not a quick rich scheme that will just continue to increase like that but a little set back for us to go back to the drawing table and set our priorities right.

Correct, in fact I have some problems calling the reduction in price we got a crash at all, bitcoin even at the lowest did not go below the previous level, it only went as low as 1900 so that was not a crash at all that was just the market trying to find the price of bitcoin and the ups and downs were nothing but a signal the market was having some issues to find the right price

I totally agree, this was no crash but a periodic volatility before it settles , those of us who have been following Bitcoin for sometimes now never panicked because we are used to this and was confident it will be coming back to normal after a few balances here and there.

[dwieyani]

Nobody will kill bitcoin in any way what bitcoin competitors do though they have the same sma bitcoin. Believe it or not but there are a lot of people with cash in their bank waiting outside bitcoin to include it at the right price and in every accident.

[deisik]

Hi Ev'rybody.
Last days we witnessed a 20% crash in bitcoin, not to sepak about other crypto, including ETH that had the most solid growth till then.
These anomalies, as good as they might be for day traders, does not speak well about the BTC as a reserve currency.

As I said before, there's a reason why paper money was pegged to gold prices and reserves. Because any currency needs a reference value if it is going to avoid those dramatic ups and downs. The euphemism of USDT is just out of question.

And even though I'm strongly against any regulation of BTC or any other crypto, I have to say, leaving it freely float poses dangers such those I said, plus manipulations of speculators who can, by their own operations, affect prices at will.

So, I will insist that crypto needs a value reference. And as I said in my other posts, the best reference value is ENERGY. The most pure asset in the universe

As to me, that's sheer nonsense

And it is not nonsense just because the idea is conceptually flawed (though it still is) but since there cannot possibly be a value reference point that would remain the same in any "coordinate system", so to apeak. In other words, whatever you may choose as a reference point (for taking or copying the value off it), it will be prone to value changes on its own (in respect to other valuable assets). You may take energy and you may even take time itself (which looks a better idea) as a basis for reference, but you will still face and have to deal with the change in the values of these references themselves. This is what any hard currency backed up by some asset is set to face inevitably. In this way, just limiting the number of coins to 21M is a step ahead since it allows to get rid of such issues altogether

[joebrook]

Hi Ev'rybody.
Last days we witnessed a 20% crash in bitcoin, not to sepak about other crypto, including ETH that had the most solid growth till then.
These anomalies, as good as they might be for day traders, does not speak well about the BTC as a reserve currency.

As I said before, there's a reason why paper money was pegged to gold prices and reserves. Because any currency needs a reference value if it is going to avoid those dramatic ups and downs. The euphemism of USDT is just out of question.

And even though I'm strongly against any regulation of BTC or any other crypto, I have to say, leaving it freely float poses dangers such those I said, plus manipulations of speculators who can, by their own operations, affect prices at will.

So, I will insist that crypto needs a value reference. And as I said in my other posts, the best reference value is ENERGY. The most pure asset in the universe.
And there's got to be a way to tie the value of bitcoin to Joules. There's already SOLARCOIN, but to be honest I'm not sure how that is working.

Future economy has to be energy-based.

Please feel free to download my proposal in pdf: Teraflops and Terawatts at:

https://drive.google.com/open?id=0B7JgGimv_JMJaWdYQXdtb1RVZVE

Greets,

http://estaciontrend.blogspot.com/

Forgive me if am slow i understand everything you said about reference but if bitcoins reference is to be ENERGY, how is it going to work, How will they implement it. I'd be happy if you can clarify that for me.

[Astvile]

No not possible,huge price volatility may be a cause of panic of holders but will never be a cause of bitcoin dying.In fact price volatility is the caused why bitcoin investors earn into it,they buy at sudden drop and sell at sudden pump.Without huge proce volatility bitcoin will not rise fast

[chocolah29]

As Dinofelis said, cash with a finite supply is inheritly volatile. Fiat is able to control giant swings with policy changes & fresh currency, this is something that bitcoin seeks to avoid. We can't add mechanisms for price control and then in the same breath call Bitcoin a "freely traded market", which imo is one of the more appetizing features of BTC.

If limited supply is the core reason for drastic fluctuations then I guess we need to switch over to satoshi based trading instead of current doing BTC based. For example dogecoin are having lesser volatility as they are having huge number of units and no total supply cap.

Well I think no other alt coin can replace bitcoin as being top crypto currency.
Bitcoin will always be bitcoin. Any currency have the volatility as a player in the market.
There will always be ups and downs so no currency will be stable even though there's a high supply. That's our economy.

[d5000]

Because any currency needs a reference value if it is going to avoid those dramatic ups and downs.

I think it is not necessary to have one particular reference value. A simple backing mechanism like I'm proposing here would also help to combat volatility. But there seems to be low interest for that in the Bitcoin community. (Perhaps I should bump this idea in the next real bear market).

However, I agree with you that energy is the "purest" asset that exist in the world.

And as I said in my other posts, the best reference value is ENERGY. The most pure asset in the universe.
And there's got to be a way to tie the value of bitcoin to Joules.

There were some discussions about that topic in 2011 to 2013 about a cryptocurrency whose price would be tied to energy. Now they are buried in the altcoin forum:

GEM
Encoin
some discussions here about a so-called "MordorCoin"

Please feel free to download my proposal in pdf: Teraflops and Terawatts at:

I have looked at it, but I don't understand how your energy-to-cryptocurrency peg would work.

Cheers from your southern neighbors

[deisik]

Because any currency needs a reference value if it is going to avoid those dramatic ups and downs.

I think it is not necessary to have one particular reference value. A simple backing mechanism like I'm proposing here would also help to combat volatility. But there seems to be low interest for that in the Bitcoin community. (Perhaps I should bump this idea in the next real bear market).

However, I agree with you that energy is the "purest" asset that exist in the world

As to me, having a few reference values would only make matters terribly worse

Since it will excessively complicate things while not solving the main task, i.e. making the coin less volatile. In fact, with two or more independent factors, you can never be sure that they won't change in unison thus adding to volatility, not taking from it. If they are not independent, it makes no sense to use more than one factor anyway. Regarding energy, there are different types of it in respect to how much work can be done with it, electricity having the highest capacity to make work, while heat energy the lowest. And just in case, you shouldn't make your threads self-moderated, otherwise many people will stay away from posting in them. No one wants his posts deleted for whatever reason (whether he is in a signature campaign or not)

[olushakes]

Suuden  crash in the case of bitcoin cannot kill it not now. If it were to be other alts where a dump by the developer might make the price not to recover could kill it but not bitcoin which has grown to this point where every dip presents an opportunity for everyone to either jump in or increase the stock because by that the it will be forced back up by the time I want to increase my 0.01btc to 2btc due to the crash.

[d5000]

As to me, having a few reference values would only make matters terribly worse

Since it will excessively complicate things while not solving the main task, i.e. making the coin less volatile. In fact, with two or more independent factors, you can never be sure that they won't change in unison thus adding to volatility, not taking from it.

If taking a basket that is too small that may occur (e.g. "Oil + Soybeans + Wheat", above all, prices of agricultural goods are often somewhat related and related to oil prices).

But that isn't what I had proposed on the linked thread. The idea is to give merchants the possibility to back Bitcoin's value, and so we would have - if it is successful - a large diversity of products and services backing Bitcoin. Volatility to the upside cannot be fought by the mechanism, but it is volatility to the downside (crashes) that most people fear when they start with Bitcoin. What I want to achieve is that in a crash, people can sleep calm because they know that tomorrow they will be able to buy things at the same BTC price than today.

Regarding energy, there are different types of it in respect to how much work can be done with it, electricity having the highest capacity to make work, while heat energy the lowest.

I think electricity is also what the OP is trying to peg to Bitcoin. But in his paper he doesn't explain how to exactly make the peg work. Hey OP, ¿dónde estás?

And just in case, you shouldn't make your threads self-moderated, otherwise many people will stay away from posting in them. No one wants his posts deleted for whatever reason (whether he is in a signature campaign or not)

May be true. Will add a moderation note, as damage is already done 

[TheButterZone]

BTC can't crash if all the exchanges disallow bids & asks below the ATH.

[deisik]

As to me, having a few reference values would only make matters terribly worse

Since it will excessively complicate things while not solving the main task, i.e. making the coin less volatile. In fact, with two or more independent factors, you can never be sure that they won't change in unison thus adding to volatility, not taking from it.

If taking a basket that is too small that may occur (e.g. "Oil + Soybeans + Wheat", above all, prices of agricultural goods are often somewhat related and related to oil prices).

But that isn't what I had proposed on the linked thread. The idea is to give merchants the possibility to back Bitcoin's value, and so we would have - if it is successful - a large diversity of products and services backing Bitcoin. Volatility to the upside cannot be fought by the mechanism, but it is volatility to the downside (crashes) that most people fear when they start with Bitcoin. What I want to achieve is that in a crash, people can sleep calm because they know that tomorrow they will be able to buy things at the same BTC price than today

Ultimately, you don't need that

In fact, this task is perfectly well fulfilled by merchants and service providers just accepting a certain currency (Bitcoin in this case) as a means of payment for their goods and services. It could be said that any currency which is not directly backed up by a specific asset is backed by all the goods that can be bought for it. And this is the best way for diminishing volatility (since that seems to be the final aim). On the other hand, how are you going to implement backing up of a decentralized currency in practice?