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Author Topic: Bitcoin's meteoric rise is, ironically, limiting its growth potential...  (Read 564 times)
ktabb
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June 07, 2017, 11:28:10 PM
 #1

...but there is a solution!

I wrote a post about this topic for anyone who is interested: http://demoinvestor.com/articles/00000001

The gist of it is that bitcoin is volatile because it doesn't have institutional investors, and this volatility limits its ability to be useful as a currency. The more stable bitcoin is, the more valuable it is as a currency. The more valuable it is as a currency, the more investors buy like crazy and push the price up, ending the stability.

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June 08, 2017, 01:54:48 AM
 #2

Volatility has been an issue of Bitcoin (and also altcoins for that matter) right from the very start but this is something that may be hard to address. I am not familiar with your solution though so I am hoping that it can be discussed by the Bitcoin stakeholders soon. Volatility has been one of the many factors why there are some who shy away from using Bitcoin as a currency because it can stippled planning and can throw one to the edge of his seat anytime, so to speak. Though there are many Bitcoin holders who can be thrilled to watch the Bitcoin volatility.

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June 08, 2017, 01:57:51 AM
 #3

...but there is a solution!

I wrote a post about this topic for anyone who is interested: http://demoinvestor.com/articles/00000001

The gist of it is that bitcoin is volatile because it doesn't have institutional investors, and this volatility limits its ability to be useful as a currency. The more stable bitcoin is, the more valuable it is as a currency. The more valuable it is as a currency, the more investors buy like crazy and push the price up, ending the stability.

The problem with using bitcoin as a currency currently isn't the volatility, its the high transaction fees and slow speed of transactions. With such high fees currently being experienced the last thing you want is more people using it as a currency.

Also the higher the marketcap of bitcoin the lower the volatility will be as it will take greater and greater amounts of money to affect the price.
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June 08, 2017, 04:30:12 AM
 #4

So which is it, is it good that Bitcoin is volatile or bad? is it bad investors buy like crazy and push the price up or good?
You have started to see Bitcoin for what it really is, answer to mankind prayers for thousands of years nothing less than a miracle of this century, nothing you or any body else could do about it, this is what a decentralized monetary ecosystem should do and this is how it functions. and if you try to somehow manipulate this system then you'll lose certainly just like many have failed.

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June 08, 2017, 05:01:18 AM
 #5

...but there is a solution!

I wrote a post about this topic for anyone who is interested: http://demoinvestor.com/articles/00000001

The gist of it is that bitcoin is volatile because it doesn't have institutional investors, and this volatility limits its ability to be useful as a currency. The more stable bitcoin is, the more valuable it is as a currency. The more valuable it is as a currency, the more investors buy like crazy and push the price up, ending the stability.

Bitcoin cannot be an investment that has a "meteoric rise" and a currency. So I believe you're one that wants bitcoin to be a currency, primarily. Yes?

You mention that institutional investors are needed to grow bitcoin as a currency, but the only interest institutional investors would have in bitcoin is as an investment. To grow bitcoin as a currency institutional investors should stay out of bitcoin, and instead merchants and retailers should get involved in bitcoin, accepting it as payment.

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June 08, 2017, 10:30:36 AM
 #6

...but there is a solution!

I wrote a post about this topic for anyone who is interested: http://demoinvestor.com/articles/00000001

The gist of it is that bitcoin is volatile because it doesn't have institutional investors, and this volatility limits its ability to be useful as a currency. The more stable bitcoin is, the more valuable it is as a currency. The more valuable it is as a currency, the more investors buy like crazy and push the price up, ending the stability.

Bitcoin cannot be an investment that has a "meteoric rise" and a currency. So I believe you're one that wants bitcoin to be a currency, primarily. Yes?

You mention that institutional investors are needed to grow bitcoin as a currency, but the only interest institutional investors would have in bitcoin is as an investment. To grow bitcoin as a currency institutional investors should stay out of bitcoin, and instead merchants and retailers should get involved in bitcoin, accepting it as payment.

Bitcoin investors today - retail bitcoin investors - will never allow bitcoin to stabilize to the degree necessary to use it as a currency. Institutional investors CAN do that. It doesn't matter what their interest is, they will stabilize the price. (By the way, their interest would be in seeing bitcoin achieve steady long-term growth, which would be great).

Current bitcoin traders are really bad at investing, and this is why the price won't stabilize. They jump on board with buying and selling manias easily, which institutional investors do not. Institutional investors are smarter and do not allow assets to do that.

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June 08, 2017, 10:32:34 AM
 #7

Volatility has been an issue of Bitcoin (and also altcoins for that matter) right from the very start but this is something that may be hard to address. I am not familiar with your solution though so I am hoping that it can be discussed by the Bitcoin stakeholders soon. Volatility has been one of the many factors why there are some who shy away from using Bitcoin as a currency because it can stippled planning and can throw one to the edge of his seat anytime, so to speak. Though there are many Bitcoin holders who can be thrilled to watch the Bitcoin volatility.

Exactly, people shy away from bitcoin due to its volatility. Particularly, institutional investors shy away. And ironically, they would help reduce the volatility if they started investing in bitcoin.

ktabb
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June 08, 2017, 10:34:09 AM
 #8

...but there is a solution!

I wrote a post about this topic for anyone who is interested: http://demoinvestor.com/articles/00000001

The gist of it is that bitcoin is volatile because it doesn't have institutional investors, and this volatility limits its ability to be useful as a currency. The more stable bitcoin is, the more valuable it is as a currency. The more valuable it is as a currency, the more investors buy like crazy and push the price up, ending the stability.

The problem with using bitcoin as a currency currently isn't the volatility, its the high transaction fees and slow speed of transactions. With such high fees currently being experienced the last thing you want is more people using it as a currency.

Also the higher the marketcap of bitcoin the lower the volatility will be as it will take greater and greater amounts of money to affect the price.

I agree that transaction fees are also a problem for using it as a currency, but this is a problem that can be solved relatively easily. I believe volatility is a much larger problem. What vendor wants to accept bitcoin when that means they are taking on such high risk with the market being so volatile? Taking on that risk harms their business, so they cannot use bitcoin as a currency.

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June 08, 2017, 10:36:52 AM
 #9

So which is it, is it good that Bitcoin is volatile or bad? is it bad investors buy like crazy and push the price up or good?
You have started to see Bitcoin for what it really is, answer to mankind prayers for thousands of years nothing less than a miracle of this century, nothing you or any body else could do about it, this is what a decentralized monetary ecosystem should do and this is how it functions. and if you try to somehow manipulate this system then you'll lose certainly just like many have failed.

This is pretty vague, you don't really address the points I made in the article and I'm not sure what your point is. But to answer your first two questions:

1. It is bad that bitcoin is volatile
2. It is bad that investors go into buying manias and push the price up

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June 08, 2017, 11:54:35 AM
 #10

Quite frankly, this volatility is the reason why people, me included, got into this. The chance of bitcoin making huge leaps in value is what attract new investors. Of course this contribute to high prices which make it harder for new players to buy in but the subsequent crashes from people cashing out their profits somehow even that out.

Not much into economics but I believe it'll stabilize naturally as more and more bitcoin comes into circulation.
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June 08, 2017, 12:20:28 PM
 #11

...but there is a solution!

I wrote a post about this topic for anyone who is interested: http://demoinvestor.com/articles/00000001

The gist of it is that bitcoin is volatile because it doesn't have institutional investors, and this volatility limits its ability to be useful as a currency. The more stable bitcoin is, the more valuable it is as a currency. The more valuable it is as a currency, the more investors buy like crazy and push the price up, ending the stability.

Bitcoins is a short scheme to get rich quickly, you buy and hold it for some time and then sell it quickly to get your desired profits retailers who accepted Bitcoins from last year without converting it to fiat made a lot of money.Amazon could do the same.

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June 08, 2017, 12:49:51 PM
 #12

...but there is a solution!

I wrote a post about this topic for anyone who is interested: http://demoinvestor.com/articles/00000001

The gist of it is that bitcoin is volatile because it doesn't have institutional investors, and this volatility limits its ability to be useful as a currency. The more stable bitcoin is, the more valuable it is as a currency. The more valuable it is as a currency, the more investors buy like crazy and push the price up, ending the stability.

Bitcoins is a short scheme to get rich quickly, you buy and hold it for some time and then sell it quickly to get your desired profits retailers who accepted Bitcoins from last year without converting it to fiat made a lot of money.Amazon could do the same.

The fact that people got rich from holding bitcoins is not pointing that it's a scheme.
it's a young coin, and as such it has its own problems,
but as time pass it will get more and more stable.
The problem it must pass is many, volatility is just one of them.
the fees are too high
you can't spend it in any store
transactions takes too much time
etc.

but i'm sure it will be better as we'll learn how to treat it.
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June 08, 2017, 01:04:10 PM
 #13

Op, you are perfectly right with your assumptions that business would help stabilize price of bitcoin, but
there is no clear and open way for institutional investors money to flow into bitcoin, not yet.
We don't have bitcoin ETF and bitcoin is unregulated asset which most money managers can't even touch.
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June 08, 2017, 04:59:18 PM
 #14

Yes, it is true that Bitcoin possesses  the characteristic of being an investment asset rather than being a currency. Bitcoin was intentionally made as a digital cash or currency and as to what you've claimed, bitcoin needs to become more stable before being a full-blown currency. However, Bitcoin is also designed decentralized so the volatility cannot be controlled. I think the most probable way to gain stability despite of being decentralized is to gain more fame across the globe and to gain more users. That way, we can lessen the volatility.

Japan has already accept bitcoin as a currency last April and I haven't heard about them complaining towards the volatility of bitcoin. And next in line is Australia. So I wonder how do you say that it limits the growth potential of bitcoin.
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June 08, 2017, 10:17:05 PM
 #15

Yes, it is true that Bitcoin possesses  the characteristic of being an investment asset rather than being a currency. Bitcoin was intentionally made as a digital cash or currency and as to what you've claimed, bitcoin needs to become more stable before being a full-blown currency. However, Bitcoin is also designed decentralized so the volatility cannot be controlled. I think the most probable way to gain stability despite of being decentralized is to gain more fame across the globe and to gain more users. That way, we can lessen the volatility.

Japan has already accept bitcoin as a currency last April and I haven't heard about them complaining towards the volatility of bitcoin. And next in line is Australia. So I wonder how do you say that it limits the growth potential of bitcoin.

Even though it is decentralized, I think there are still measures that can be taken to stabilize the price. Government support is a big one imo. Institutional investment will help as well. And the biggest requirement is simply time.

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June 08, 2017, 10:25:41 PM
 #16

Op, you are perfectly right with your assumptions that business would help stabilize price of bitcoin, but
there is no clear and open way for institutional investors money to flow into bitcoin, not yet.
We don't have bitcoin ETF and bitcoin is unregulated asset which most money managers can't even touch.

Exactly, but that can change. An ETF could be approved in the future and there are other measures that can be taken to increase institutional ownership and stabilize the price.

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June 08, 2017, 10:45:16 PM
 #17

Volatility has been an issue of Bitcoin (and also altcoins for that matter) right from the very start but this is something that may be hard to address. I am not familiar with your solution though so I am hoping that it can be discussed by the Bitcoin stakeholders soon. Volatility has been one of the many factors why there are some who shy away from using Bitcoin as a currency because it can stippled planning and can throw one to the edge of his seat anytime, so to speak. Though there are many Bitcoin holders who can be thrilled to watch the Bitcoin volatility.
Volatility can't be considered as an issue for bitcoin itself. Too many peoples have considered the volatility of bitcoin as a benefit. That makes the market of bitcoin still alive and the circulation of the Bitcoin will always be running.

But the volatility gives a lot of impact to the seller. To exchange the bitcoin instantly is a must.

But the volatility can't be avoided if there will still be demand in the future.

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June 09, 2017, 01:01:47 AM
 #18

Volatility has been an issue of Bitcoin (and also altcoins for that matter) right from the very start but this is something that may be hard to address. I am not familiar with your solution though so I am hoping that it can be discussed by the Bitcoin stakeholders soon. Volatility has been one of the many factors why there are some who shy away from using Bitcoin as a currency because it can stippled planning and can throw one to the edge of his seat anytime, so to speak. Though there are many Bitcoin holders who can be thrilled to watch the Bitcoin volatility.
Volatility can't be considered as an issue for bitcoin itself. Too many peoples have considered the volatility of bitcoin as a benefit. That makes the market of bitcoin still alive and the circulation of the Bitcoin will always be running.

But the volatility gives a lot of impact to the seller. To exchange the bitcoin instantly is a must.

But the volatility can't be avoided if there will still be demand in the future.

Volatility is only a benefit for speculative investors. The investors who have the most money are not the kind of investors who buy highly volatile and risky assets. Those investors will find bitcoin more enticing if it is stable, so in order for bitcoin to really bring in a lot of money, it needs to be stable.

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June 09, 2017, 02:15:24 AM
 #19

...but there is a solution!

I wrote a post about this topic for anyone who is interested: http://demoinvestor.com/articles/00000001

The gist of it is that bitcoin is volatile because it doesn't have institutional investors, and this volatility limits its ability to be useful as a currency. The more stable bitcoin is, the more valuable it is as a currency. The more valuable it is as a currency, the more investors buy like crazy and push the price up, ending the stability.

Adoption leads to forward price movement the estimated future value growth metric is a factor in determining the price. Even when it was in its stable period people used it now at this aggressive people holding onto profits is fine there are always people who use and spend Bitcoin via a service to transact, although less users do that if the fee structure for a transaction makes that an unattractive option.

The best policy is to sell a portion of it enough to cover the cost of the product and take a small profit while leaving the remaining balance as a savings fund in the asset, which is easy a merchant can sell and convert Bitcoins at the point of sale never seeing the loss but getting dollar for dollar what they wanted within a very short frame of time, but by saving a small amount from each transaction overtime the odd dollar here and there does pile up and would not be as burdensome as it seems to implement.

(Could bring up a whole discussion about how small balance sigs being spent will be a pita cause of the size of the entry on send but that gets over complex)
But on institutional regulations the question is in what form do you really have in mind either way HODL.
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June 09, 2017, 08:32:57 AM
 #20

...but there is a solution!

I wrote a post about this topic for anyone who is interested: http://demoinvestor.com/articles/00000001

The gist of it is that bitcoin is volatile because it doesn't have institutional investors, and this volatility limits its ability to be useful as a currency. The more stable bitcoin is, the more valuable it is as a currency. The more valuable it is as a currency, the more investors buy like crazy and push the price up, ending the stability.

Your argument is correct but I won't fully subscribe to it by limiting volatility to the fact that it brings disadvantages to bitcoin by ignoring another potent factor which is what is attracting users in to the space and when they come in, the probability of staying is high and by so doing, the population increases to demand attention by the people and institutions that matters its after that, that the next phase of stability can begin.

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