Is Bitcoin really too volatile to be a useful currency?

[Uberse]

We read all the time that Bitcoin cannot be a valid currency because it is too volatile. The argument is that people won't spend bitcoins when their fiat value spikes. But wouldn't that only be true if everyone knew exactly how high the price was going to go and when it was going to get there? And in a volatile environment, isn't each transaction a zero-sum game? Would a decisive number of people consistently find such risk objectionable?

Does bitcoin's volatility hamper the dark web? Has anyone seen headlines like "Dark Web Sales Fall Flat as Bitcoin Skyrockets"? Are dark marketeers so careless of their money? And has anyone ever heard experts declare that stocks' volatility in effect makes the money that purchased them equally volatile --  although that is exactly what such volatility does?  Do people hold off using a shopping coupon in hopes that next week's Sunday paper will bring a better deal?

Volatility is a strawman. Merchants will adjust their prices and people who need a good or service will use whatever currency is the most practical or convenient for them at a given moment. Ultimately we want what we want now, and tomorrow be damned.

[avikz]

Volatility of bitcoin price is a serious business challenge. Even though bitcoin shows good promise, but in cash rich business like general stores and fast moving consumer goods business, the volatility throws a significant profitability challenge. Unless we find a solution to immediately settle the funds received in bitcoin, it will remain as a major roadblock for bitcoin to be accepted as a normal currency. Let me explain why,

Day 1:
Bitcoin price: $10,000
Product "A" cost: $100 or 0.01 btc
Seller sold 2 units of "A" and received 0.02 btc.

Day 2:
Bitcoin price: $12,000
Product "A" cost: $100 or 0.0084
Seller sold 5 units of "A" product and received 0.042

Day 3:
Bitcoin price: $14200
Product "A" cost: $100 or 0.0070
Seller sold 3 units of "A" product and received 0.021

So on day 3, the seller should hold (0.02+0.042+0.021) = 0.083 bitcoin for selling 10 units of "A" product whose dollar value in fiat is $1,000. TIll day 3, bitcoin price was increasing and the seller was receiving less amounts of bitcoins for the same value in dollar. Imagine, the bitcoin price crashed on day 4 and came down to $9,500. Lets calculate again,

Day 4:
Bitcoin price: $9,500
Bitcoin holding: 0.083
Dollar value: (0.083 X $9500) = $788.5

So on day 4, the seller is actually making a loss of $211.5 for the $1000 product. So unless that seller is really optimistic about bitcoin, he won't favor it to be used as a currency in his store. Either he would need a service which will help him to settle every bitcoin trade immediately using an intermediary or simple don't accept it.

Probably a big company can handle such losses, but a small trader will not be able to handle this where every penny counts. That's the business challenge I am referring to and it is a major roadblock for bitcoin to be accepted as a mainstream currency. 

[JesusCryptos]

Yes it is too volatile. Imagine prices having to change every second on every trade portal like Amazon. Moreover, if it does not solve the problem of the high fees, it is unusable as a currency also for this reason.

[tipac]

For me the whole crypto thing is garbage, i just use it because people want it.

[Uberse]

Yes it is too volatile. Imagine prices having to change every second on every trade portal like Amazon. Moreover, if it does not solve the problem of the high fees, it is unusable as a currency also for this reason.

I see your point of course, but to get some perspective, in your reply change Amazon to E-trade and currency to store of value.

[Uberse]

For me the whole crypto thing is garbage, i just use it because people want it.

Exactly so. May we infer that you are a merchant?

[Uberse]

Volatility of bitcoin price is a serious business challenge. Even though bitcoin shows good promise, but in cash rich business like general stores and fast moving consumer goods business, the volatility throws a significant profitability challenge. Unless we find a solution to immediately settle the funds received in bitcoin, it will remain as a major roadblock for bitcoin to be accepted as a normal currency . . . Probably a big company can handle such losses, but a small trader will not be able to handle this where every penny counts. That's the business challenge I am referring to and it is a major roadblock for bitcoin to be accepted as a mainstream currency. 

Coinbase does offer an instantaneous-conversion service for businesses (although they probably charge well for it). But you make a perfectly valid point. Yet in that scenario it is at least possible that for the merchant in question, the bitcoin sales were in addition to what he would have sold anyway. In this early-adapter phase, it is certainly a possibility. But again, tomorrow those "losses" could become gains. There is no way of telling. In the end it comes down to the cost of instantaneous conversion vs a transient bookkeeping loss that might turn into a very real long-term gain. I think a Bitcoin sticker in the window would at least do no harm.

[Al-e_x]

Yes indeed true bitcoin is really too volatile, But in my opinion it is common for bitcoin to fluctuate. And many bitcoin factor is very fluctuate one of them such as:
1. Situations where more bitcoin traders than bitcoin users.
        It can be understood that being a bitcoin user is a bit difficult because the merchant receiving bitcoin is still relatively small.
2. News spread globally.
        Ordinary people who do not understand well about bitcoin become very affected by various positive and negative news spread in the media.
3. Bitcoin hacked or carried away by other parties.
        Investors and new bitcoin users jump into the world of cryptocurrency will be very frightened if they hear if any party loses bitcoin for being hacked.

And many more things that affect the bitcoin is very volatile.

[odolvlobo]

Volatility is an impediment to use as a currency right now, but it won't be in the future. I think high fees are the biggest impediment to adoption, right now and in the future.

[Uberse]

Volatility is an impediment to use as a currency right now, but it won't be in the future.

That's right. Buyers and sellers alike will take its volatility in stride.

[weav]

It is a double edged sword i think , the volatility attracted and still attract a lot of new people to the space. But is is nearly impossible to pay with it without immediately swapping it for usd. So there is the biggest challenge for the bitcoin team at the moment. Maybe a system like some other coins have where spending coins has an advantage opposed to just holding it.

[franky1]

volatility is not the issue.

for years merchants accepted bitcoin because they used bitpay and coinbase that converted it to fiat at receipt so when a shopping cart showed $100.. the cart converted it to a bitcoin amount to display to customers and then the cart service gave the merchant $100, within a allotted time.. thus never a problem

the math example by avikz is wrong due to avikz showing a silly example where the seller waited until the price dropped before converting.
firstly
merchants don't wait
secondly
if your going to wait your not going to finally give in and sell on the worse day of the week, so that example is wrong.
funnily if the seller exchanged on day 3 - $14200 he would have been $178.60 UP..
but yea aviks selective picked an obscene scenario, to make an obscene point

the problem is not price volatility.. the problem is the cost to do the transaction (the tx fee)
also bitcoin is not good for real world brick and mortar merchants with checkout lines, where it takes 10mins+ to guarantee the payment is not reversible.
its like watching an old lady infront of you counting out pennies for 10 minutes, resulting in bad customer service and complaints by the other customers in the queue waiting

bitcoin had a very niche market for online products and services that needed to be delivered and as such allowed time for confirmation before dispatching products.
but it did not work well for small items of under $100 due to the fact that the TX fee was growing to a few dollars just to make a trade.

which could have been avoided with simple code in the form of a tx priority fee formula.. but instead devs just went ahead, lets fees spiral out of control to then advertise their banking2.0 second layer services.

[StarKay]

Firstly, Bitcoin is not a currency as we would like to believe, for now it is a make believe currency by crypto lovers. This accounts for its low volume in global trade.
Secondly, if Bitcoin were to be a currency it won't be as volatile as we're seeing. It's volatility is in relation to fiat. Bitcoin as a currency would not need fiat equivalent to be used as a means for transactions. 
E.g 1BTC = 1 Toyota Camry,
1000Satoshi = 1Pizza
Fiat equivalent wouldn't have mattered.

Presently, Bitcoin serves speculative purposes hence its volatility. Maybe things would be different tomorrow when Bitcoin (or it's derivative) becomes accepted as the legal tender.

[Random Seller]

I think volatility also affects people willingness to spend their bitcoins.

People hold bitcoins in hope that the value will increase.

For example:
If you think 1 BTC will be worth $1 million in the future, would you use 1 BTC to buy a car that’s priced at 10k today?

[Granslam]

Yes, Sad to say. Bitcoin's high volatility rate is one of the huge drawbacks of this amazing currency. So much that it couldn't be used as a currency because any country that would declare to use bitcoin as their respective national currency is sure to fall. Let's just hope that one day bitcoin's value would be stable so that it would be of greater use.

[entrepmind23]

Bitcoin can only be a useful currency if all people are using bitcoin in which case there is no need to convert it to fiat which is the reason why we can say that bitcoin is volatile. If you are buying something in the grocery and the price is in bitcoin, you pay in bitcoin and your change is in bitcoin and there is no need to convert to fiat then the profit and loss of your money would be easily computed. It is not possible now because all are converted to fiat since not all businesses are involved with bitcoin yet so this is the hindrance why bitcoin cannot be totally use yet as a currency because you might end up losing more if the bitcoin's value drop thousands of dollars the following day.

[Uberse]

If you think 1 BTC will be worth $1 million in the future, would you use 1 BTC to buy a car that’s priced at 10k today?

If you have $10K today, would you use it to buy a bitcoin or a car? You have no idea how far in the future that million dollar bitcoin might be, but you definitely know whether you need a car now. And if you start to save up another $10K by working a better job that your new car takes you to, bitcoin might tank any number of times, giving you buying opportunities. Ultimately, you have to balance risks and opportunities.

[kiver]

Volatility of bitcoin price is a serious business challenge. Even though bitcoin shows good promise, but in cash rich business like general stores and fast moving consumer goods business, the volatility throws a significant profitability challenge. Unless we find a solution to immediately settle the funds received in bitcoin, it will remain as a major roadblock for bitcoin to be accepted as a normal currency. Let me explain why,

Day 1:
Bitcoin price: $10,000
Product "A" cost: $100 or 0.01 btc
Seller sold 2 units of "A" and received 0.02 btc.

Day 2:
Bitcoin price: $12,000
Product "A" cost: $100 or 0.0084
Seller sold 5 units of "A" product and received 0.042

Day 3:
Bitcoin price: $14200
Product "A" cost: $100 or 0.0070
Seller sold 3 units of "A" product and received 0.021

So on day 3, the seller should hold (0.02+0.042+0.021) = 0.083 bitcoin for selling 10 units of "A" product whose dollar value in fiat is $1,000. TIll day 3, bitcoin price was increasing and the seller was receiving less amounts of bitcoins for the same value in dollar. Imagine, the bitcoin price crashed on day 4 and came down to $9,500. Lets calculate again,

Day 4:
Bitcoin price: $9,500
Bitcoin holding: 0.083
Dollar value: (0.083 X $9500) = $788.5

So on day 4, the seller is actually making a loss of $211.5 for the $1000 product. So unless that seller is really optimistic about bitcoin, he won't favor it to be used as a currency in his store. Either he would need a service which will help him to settle every bitcoin trade immediately using an intermediary or simple don't accept it.

Probably a big company can handle such losses, but a small trader will not be able to handle this where every penny counts. That's the business challenge I am referring to and it is a major roadblock for bitcoin to be accepted as a mainstream currency. 

really good explanation for bitcoin  volatility problem i my self couldn't of better unfortunately i don't smerit anymore   but do you think if bitcoin and other crypto assets  got a world wide  acceptance as a form of payment will make it reach the point of stabilization >? that's my opinion which i hope iam right about or you could maybe refer to a better solution on the volatility  of crypto market    

[jrrsparkles]

Yes,it is too volatile to be used as a currency.The price of bitcoin was around $20K  before some weeks but for now it is around $8000 so the price decreased more than a half so if a merchant accepts bitcoin then he will face srious losses when condition like this.BUt we are still eraly at the using of crypto currency in future the price will get stabilize at some point and we can use it as a currency.

[dylanc]

It is volatile now, but it may stabilize in the future. Who knows what will happen? But I think its volatility doesn't affect its potential uses.