Will Bitcoin volatility prevent adoption?

[flaviojr123]

BTC main value proposition is to be a decentralized currency and/or value store. 1. The BTC community desires it to be widely adopted by the population. But price volatility prevents so. A significant amount of people cannot afford the cost of volatility.

A big argument against inflation is that it raises the cost of business. The same argument can be used to criticize BTC. BTC volatility raises the cost of doing business if BTC is your only capital. If we desire BTC adoption to rise we must take care of BTC price fluctuation. BTC demand is highly unpredictable while supply is predictable, resulting in unpredictable prices. That means volatility can't change unless demand stabilizes.

Common counter-arguments:
3 "BTC is volatile but it always rises in the long-term so it doesn't matter". Is it does, it increases the cost of business. I can't start a bakery with only BTC capital because in the first dip I will have to take loans to pay wages.
3.1 "Oh, but you can't see that happening because you can't see far enough." This sounds like a highly utopian view. Pragmatically, we need a path from here to there, I turn to you and ask, how can we get there?
3.2 "Okay, it doesn't matter for some people and that's all". Okay, then BTC will be a niche store of value, contradicting #1.
4 "Demand will stabilize in the long term." How?
5 "Price stability is a myth, market demands always change them" Sure, it's a myth. Yet it is desirable. If we are designing the system, shouldn't we take that in account? "No, we shouldn't, if you want to do that go and create your own coin." Okay, then BTC will be a niche store of value, contradicting #1.

What incentives do savers have to buy-in on a inflationary money supply? The incentive of stability? That's one reason people agree being exposed to the USD. Am I defending inflation tax? No. I'm asking could there be benefits to having a transparent voluntary contract with varying money supply rate. And I'm leaning towards a yes to this question.

If the supply of a coin could be influenced by price then we would have a more stable coin, the cost we pay is inflation. The issue then becomes an optimization issue, on what would be a proper trade-off.

What are your thoughts?

[shahani]

Many people do not want volatility and deflation system, but how can bitcoin operate smoothly if these system will not apply? Bitcoin cannot move a long life operation if volatility and deflation will not apply. It is the way on how the management provide a good balance system between users and operators.

[Agaton]

Your truly right that volatility can prevent adoption, because when a certain business institition adopt cryptocurrency and for the next days the price will go down it comes for a big losses, and to avoid losses it is better to used real money which value is fixed, and cryptocurrencies are only used to make a real money, because all cryptocurrencies are having a large value when change it into a real paper money.

[atrocityx]

Yes I do think so but I still maintain that BTC's largest use case is just an intermediary between USD and alt coin exchanges.. and BTCs volatilty really helps make money in this case.. but as far as currency and using for payments absolutely.. but volatility would be a 3rd reason behind slow and heavy transaction fees.

[LogitechMouse]

Yes bitcoin's volatility prevents mass adoptions woldwide. Lets take this situation, a company X gives salary to the employees in bitcoin and suddenly the price of bitcoin increases and after few days it decreases again. It will be a huge loss for the company and what is the reason? Volatility.

In my opinion, bitcoin can be adopted but not a mass adoption because volatility is preventing it.

[balanza96]

Exactly as posted above. As a matter of fact Microsoft and Valve for example have stopped accepting Bitcoin due to it's volatility.

[jtipt]

Exactly as posted above. As a matter of fact Microsoft and Valve for example have stopped accepting Bitcoin due to it's volatility.

Microsoft still does accept bitcoin, AFAIK.
But yeah point being, so much volatility makes makes BTC unusable as an currency. Bitcoin would still be usable if the volatility was restricted to few hundred $, like say for past 2-3 days BTC is going up and down within $8000-$8500 this much of volatility would be fine.

[entrepmind23]

The idea of bitcoin being use as currency by the masses is still far from reality because of the volatility and the limitations when it comes to technology since some places in the world has limited access or no access at all to internet so they cannot use cryptocurrency. Bitcoin is being use now as store of value instead of a currency because it is not practical to use it as such since the fee is more expensive than the actual value of something if it is use as payment to small value transactions.

Unless the fiat currency is eliminated which I think is less likely to happen then volatility of cryptocurrency will continue. It may come to a point where many people will use cryptocurrency thus a mass adoption but it will not become THE currency that will be use because fiat will still be the practical one and accessible by all people.

[amishmanish]

BTC main value proposition is to be a decentralized currency and/or value store. 1. The BTC community desires it to be widely adopted by the population. But price volatility prevents so. A significant amount of people cannot afford the cost of volatility.

A big argument against inflation is that it raises the cost of business. The same argument can be used to criticize BTC. BTC volatility raises the cost of doing business if BTC is your only capital. If we desire BTC adoption to rise we must take care of BTC price fluctuation. BTC demand is highly unpredictable while supply is predictable, resulting in unpredictable prices. That means volatility can't change unless demand stabilizes.

To decide whether Bitcoin volatility will prevent adoption, maybe we should look at whether it has prevented adoption till now. The people who have been doing business with Bitcoin are pioneers with enough understanding to take on the risks you have mentioned above. Those who has bitcoin to spend have also been doing it to increase circulation and popularity.
A simple way to do it was by using BTC to spend and buying the equivalent in BTC on exchanges. For the merchants, They sell for BTC and convert part of it to Fiat to keep shop running. This is still an enthusiast's game and we haven't reached the stage where BTC should be your only way of doing business.

The primary purpose here is redistribution of BTC. It should be seen as very early stages of a long cycle of adoption. The next paradigm shift is going to come when Lightning Network and cross-channel swaps are fully deployed. Those will enable micro transactions and things like pay-per-view for content producers in the knowledge economy. Once this starts, its upto the participants to decide on how much of fiat they want to maintain as a hedge against bitcoin volatility. The path to adoption seems straight-forward enough but its a community project. Community being the catch word, nobody is going to come and propose that BTC is the best. Like say someone shilling a clone and claiming that its fast and cheap without explaining that it is so because of lack of scale.

What incentives do savers have to buy-in on a inflationary money supply? The incentive of stability? That's one reason people agree being exposed to the USD. Am I defending inflation tax? No. I'm asking could there be benefits to having a transparent voluntary contract with varying money supply rate. And I'm leaning towards a yes to this question.

The benefits to saving in BTC and not just in USD are many fold. A large part of the value that BTC has comes from its usage as a truly borderless currency. We still have to see how regulation plays out and these truly are the issues the community should be focussing on. The value also comes from underlying infrastructure and its usage. These initial days are filled with scams and clones but it should rationalize over time. If it doesn't, it will be the end for all these clones. Bitcoin movement on the other hand can still sustain itself for its supporters are much more clear about their motivations and aims.
Savings in USD or any other Fiat are subject to inflation as well as the "screw-up tax"  that the public pays when central banks and banking behemoths screw up. BTC is much better in these regards.

If the supply of a coin could be influenced by price then we would have a more stable coin, the cost we pay is inflation. The issue then becomes an optimization issue, on what would be a proper trade-off.

Supply is determined by mining algorithm. Number of coins produced per blocks is part of the consensus rules and these cannot simply be changed by linking them with price. Its an idea alright, but i don't see any possible scenario on how this could be implemented without some sort of central control. We wrap back to the same question, do we need value stabilization when it is chiefly a centralized kind of decision?
The centralization associated with any stabilizing attempt is probably the reason nobody wants it.

[amishmanish]

To the OP, you sound like you are actually thinking to care enough about these questions. Would love to have you continue the discussion without this thread turning into another repository of generic comments.. LOL..Meriting your post so we can keep this working.
Do it in your own time. I'll keep a tab through "new replies". Thanks!

[mezzaluna]

BTC main value proposition is to be a decentralized currency and/or value store. 1. The BTC community desires it to be widely adopted by the population. But price volatility prevents so. A significant amount of people cannot afford the cost of volatility.

A big argument against inflation is that it raises the cost of business. The same argument can be used to criticize BTC. BTC volatility raises the cost of doing business if BTC is your only capital. If we desire BTC adoption to rise we must take care of BTC price fluctuation. BTC demand is highly unpredictable while supply is predictable, resulting in unpredictable prices. That means volatility can't change unless demand stabilizes.

Common counter-arguments:
3 "BTC is volatile but it always rises in the long-term so it doesn't matter". Is it does, it increases the cost of business. I can't start a bakery with only BTC capital because in the first dip I will have to take loans to pay wages.
3.1 "Oh, but you can't see that happening because you can't see far enough." This sounds like a highly utopian view. Pragmatically, we need a path from here to there, I turn to you and ask, how can we get there?
3.2 "Okay, it doesn't matter for some people and that's all". Okay, then BTC will be a niche store of value, contradicting #1.
4 "Demand will stabilize in the long term." How?
5 "Price stability is a myth, market demands always change them" Sure, it's a myth. Yet it is desirable. If we are designing the system, shouldn't we take that in account? "No, we shouldn't, if you want to do that go and create your own coin." Okay, then BTC will be a niche store of value, contradicting #1.

What incentives do savers have to buy-in on a inflationary money supply? The incentive of stability? That's one reason people agree being exposed to the USD. Am I defending inflation tax? No. I'm asking could there be benefits to having a transparent voluntary contract with varying money supply rate. And I'm leaning towards a yes to this question.

If the supply of a coin could be influenced by price then we would have a more stable coin, the cost we pay is inflation. The issue then becomes an optimization issue, on what would be a proper trade-off.

What are your thoughts?

You have good points. It's true that volatility prevents adoption, in order to have a mass adoption of a certain currency it is recommended to have a stable value. It indicates a stable economy too.

[arpon11]

Companies including online shop are not adopting bitcoin now because of its volatility and for them to adopt bitcoin it most be stable. Bitcoin is the best form of money and because is the best form of money it most be money like. Many of us are treating bitcoin as stocks and commodities and using bitcoin as an investment opportunities but bitcoin should be see first as money and as a mode of payment for  good and services. We undermine the value of bitcoin as money if we use it as stocks or commodities.

[balintong15]

volatility is unpredictable. it continues to change whatever things it can change. it is likely to become dangerous or out of control. but volatility is not good in a way that if what was planned, then it should be followed but sometimes it is volatilized. bitcoin volatility can not prevent adoption. i believe that it is dangerous to companies like internet companies. changing of rules and other things that people knew about can lead to chaos and troubles. people will protest and sometimes leaders or investors will pull out their investments if that happens.

[superjeyy]

Yes bitcoin's volatility prevents mass adoptions woldwide. Lets take this situation, a company X gives salary to the employees in bitcoin and suddenly the price of bitcoin increases and after few days it decreases again. It will be a huge loss for the company and what is the reason? Volatility.

In my opinion, bitcoin can be adopted but not a mass adoption because volatility is preventing it.

What LogitechMouse said is true, the volatility is really a great factor in considering adoption because there are many risks involved in it. The volatility can directly result to losses which is something many of us is trying to prevent so that unfortunate circumstances would not occur. However, I really think people should look into other factors aside from the volatility since Bitcoin has a lot of potential. If we can be able to adapt to its volatility and consider margins for its movement then adoptation would not be much of a problem.

[Nhor1011]

   Yes bitcoin volatility prevent adoption specialy for those company that only pay their worker at fixed salary and their business also affected.They can't use bitcoin for there company,because it is changeable,they are at risk everytime price drop. I think bitcoin is just invented for investment which is you can buy if price low and sell if the price is high for you to gain more profit.

[Nellayar]

Many people do not want volatility and deflation system, but how can bitcoin operate smoothly if these system will not apply? Bitcoin cannot move a long life operation if volatility and deflation will not apply. It is the way on how the management provide a good balance system between users and operators.

I also wanted to prove that volatility of bitcoin makes the market equillibrium wherein the demand and supply affects the price of the bitcoin. The volatility of bitcoin makes us more profitable. I know that many speculations are against of its volatility but bitcoin will never be a good coin if the price of it will gradually move.

[vv181]

I'm sure many merchants could make a Bitcoin adaption, but I believe they will sell the profit immediately. They just want a profit in FIAT. So I doubt the volatility will prevent the adoption. The problem is could be the anonymity that company won't deal with.

[digaran]

I'm sure many merchants could make a Bitcoin adaption, but I believe they will sell the profit immediately. They just want a profit in FIAT. So I doubt the volatility will prevent the adoption. The problem is could be the anonymity that company won't deal with.

You could have your profit in FIAT immediately by using a payment processor, they would charge their fees and pay you FIAT, Bitcoin's volatility is not an issue. all the merchants and all the people using Bitcoin and or any cryptocurrency for their advantages are making %2-3 of total daily transactions and trading volume. the remaining %97-98 are taking advantage on each other because there is no central authority to fear.

Is there a country without any government? they all have one, because people need centralization, the only mass adoption for cryptocurrency is the adoption of countries, masses are not capable of bypassing their governments.

[Pepito Manaloto]

It is a sort of a factor. Ofcourse, volatility on n investment as well as a currency is  bit of a downside. But it cn also be n advntge where profit will be made from. They may buy during the dumps and sell whenever its market vlue is on its peak. But also, only few people will be thinking of this thing so it might be a reason for some countries on not to adopt cryptocurrencies including Bitcoin. Let's just hope that in the future this problem will be solved.

[farhaan]

Exactly as posted above. As a matter of fact Microsoft and Valve for example have stopped accepting Bitcoin due to it's volatility.

But microsoft had once again started to accept bitcoin payments.But at the same time, we should not forget that steem has totally dropped accepting bitcoin payments.