You are arguing with a shitcoin scammer, please don't. You know better than that.
People who say that is is a feature are wrong or just stuck in the past, but you are partially wrong too with they way that you proposed this topic. I would rephrase this title to the following: Volatility was a feature, now it is a bug. I believe that this more accurately reflects the progression that Bitcoin has experienced.
I can agree with that, the price discovery phase at the start was and is of course important. And it is probably still ongoing: the price/capitalization of Bitcoin is now closer to its "mature" market value, but there are still hardly explainable big fluctuations. We went from 20k to 120k and back to 60k in only 3 years without a convincing fundamental reason -- with the exception of the ETFs and Trump's announcements which explained a part of the uptrend, but not the downtrend.
Perhaps a part of the task to reduce volatility further is to build better fundamental Bitcoin theories. While there was some advancement in fields like Total Addressable Market, I've seen less than a year ago a supposed "business paper for investors" where this (reasonable) theory was still contrasted with clear pseudoscience like Stock to Flow. Most of this field is still very shallow after 15 years.
There was an interesting post in the German forum about that, by
user virginorange, where he calculated TAM based on the concept of "monetary premium", comparing it with other investment assets like real estate and gold. I don't know if he has translated that post.
The thing about theories is that we basically have no theories at all. The views through which Bitcoin is viewed can be put into 2 big groupings, bullshit anti-camps and repeatable pro-camps. In the first you will find the idiots that are repeating textbook fraudulent definitions of inherent values and other stuff, and in the other you will see people who are just repeating the same old ideas that are very limited. For example, while Bitcoin is able to fulfill the function of (P2P digital) cash seeing it as only that is extremely limited and wrong. So many things can be done with it, and in many different ways, contrary to what is possible with normal cash. Even academic papers are often committing these errors when it comes to Bitcoin and only analyze it using the same assumptions as others. Therefore, I absolutely agree that more fundamental theories are required. What is written by virginorange seems interest and sadly has not attracted much attention in that section either.
Perhaps someone should translate the whole thread (not with AI) and bring it forth to the English section. It would be worthwhile since the numbers are now a bit outdated.
However, he is absolutely right that Monero is quite stable and that it has a lot to do with the lack of various derivatives. However, he is wrong to claim that it is possible to design such a currency.
I disagree with that. I think Dai showed that you can design a reasonably stable decentralized currency. The problem is that Dai itself is not 100% decentralized. But the mechanisms it is based on (which are a refinement of earlier efforts like BitShares) seem to work. I'd like to see an effort to port these mechanisms to a 99% decentralized project - 99% because at least from today's point of view you still depend on centralized oracles for the assets you base the "stability" measure on.
I don't consider a stablecoin that is tied to another currency, which is just another form of peg, stable. The dollar itself is not stable, and neither is gold, so anything that is pegged to them will inherit their own volatility. While these proxies will be "stable" in the sense that they will retain practically the same value in the number of units $1.00, that does not mean that their value is actually stable -- it is simply tied to 1 unit of USD. The reason why I said that it is impossible to do this is because it conflict with the idea of a free market. In this sense,
stablecoins do not have a stable value -- they have a stable peg. Any USD stablecoin inherits the volatility of USD.
If something does not change in the rate of decrease in both the upside and downside volatility, Bitcoin is destined to die. Do the simulations and you will see that this is not a sustainable model, and we will experience a big crisis soon unless something changes.
Your numbers until here are correct afaik (I have often cited similar numbers and calculated them manually). BTW: I would not say "Bitcoin is going to die" (although I remember having used the word "die" in another post here
) but its current price discovery would suffer a considerable setback. I think in this case a scenario like I paint
in this little horror fairytale (crash to perhaps as low as $1000) could be possible in a few years. It can recover from that, but only with a change in investment behavior (less speculation, more usage/"real saving", Wall Street exit).
Alright, you have a point. It does sound a bit like hyperbole, maybe I should have clarified that it means for all practical purposes. I was writing about this in another thread just today. Were Bitcoin to go back to something like $1000 as in your fairy tale, and not recover to new territories we can consider it dead for all practical purposes. If one wants to be technologically and semantically precise, as long as there is 1 node then it is never going to be dead -- but in that scenario it is practically useless and a shell of its former self. I don't consider that the living dead are alive. I hope that explanation helps correct my error.
38.15% reduction in return on average per cycle (upside).
15.74% reduction in downside risk on average per cycle.
I don't know if it's a good idea to include the current cycle already in that calculation, as we don't know if we've reached the bottom. IF we reached the bottom, I'm even quite optimistic that the "volatility change" I'm advocating for is already underway, because a -50% bear would be a phenomenal improvement from the -75-85% we're accustomed to of the last 3 cycles. Even a fall to the 50,000 area, which is not unlikely considering the current geopolitical tensions and economic insecurity sentiment, would still be a stronger improvement than the almost negligible 2018-22 improvement. The problems would start if we fall much lower than that. Then we can say that nothing really changed.
You are right to mention that, but it is not a fully applicable criticism.
The numbers were a bit of a quick and dirty simulation to show that the trend in which we are heading this way is not sustainable. There are other issues with it too, for example, taking the average of the decreases -- while it is better than taking the change between the last 2 points, it does not account for differences in the rate of change and that would require some sort of estimation for my example. Anyway, that is why I wrote that it is in progress at that point. -50% would be a great result as you say, but even with that the overview for the future does not look bright. If we do another -75-85% the future looks really grim!
Overall, I agree with your conclusions. I would propose to use the "yearly average price" (WMA 52 or daily SMA 256) for these calculations though. Maybe I'll prepare this for the next post here or even it may make sense to open a new thread.
Please do, but I think it would be better to keep them here. As I criticized in my post, people need to stop rushing to make a post if they have never run any data on these things. I am not trying to claim that the way that I did the math is the most correct way, but it is part of building the picture. General statements based on personal beliefs and biases regarding these topics are useless here. Your calculation from another perspective or calculations by others are greatly welcome to enhance the complete. perspective.
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