Bitcoin does not have a volatility problem!

[buddhamangler]

I'm sick and tired of hearing this over and over.

Bitcoin has a "Market Cap" of 8 billion dollars where the perceived "value" hangs by a thread almost all the time.  What regulation will be passed?  Will China ban it?  OMG Amazon takes Bitcoin.  OMGWTFBBQ the banks are shutting down accounts.  Add to this the huge potential of Bitcoin itself and you have a recipe for volatility.  This is not a bad thing!  Price discovery for Bitcoin will continue for a long time.

Stocks regularly gain/lose huge percentages of value, do you ever hear that there is a "volatility problem" with the stock market?  NO

This perception that Bitcoin cannot be a currency because it is so volatile has to stop.  It IS a currency now.  The volatility is caused by normal price discovery on something that "could" change the world.

Is anyone else sick of this?

[1714917123]

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[roslinpl]

I'm sick and tired of hearing this over and over.

Bitcoin has a "Market Cap" of 8 billion dollars where the perceived "value" hangs by a thread almost all the time.  What regulation will be passed?  Will China ban it?  OMG Amazon takes Bitcoin.  OMGWTFBBQ the banks are shutting down accounts.  Add to this the huge potential of Bitcoin itself and you have a recipe for volatility.  This is not a bad thing!  Price discovery for Bitcoin will continue for a long time.

Stocks regularly gain/lose huge percentages of value, do you ever hear that there is a "volatility problem" with the stock market?  NO

This perception that Bitcoin cannot be a currency because it is so volatile has to stop.  It IS a currency now.  The volatility is caused by normal price discovery on something that "could" change the world.

Is anyone else sick of this?

Hi
You must breath and relax.

1st - Bitcoin is not a currency. You might think it is because you can pay with Bitcoin for many cool and different things. But Bitcoin is not a currency. It is a digital currency. A currency for people over the Interweb.

But It is not a currency at the moment and it is nothing BAD! When Bitcoin will became a currency - regulations will come to it. I mean gov regulations.

2nd - There is a lot of volatility in Bitcoin And most of us likes it when we talk about market price volatility

3rd - Yes. Price is not yet discovered. And more likely it is sure that it will be much much higher after few years.



Regards.

[beetcoin]

I'm sick and tired of hearing this over and over.

Bitcoin has a "Market Cap" of 8 billion dollars where the perceived "value" hangs by a thread almost all the time.  What regulation will be passed?  Will China ban it?  OMG Amazon takes Bitcoin.  OMGWTFBBQ the banks are shutting down accounts.  Add to this the huge potential of Bitcoin itself and you have a recipe for volatility.  This is not a bad thing!  Price discovery for Bitcoin will continue for a long time.

Stocks regularly gain/lose huge percentages of value, do you ever hear that there is a "volatility problem" with the stock market?  NO

This perception that Bitcoin cannot be a currency because it is so volatile has to stop.  It IS a currency now.  The volatility is caused by normal price discovery on something that "could" change the world.

Is anyone else sick of this?

they don't swing as violently as bitcoin, which is the point. bitcoin can lose 20% of its value in a single day. with stock shares, it doesn't drop that fast.

dropping 10% in one day (say going from $600 to $540) is not really out of the norm for bitcoin. if a stock dropped by 10% in one day, it would be considered a crash.

[Daniel91]

I'm sick and tired of hearing this over and over.

Bitcoin has a "Market Cap" of 8 billion dollars where the perceived "value" hangs by a thread almost all the time.  What regulation will be passed?  Will China ban it?  OMG Amazon takes Bitcoin.  OMGWTFBBQ the banks are shutting down accounts.  Add to this the huge potential of Bitcoin itself and you have a recipe for volatility.  This is not a bad thing!  Price discovery for Bitcoin will continue for a long time.

Stocks regularly gain/lose huge percentages of value, do you ever hear that there is a "volatility problem" with the stock market?  NO

This perception that Bitcoin cannot be a currency because it is so volatile has to stop.  It IS a currency now.  The volatility is caused by normal price discovery on something that "could" change the world.

Is anyone else sick of this?

Hi
You must breath and relax.

1st - Bitcoin is not a currency. You might think it is because you can pay with Bitcoin for many cool and different things. But Bitcoin is not a currency. It is a digital currency. A currency for people over the Interweb.

But It is not a currency at the moment and it is nothing BAD! When Bitcoin will became a currency - regulations will come to it. I mean gov regulations.

2nd - There is a lot of volatility in Bitcoin And most of us likes it when we talk about market price volatility

3rd - Yes. Price is not yet discovered. And more likely it is sure that it will be much much higher after few years.



Regards.

I can agree with the most points but I think that very soon we will have to give new definition of currency.
I think concept that currency must be in the paper form, and that some bank or country must be behind, soon will be over.
Of course, this will not happen overnight but gradually, as Bitcoin come closer to the ''mainstream'' status.

[wolfYella]

The volatility problem that bitcoin has is that it's price is not stable.

[Meuh6879]

volatility ?
this month : 10 Euros MAX of low/high value = 450 Euros for 1 BTC.

[adoni]

Bitcoin IS a currency

It's a perfect example of a fiat currency, just like the USD is a fiat currency.

ANYTHING a group of people AGREE to accept in exchange for goods and service is by definition a fiat currency

While a real 'currency' has something backing it, there are no real currencies today, it's all FIAT CURRENCY

A fiat currency is only as good as its TRUST FACTOR

Be it shells or coconuts or sticks or worthless pieces of paper it's all fiat, with the exception of coconuts, that is something of VALUE since it's a food that can also be processed into coconut products.

Much of recent history has been currency, backed by Gold or Silver, but today all currency is FIAT and no one can argue that btc is not now a fiat currency, IT IS

[Este Nuno]

Bitcoin is presented as a currency to be used on a daily basis. A stock is an entirely different instrument which is not meant to be exchanged for value often, but generally meant to be an investment that is held over time.

You can't compare the two. And there are lots of stocks that are much less volatile than bitcoin. Someone in finance can give you the hard numbers to back this up as well. Volatility is measured, and even without the hard numbers a simple look at many popular stock charts over the last 5 years will show less volatility than BTC.

[beetcoin]

Bitcoin is presented as a currency to be used on a daily basis. A stock is an entirely different instrument which is not meant to be exchanged for value often, but generally meant to be an investment that is held over time.

You can't compare the two. And there are lots of stocks that are much less volatile than bitcoin. Someone in finance can give you the hard numbers to back this up as well. Volatility is measured, and even without the hard numbers a simple look at many popular stock charts over the last 5 years will show less volatility than BTC.

well, in that case, i'd like to see people stop comparing bitcoin to the internet.. because they are even less similar to bitcoin than stocks are.

[AliceWonder]

Bitcoin IS a currency

It's a perfect example of a fiat currency, just like the USD is a fiat currency.

ANYTHING a group of people AGREE to accept in exchange for goods and service is by definition a fiat currency

No, fiat currency has value because it has been declared to by a governing body.
Bitcoin is not fiat.

[beetcoin]

Bitcoin IS a currency

It's a perfect example of a fiat currency, just like the USD is a fiat currency.

ANYTHING a group of people AGREE to accept in exchange for goods and service is by definition a fiat currency

No, fiat currency has value because it has been declared to by a governing body.
Bitcoin is not fiat.

wtf, i didn't notice that he referred btc to fiat. he might be parroting a term that gets thrown around a lot, without knowing its meaning. not sure if he knows what that term means http://en.wikipedia.org/wiki/Fiat_money

Fiat money is currency which derives its value from government regulation or law. It differs from commodity money, which is based on a good, often a precious metal such as gold or silver, which has uses other than as a medium of exchange. The term derives from the Latin fiat ("let it be done", "it shall be").[1]

bitcoin can be a bit confusing because it's a quasi everything.. it can be a currency, commodity, store of value.. why can't we just call it that? it's not 100% a currency, not 100% a store of value.. it has bits and parts of many kinds of assets.

[adoni]

by definition fiat currency is something of no real value that a group of people accept as having value, granted most fiat currencies have had a government controlling it, however it has existed for millennia.

Original economies for humans were 'barter', mostly foods traded among people, a pig for x chickens, etc. But food is perishable usually so eventually barter economies had to move into a system backed by something of value other than food, primitive economies were built on many fiat systems with no real governments, beads and shells, etc, are all examples of primitive fiat currency systems.

So believe what you want, but if you discourse upon such themes with educated professors and such they will agree my definition fits fiat systems as a whole throughout history, although recent fiat currencies have had government controls.

Bottomline is fiat has no real value and a group of people AGREE to a value in doing trade or commerce.

[beetcoin]

by definition fiat currency is something of no real value that a group of people accept as having value, granted most fiat currencies have had a government controlling it, however it has existed for millennia.

Original economies for humans were 'barter', mostly foods traded among people, a pig for x chickens, etc. But food is perishable usually so eventually barter economies had to move into a system backed by something of value other than food, primitive economies were built on many fiat systems with no real governments, beads and shells, etc, are all examples of primitive fiat currency systems.

So believe what you want, but if you discourse upon such themes with educated professors and such they will agree my definition fits fiat systems as a whole throughout history, although recent fiat currencies have had government controls.

no, your definition is wrong. you can't go around and relabel what has been labelled. look at wikipedia's definition. when the sky is blue, you call it blue - not grey. http://en.wikipedia.org/wiki/Fiat_money

[adoni]

Come on man wiki sucks, haven't you heard?

www.WikiSucks.com

I'm not redefining it, I'm stating historical facts and educated experts in the history of commerce will agree with me.

You don't need any government to create a fiat currency, all you need is a group of people that AGREE to use something of no real value for value in a commerce system.

Now beads and shells were a currency in ancient cultures, that's not barter, it's a fiat currency.

So historically through thousands of years fiat currencies have existed in many parts of the world and I don't care how wiki idiots define it.

I KNOW WHAT A FIAT CURRENCY IS

Good examples of modern fiat with NO GOVERNMENT CONTROLS is how cigarettes in jail are a currency or a fiat system.

As well as Tide with drug dealers.

http://www.forbes.com/sites/pascalemmanuelgobry/2013/01/08/all-money-is-fiat-money/

[beetcoin]

Come on man wiki sucks, haven't you heard?

www.WikiSucks.com

I'm not redefining it, I'm stating historical facts and educated experts in the history of commerce will agree with me.

You don't need any government to create a fiat currency, all you need is a group of people that AGREE to use something of no real value for value in a commerce system.

Now beads and shells were a currency in ancient cultures, that's not barter, it's a fiat currency.

So historically through thousands of years fiat currencies have existed in many parts of the world and I don't care how wiki idiots define it.

I KNOW WHAT A FIAT CURRENCY IS

Good examples of modern fiat with NO GOVERNMENT CONTROLS is how cigarettes in jail are a currency or a fiat system.

As well as Tide with drug dealers.

http://www.forbes.com/sites/pascalemmanuelgobry/2013/01/08/all-money-is-fiat-money/

wtf are you talking about, cigarettes do have value outside of being currency. you can smoke it.

also, it's easy to denounce the source of a claim in order to support yours. almost everywhere else, fiat is defined as government controlled http://www.investopedia.com/terms/f/fiatmoney.asp

[StevenS]

Come on man wiki sucks, haven't you heard?

True, you can't always depend 100% on Wikipedia, because it is edited by "ordinary people" like us, so before quoting Wikipedia, it is best to find other sources as well.

In this case, I checked a number of other sources, including dictionary.com, which is based on the dependable Random House Dictionary, and says:

paper currency made legal tender by a fiat of the government, but not based on or convertible into coin.

The Oxford Dictionaries, another reputable source, says:

Inconvertible paper money made legal tender by a government decree.

Also most of the "business" or "investment" online dictionaries agree with these.

On the other hand, another dependable dictionary, Merriam-Webster says:

money (as paper currency) not convertible into coin or specie of equivalent value

...so that would fit your definition.

In summary, with one exception I found, most English dictionaries define fiat currency as decreed by government.

[Lauda]

Bitcoin is presented as a currency to be used on a daily basis. A stock is an entirely different instrument which is not meant to be exchanged for value often, but generally meant to be an investment that is held over time.

You can't compare the two. And there are lots of stocks that are much less volatile than bitcoin. Someone in finance can give you the hard numbers to back this up as well. Volatility is measured, and even without the hard numbers a simple look at many popular stock charts over the last 5 years will show less volatility than BTC.

Well indeed, but many are holding and even being told to buy and hold Bitcoins. I rarely see someone say that you should use them (to the newer people). It does act as stock to a certain degree.

[Este Nuno]

If all money was fiat money then it would be redundant to call any money fiat money. In modern english fiat refers to government issued legal tender.

Quoted from your own article: "the word “fiat” refers to a government decree that makes money money,"

[sed]

Bitcoin IS a currency

It's a perfect example of a fiat currency, just like the USD is a fiat currency.

ANYTHING a group of people AGREE to accept in exchange for goods and service is by definition a fiat currency

While a real 'currency' has something backing it, there are no real currencies today, it's all FIAT CURRENCY

A fiat currency is only as good as its TRUST FACTOR

Be it shells or coconuts or sticks or worthless pieces of paper it's all fiat, with the exception of coconuts, that is something of VALUE since it's a food that can also be processed into coconut products.

Much of recent history has been currency, backed by Gold or Silver, but today all currency is FIAT and no one can argue that btc is not now a fiat currency, IT IS

Wait a minute, you suggested a contrast between a "real currency" and a "fiat currency" where "real" "has something backing it" and "fiat" is "ANYTHING a group of people AGREE" to accept".  But the contrast here isn't very clear.

First, note that (1) even if there is "something backing" a currency, it still takes agreement that that thing is valuable in oder for it to be a currency.  I mean, imagine a currencty "backed" by leaves of the black cottonwood tree.  Each token in the currency would be exchangable for a certain, fixed, amount of black cottonwood leaves.  However, it's not really a currency unless people agree to value black cottonwood leaves in this way.  Therefore any currency "real" or "fiat" obviously requires agreement.

Second, note that bitcoin is indeed backed by an item with true scarcity---the mathematical scarcity of the solution to the hashing problem for transaction blocks.  This is scarcity is just as real as the scarcity of gold/diamonds/metals, etc. In fact, possibly more real because it's possible (if difficult) to manufacture diamonds (thus changing the scarcity) while it's impossible to change the scarcity of solutions the the hashing problem.

Anyway, I just think that you haven't thought this all the way through.

[beetcoin]

If all money was fiat money then it would be redundant to call any money fiat money. In modern english fiat refers to government issued legal tender.

Quoted from your own article: "the word “fiat” refers to a government decree that makes money money,"

yeah the logic doesn't make any sense. look at this part in the article:

In both cases, what makes Tide detergent, or cigarettes, or the US dollar, or Bitcoin, or whatever, a currency, is simply common agreement that these an item of currency is valuable. What makes it possible to buy drugs with Tide is not because Tide is useful as a detergent. It’s because drug dealers and users have agreed that it is currency.

tide detergent has a tacit use - to clean your clothes. so why is it being compared to fiat currency? if druggies didn't use it for trade, it would still have a use or some sort of value (clean your clothes). i'm not sure you could say the same about paper notes.

[Kipsy89]

I'm sick and tired of hearing this over and over.

Bitcoin has a "Market Cap" of 8 billion dollars where the perceived "value" hangs by a thread almost all the time.  What regulation will be passed?  Will China ban it?  OMG Amazon takes Bitcoin.  OMGWTFBBQ the banks are shutting down accounts.  Add to this the huge potential of Bitcoin itself and you have a recipe for volatility.  This is not a bad thing!  Price discovery for Bitcoin will continue for a long time.

Stocks regularly gain/lose huge percentages of value, do you ever hear that there is a "volatility problem" with the stock market?  NO

This perception that Bitcoin cannot be a currency because it is so volatile has to stop.  It IS a currency now.  The volatility is caused by normal price discovery on something that "could" change the world.

Is anyone else sick of this?

Yeah, but Bitcoin is a currency. And a currency needs to be somewhat stable. At least that's what I got over the last months I learned about bitcoins economic aspects here! It shouldn't be as volatile as some freaking stock!

[beetcoin]

seriously why are we still calling it a currency? at best, it's a quasi currency. it has some qualities that make it a medium of exchange, but it has other qualities as well. if it were 100% a currency, people wouldn't be hoarding it as much as they do.

[Kipsy89]

seriously why are we still calling it a currency? at best, it's a quasi currency. it has some qualities that make it a medium of exchange, but it has other qualities as well. if it were 100% a currency, people wouldn't be hoarding it as much as they do.

Well, a lot of people call it a mere protocol for transacting wealth. Yeah, so of course it is a protocol. It has to be to work between computers and stuff. But it also may become something like the backbone for other services. It's the first time there's an open world-wide way of transacting money! Blowing my mind every time!

[Cryptopher]

I'm intrigued to see what effect, if any, the block reward halving to 12.5 BTC will have when it happens.

Without going too far into the realms of speculation, currently Bitcoin's market value is holding strong despite coins being constantly minted. Of course we all know that this is largely thanks to the little volume that is going through exchanges at the moment.

There will occasionally be turbulent times where the price will shift $100 or so dollars in a day, but I haven't seen one of those days in quite a while now.

[IacceptBTC]

seriously why are we still calling it a currency? at best, it's a quasi currency. it has some qualities that make it a medium of exchange, but it has other qualities as well. if it were 100% a currency, people wouldn't be hoarding it as much as they do.

People hoard bitcoin because they think it is going to increase in value in the future. Bitcoin is very much a medium of exchange as it allows people to trade very easily. What bitcoin is missing is being a store of value because it's price varies so much from day to day.

[beetcoin]

seriously why are we still calling it a currency? at best, it's a quasi currency. it has some qualities that make it a medium of exchange, but it has other qualities as well. if it were 100% a currency, people wouldn't be hoarding it as much as they do.

People hoard bitcoin because they think it is going to increase in value in the future. Bitcoin is very much a medium of exchange as it allows people to trade very easily. What bitcoin is missing is being a store of value because it's price varies so much from day to day.

ok, and if it is a currency, then would you say "i'm going to hold onto cash because i think it is going to increase in value in the future"?

[Cryptopher]

seriously why are we still calling it a currency? at best, it's a quasi currency. it has some qualities that make it a medium of exchange, but it has other qualities as well. if it were 100% a currency, people wouldn't be hoarding it as much as they do.

Yeah I sometimes wonder this too. I mean it is much more comparable to gold. People hoard that against the USD/GBP etc. Just because places accept it is a means of payment doesn't make it a currency, it just makes it as a desirable asset that people will trade for - a quality a currency shares.

I see Bitcoin as a vehicle, a means for moving actual money without some of the red tape, and often costs too, associated with money transfer. It's value increases through speculation on its role as a tradable asset, not as an exchange rate currency for currency.

[beetcoin]

seriously why are we still calling it a currency? at best, it's a quasi currency. it has some qualities that make it a medium of exchange, but it has other qualities as well. if it were 100% a currency, people wouldn't be hoarding it as much as they do.

Yeah I sometimes wonder this too. I mean it is much more comparable to gold. People hoard that against the USD/GBP etc. Just because places accept it is a means of payment doesn't make it a currency, it just makes it as a desirable asset that people will trade for - a quality a currency shares.

I see Bitcoin as a vehicle, a means for moving actual money without some of the red tape, and often costs too, associated with money transfer. It's value increases through speculation on its role as a tradable asset, not as an exchange rate currency for currency.

yeah it's just basic economics.. gold can't be a standard for exchange because its supply cannot be manipulated, whether we like that or not. in that kind of an economy, not enough people would spend and growth can't occur. i know some people are sensitive to this issue, but it's just true. i do, however, think that the fed/treasury abuse their power.

look at this thread with a poll: https://bitcointalk.org/index.php?topic=613944.0;viewResults

25% of the people don't even spend it, because they are using bitcoin speculatively. 45% occasionally spends their coins.

[Kipsy89]

I'm intrigued to see what effect, if any, the block reward halving to 12.5 BTC will have when it happens.

Without going too far into the realms of speculation, currently Bitcoin's market value is holding strong despite coins being constantly minted. Of course we all know that this is largely thanks to the little volume that is going through exchanges at the moment.

There will occasionally be turbulent times where the price will shift $100 or so dollars in a day, but I haven't seen one of those days in quite a while now.

Yeah! That'll be an interesting day. And it's not that far away, either! We've seen a block halving before (well I personally haven't) but the Bitcoin ecosystem has! The last time everything went fine but the price didn't skyrocket immediately. But after some time it did. Maybe the Bubbles of 2013 were delayed effects of the block halving! Exciting times lie ahead!

[nutildah]

seriously why are we still calling it a currency? at best, it's a quasi currency. it has some qualities that make it a medium of exchange, but it has other qualities as well. if it were 100% a currency, people wouldn't be hoarding it as much as they do.

By itself, bitcoin is useless and worth nothing. Only because we assign it value does it become a medium of trade. Thus, bitcoin is a currency.

People (corporations) are hoarding dollars like never before. The federal reserve can barely print enough money to keep deflation from settling in.

Billions and billions of dollars of cash, just sitting around doing nothing but propping up the valuation of stocks.

[nutildah]

And by the way, sure, bitcoin isn't very volatile... until you compare it to 95% of all currencies currently used in the world.

[Cryptopher]

And by the way, sure, bitcoin isn't very volatile... until you compare it to 95% of all currencies currently used in the world.

Then my recommendation is to not compare Bitcoin to other currencies in the world

Bitcoin is a better fit to compare with gold.

[hamiltino]

I will not run around telling everyone to convert their fiat to bitcoin because bitcoin is volatile. Waiting for a currency that is not volatile or the bitshares bank may do for now.

[dandouna]

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[franky1]

as the topic suggests

Bitcoin does not have a volatility problem!

this is true.

right now with my bitcoin i could easily buy 350 loaves of bread, i can predict that in a years time i can still get atleast 350 loaves of bread with a bitcoin (ill get more the 350 biut shhh thats not the point). in 5 years my bitcoin could still get 350 loaves of bread.

but i bet you in 6 years time you wont be able to get 350 loaves of bread for $600.

bitcoin is not volatile. FIAT is

[AliceWonder]

bitcoin is not volatile. FIAT is

Very rarely does the price of a consumable good (say a bag of frozen burritos or movie tickets) change.

They do change, but not often.

Try to buy those things with bitcoins and the price changes weekly if not daily.

Clearly it is bitcoin that is volatile and not the fiat currency. At least not USD fiat currency.

[nutildah]

bitcoin is not volatile. FIAT is

I don't think you understand what volatility actually means. Compared to a basket of world currencies, BTC is very volatile. Compared to stocks, its volatile. Compared to triple leveraged ETFs, its volatile. Compared to the VIX (volatility index), its volatile. Compared to bonds, its extremely volatile.

Volatility = measure of price variability compared to other tradeable assets and commodities.

I know people here want to love everything about bitcoin so badly and demolish any criticism of it, but when does fanboydom actually outweigh the quest to understand reality, and why?

[lihuajkl]

Volatility is not problem for many people. Specially the traders and speculators are like volatility and can make profit from the swing of price. Actually the current price doesn't fluctuate a lot and is near the mining expense.

[Este Nuno]

bitcoin is not volatile. FIAT is

I don't think you understand what volatility actually means. Compared to a basket of world currencies, BTC is very volatile. Compared to stocks, its volatile. Compared to triple leveraged ETFs, its volatile. Compared to the VIX (volatility index), its volatile. Compared to bonds, its extremely volatile.

Volatility = measure of price variability compared to other tradeable assets and commodities.

I know people here want to love everything about bitcoin so badly and demolish any criticism of it, but when does fanboydom actually outweigh the quest to understand reality, and why?

Thank you for bringing some sanity to this thread.

Clearly Bitcoin is volatile. Even without calculating it it's obvious to anyone who can look at a graph.

[Brooker]

Volatility is not problem for many people. Specially the traders and speculators are like volatility and can make profit from the swing of price. Actually the current price doesn't fluctuate a lot and is near the mining expense.

It's a problem for speculators when it doesn't go their way. It's also a problem for it as a currency. There's not much risk involved for companies who use a payment processor but for users who buy coins only to see them lose x amount of value before they can spend them it's definitly a problem.