Price Volatility vs. System Volatility

tecate

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This is an excellent discussion of the topic by Caitlin Long via Forbes. If anyone is still on the fence as regards the utility of Bitcoin, this should go some way towards clearing things up.



 

WolfeTone

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Excellent article, succinctly demonstrates the value of bitcoin.
I think at this point it is fair to say that bitcoin is here to stay. I think it has now become, or is hurtling towards becoming, being embedded in the social fabric.
I think I will buy some more.
 
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Gus1970

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This is an excellent discussion of the topic by Caitlin Long via Forbes. If anyone is still on the fence as regards the utility of Bitcoin, this should go some way towards clearing things up.



That’s a nice angle to use to look at crypto.

Most people that come from traditional finance struggle when trying to give bitcoin value because they try to use old measures that don’t apply.

To be able to assign a value to it, first we need to be able to recognise the disruptive properties of crypto and blockchain, failing that, at best, you’ll be comparing apples and oranges and getting a summer cocktail of rubbish.

Thanks for sharing
 
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NoRegretsCoyote

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This is an excellent summary of the issues.

I was a huge sceptic of bitcoin back around 2009 as I thought its inherent volatility was a barrier to regular use as a medium of exchange.

I didn't reckon that demand for a secure medium for illegal transactions is very high. The alternatives - suitcases full of cash - carry lots of risk too, and users will put up with the volatility in exchange for security.

I think it is here to stay.
 

john luc

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Quote,
"Most people that come from traditional finance struggle when trying to give bitcoin value because they try to use old measures that don’t apply."

Hmm so it's different this time. :rolleyes:
 

Leo

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I don't see anything new in that article. Is there really anyone who even had the slightest inclination that Bitcoin had price stability as a goal or in any element of the system design?

There is nothing in there that goes anyway towards assigning Bitcoin value other than 'Bitcoin is valuable to you as an insurance policy. Only in retrospect will it become clear how valuable that choice turns out to be.'

The only other benefit they include is 'a choice to own financial assets outside of the traditional fiat-currency system.' That misses the mark I think.
 

tecate

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Quote,
"Most people that come from traditional finance struggle when trying to give bitcoin value because they try to use old measures that don’t apply."

Hmm so it's different this time. :rolleyes:
What's your point or do you have one?
I don't see anything new in that article. Is there really anyone who even had the slightest inclination that Bitcoin had price stability as a goal or in any element of the system design?
So lack of systemic volatility isn't a feature/benefit, Leo? And in terms of the existing centralised setup, systemic volatility is a good thing? Do tell.:rolleyes:
 

Leo

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What's your point or do you have one?
Not aimed at you, more the follow on comments that seem to think this is an endorsement of some intrinsic value. It's a nice comparison of an aspect of FIAT Vs Bitcoin, but it shouldn't really be a surprise to anyone with a basic understanding of how Bitcoin works, so I was surprised by the following enthusiasm...

So lack of systemic volatility isn't a feature/benefit, Leo?
You'll note I didn't state it was. I've worked in IT a long time, a lack of systemic volatility is a basic assumption in any of the systems I work with.

And in terms of the existing centralised setup, systemic volatility is a good thing? Do tell. :rolleyes:
Care to point to where I said it was?
 

NoRegretsCoyote

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There is nothing in there that goes anyway towards assigning Bitcoin value other than 'Bitcoin is valuable to you as an insurance policy. Only in retrospect will it become clear how valuable that choice turns out to be.'

The only other benefit they include is 'a choice to own financial assets outside of the traditional fiat-currency system.' That misses the mark I think.
True.

It's not in the article, but bitcoin has big demand for use as a medium of exchange in illicit transactions. This means that bitcoin (or a better crypto if it comes along) will always be with us.

I can't see it being part of the investment strategy of a typical AAMer, but that doesn't mean that cryptos don't have long-term value.
 

Leo

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It's not in the article, but bitcoin has big demand for use as a medium of exchange in illicit transactions. This means that bitcoin (or a better crypto if it comes along) will always be with us.
True, though a lot of the bigger players in illicit trade have been moving away from Bitcoin as the anonymity of transactions has been tested and authorities such as Euopol have tools that have allowed them trace individuals behind transactions with some success.

I can't see it being part of the investment strategy of a typical AAMer, but that doesn't mean that cryptos don't have long-term value.
I still agree with the Antonopoulos view that it has more function in dysfunctional or entirely corrupt states. I think crypto will move on, Bitcoin has too many fundamental issues challenging its development, so better solutions will prevail.
 

tecate

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Not aimed at you, more the follow on comments that seem to think this is an endorsement of some intrinsic value. It's a nice comparison of an aspect of FIAT Vs Bitcoin, but it shouldn't really be a surprise to anyone with a basic understanding of how Bitcoin works, so I was surprised by the following enthusiasm...
I don't think its complete implications in terms of lack of systemic volatility are the thing of 'basic understanding' for most who are newly introduced to Bitcoin. Systemic volatility takes some consideration to grasp in and of itself.

You'll note I didn't state it was. I've worked in IT a long time, a lack of systemic volatility is a basic assumption in any of the systems I work with.
Exactly the point. The article acknowledged Bitcoins issue in terms of price volatility. However, it championed its lack of systemic volatility (by comparison with the conventional systems which are in place). You rubbished the article but never mentioned or discussed the relevance of a lack of systemic volatility.

Not aimed at you, more the follow on comments that seem to think this is an endorsement of some intrinsic value. It's a nice comparison of an aspect of FIAT Vs Bitcoin, but it shouldn't really be a surprise to anyone with a basic understanding of how Bitcoin works, so I was surprised by the following enthusiasm...
I don't think its complete implications in terms of lack of systemic volatility are the thing of 'basic understanding' for most who are newly introduced to Bitcoin. Systemic volatility takes some consideration to grasp in and of itself.

Care to point to where I said it was?
Careful with this. You'll recall the back and forth that ensued following similar semantics a while back. There's a question mark in the sentence of mine that you quote. It's as per my point above - you rubbished the article yet didn't even mention the primary point or assertion of the article.
 

tecate

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It's not in the article, but bitcoin has big demand for use as a medium of exchange in illicit transactions. This means that bitcoin (or a better crypto if it comes along) will always be with us.
True, though a lot of the bigger players in illicit trade have been moving away from Bitcoin as the anonymity of transactions has been tested and authorities such as Euopol have tools that have allowed them trace individuals behind transactions with some success.
Snowden did use it but equally has come out recently and stated that it is the one facet of the cryptocurrency that needs to be worked on. It's privacy is improving. Schnorr signatures and the consideration of zero knowledge proofs. The use of CoinJoin - which was recently implicated in a 100 person transaction (via the Wasabi wallet).

I can't see it being part of the investment strategy of a typical AAMer, but that doesn't mean that cryptos don't have long-term value.
Of the typical AAM'er no. But nothing ever stays the same. Jamie Dimon said it was a fraud and later they launched their own crypto. In recent days, news has emerged that Goldman Sachs are considering the same. Recent months have seen the first pension funds invest in crypto with Fidelity and many other institutions now getting involved. And on another thread in this sub-forum last week, I posted 2x links to Deutsche Bank and Invesco analysts who actively brought up the notion of Bitcoins use as a hedge (something they would have laughed at 12 months ago). Crypto/Bitcoin/Digital Assets may well be a part of an AAM'ers portfolio before they're conscious of it themselves (through their pensions, etc.).


I still agree with the Antonopoulos view that it has more function in dysfunctional or entirely corrupt states. I think crypto will move on, Bitcoin has too many fundamental issues challenging its development, so better solutions will prevail.
I agree that crypto has far more utility in developing countries - exactly in terms of Caitlin Long's consideration of Stability Volatility. Will Bitcoin maintain its relevance? Difficult to say but right now, it seems to be embedded with a certain use case. Time will tell.
 

Leo

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I don't think its complete implications in terms of lack of systemic volatility are the thing of 'basic understanding' for most who are newly introduced to Bitcoin. Systemic volatility takes some consideration to grasp in and of itself.
We're not talking about people new to Bitcoin, I was referring to some others who champion Bitcoin seeming to find that a lack of such volatility somehow attributes value. My point is that there should be nothing new in this article for anyone who is actively pushing Bitcoin.

Exactly the point. The article acknowledged Bitcoins issue in terms of price volatility.
Well, it doesn't call it out as an issue, it just says recent instability has caused some people to conclude Bitcoin is unstable, and then goes on the discuss price Vs systemic stability.

However, it championed its lack of systemic volatility (by comparison with the conventional systems which are in place). You rubbished the article but never mentioned or discussed the relevance of a lack of systemic volatility.
I didn't rubbish it, I said 'It's a nice comparison of an aspect of FIAT Vs Bitcoin, but it shouldn't really be a surprise to anyone with a basic understanding of how Bitcoin works.' I also mentioned I worked in IT, systemic volatility is simply not tolerated in any of the systems I've been involved with over the years. So I see nothing remarkable about such stability, I've had some involvement in systems procurement over the years, none of the major IT vendors pay on stability in their marketing material, it's assumed a a given.

I would have liked to see them delve more into the perceived systemic stability issues affecting FIAT to make it a meaningful comparison, but they don't unfortunately.

Careful with this. You'll recall the back and forth that ensued following similar semantics a while back. There's a question mark in the sentence of mine that you quote. It's as per my point above - you rubbished the article yet didn't even mention the primary point or assertion of the article.
Careful? Perhaps you should stop putting words in my mouth and then just sticking a question mark after it. If you have a question ask it, no need for the doulbe speak...

And in terms of the existing centralised setup, systemic volatility is a good thing? Do tell.:rolleyes:
 

tecate

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We're not talking about people new to Bitcoin, I was referring to some others who champion Bitcoin seeming to find that a lack of such volatility somehow attributes value. My point is that there should be nothing new in this article for anyone who is actively pushing Bitcoin.
Who said we're not talking about people new to Bitcoin. And other than that - new to Bitcoin or otherwise - you think most people have an appreciation of the inherent systemic instability in our current centralised systems? I really don't think so. In that respect the article is important as it gets that message out there and does so with some finesse.

Well, it doesn't call it out as an issue, it just says recent instability has caused some people to conclude Bitcoin is unstable, and then goes on the discuss price Vs systemic stability.
Of course it calls it out.

I didn't rubbish it,
By not even acknowledging the central point of the article, you rubbished it.

I would have liked to see them delve more into the perceived systemic stability issues affecting FIAT to make it a meaningful comparison, but they don't unfortunately.
Your view of course but I definitely disagree.

Careful? Perhaps you should stop putting words in my mouth and then just sticking a question mark after it. If you have a question ask it, no need for the doulbe speak...
I did no such thing Leo. I posed a question - that's why there's a "?" at the end of the sentence. To suggest anything else is just plain wrong.
 

WolfeTone

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I've had some involvement in systems procurement over the years, none of the major IT vendors pay on stability in their marketing material, it's assumed a a given.
The references to instability are related to financial systems, not the IT systems used to operate financial systems.
Financial systems being anything from Central Bank and Government policies of interference, rule making, rule changing, interpretation, etc. These are the instabilities built into the financial system - basically centralized control.
 

Leo

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Who said we're not talking about people new to Bitcoin.
I did in the post you responded to...

Of course it calls it out.
Can you quote that piece?

By not even acknowledging the central point of the article, you rubbished it.
How so? My not commenting one way or another allows you to assume how I regard the material?

I did no such thing Leo. I posed a question - that's why there's a "?" at the end of the sentence. To suggest anything else is just plain wrong.
Why not ask a simple question then? Suggestive formatting is generally an attempt to put forward an answer as fact. And why the need for the roll eyes if it's just a question? The accepted usage of the roll eyes emoji is to express disbelief. What is it you don't believe if you're just asking a question without suggesting where my thoughts on the matter lie?
 

Gus1970

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Quote,
"Most people that come from traditional finance struggle when trying to give bitcoin value because they try to use old measures that don’t apply."

Hmm so it's different this time. :rolleyes:
Some people still use horses to move around and light candles to have dinner in the evening, for them, nothing ever changed.

You pick where you want to be
 

Gus1970

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I didn't rubbish it, I said 'It's a nice comparison of an aspect of FIAT Vs Bitcoin, but it shouldn't really be a surprise to anyone with a basic understanding of how Bitcoin works.' I also mentioned I worked in IT, systemic volatility is simply not tolerated in any of the systems I've been involved with over the years. So I see nothing remarkable about such stability, I've had some involvement in systems procurement over the years, none of the major IT vendors pay on stability in their marketing material, it's assumed a a given.
I’m not sure the article refers to your IT systems, but i’m sure i must be wrong somewhere.
 

tecate

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I did in the post you responded to...
And since when do you set the parameters. Clearly that article is insightful for anyone that hasn't considered the aspect of systemic volatility. You'll note from my initial post, it was on that basis that I started this thread.

Can you quote that piece?
The headline refers to it - then she specifically says as much in the first line. We can go back and trawl through the rest of the article if you wish ...although I can't see how that is necessary.

How so? My not commenting one way or another allows you to assume how I regard the material?
In this context, it certainly does. Everyone who has heard anything about Bitcoin knows that it suffers from price volatility. The insight came from the consideration of stability volatility. You said that the article didn't bring anything new - yet it did (with its consideration of stability volatility). You opened with that and proceeded not to mention anything about that main theme to the article.

Why not ask a simple question then?
Respectfully, you now agree that it is a question and don't like the nature of the question?

Why not ask a simple question then? Suggestive formatting is generally an attempt to put forward an answer as fact. And why the need for the roll eyes if it's just a question? The accepted usage of the roll eyes emoji is to express disbelief. What is it you don't believe if you're just asking a question without suggesting where my thoughts on the matter lie?
Subjective formatting and the correct use of roll eyes emoji's? This is getting obtuse. I suggest we focus on the actual discussion.
 

Leo

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And since when do you set the parameters. Clearly that article is insightful for anyone that hasn't considered the aspect of systemic volatility. You'll note from my initial post, it was on that basis that I started this thread.
You chose to respond to a point I made about people with a basic understanding of how Bitcoin works, you then tried to dismiss my point by talking about people who were new to Bitcoin. So I've no problem with anyone disagreeing with or challenging my views, but challenge what I said, not some other point entirely.

The headline refers to it - then she specifically says as much in the first line. We can go back and trawl through the rest of the article if you wish ...although I can't see how that is necessary.
It doesn't. The headline is: 'Bitcoin, The Dollar And Facebook's Cryptocurrency: Price Volatility Versus Systemic Volatility'. Nowhere does that even suggest whether such volatility is a good or bad thing.

The article continues in a similar vein. So again, please quote where they have said or suggested it's an issue?

In this context, it certainly does.
Context is irrelevant. You cannot conclude what my thoughts are if I have not even hinted at them.

QUOTE="tecate, post: 1617528, member: 96631"]You said that the article didn't bring anything new - yet it did (with its consideration of stability volatility). [/QUOTE]

And I stand by that, there is nothing new in there. The systemic stability they refer to is a long standing feature of Bitcoin. I have said it as an interesting (if somewhat one sided) FIAT Vs Bitcoin comparison of a feature, but it should be no surprise to anyone who is pushing Bitcoin.

Respectfully, you now agree that it is a question and don't like the nature of the question?

Subjective formatting and the correct use of roll eyes emoji's? This is getting obtuse. I suggest we focus on the actual discussion.
I was trying to have an open discussion. You chose to presuppose my view through the use of suggestive formatting, then used the roll eyes in response to your assumption. That doesn't lead to anything constructive.
 
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