I know, I've given up all hope they'll ever answer the question asked.
Why is Bitcoin "digital gold" crashing right now?
- Thread starter Brendan Burgess
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I know, I've given up all hope they'll ever answer the question asked.
The opposite is the same. If I owe you 1BTC in 6months, whats riskier, holding 1BTC in a wallet or buying $$ with your Bitcoin?
Volatility works both ways. Clearly BTC is a volatile asset measured against fluctuating US$. Alternatively, it is the US$ that is a volatile asset against sound money like BTC.
Bitcoin has, durability, portability, scarcity, divisibility, fungibility, and is decentralised and trustless currency.
The US$ is just a mish-mash of central bank keyboard strokes and manipulated government IOU's.
DublinHead54
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From my perspective there is no risk, I get 1 BTC regardless. You take the risk on whether to buy 1 BTC now or wait for 6 months and deliver me 1 BTC at the future price. From your perspective buying dollars is riskier because you have agreed to deliver 1BTC.
Why is decentralized good? Why is a trustless currency good? Are we suddenly all going to lose faith in the United States or the European Union? History would suggest not. I've critiqued all these points (I work in the industry), and I don't see an overwhelming reason for BTC to replace Central Bank issued Currencies.
What I find amusing, is decentralized is touted as a benefit, but it is not decentralized, China controls the vast majority of the mining pool.
It is a great story though.
It's the same risk. If you give me 1BTC to return to you in 6 months and I buy $10,000 with it today, I'm taking a risk that it wont cost me $20,000 to buy the 1BTC that I need to return to you.
It's the exact same risk just reversed.
Is the suggestion that someone has claimed that in this discussion? If so, can you provide a link to it?
History also teaches us that time and time again, sovereign currencies have been (and continue to be in specific cases) mismanaged. That mismanagement has usually been to the detriment of ordinary citizens. That's indisputable.
Has someone here called for 'replacement'? Competition is healthy - and that's why the advent of decentralised crypto and corporate digital currency alongside sovereign currency can only be a good thing.
It's not decentralised to the 9th degree, no. However, to suggest that bitcoin's current level of decentralisation isn't beneficial is foolish. Could bitcoin mining be better distributed? - sure, it could. In the meantime, those mining pools are going to have to ruin themselves to temporarily disrupt the network. That's the only danger that you can be talking about here - because at an individual level, nobody can access that individuals bitcoin and the scenario you're suggesting isn't going to play out to the detriment of a minority of individuals. i.e. it's sufficiently decentralised such that no government, bank or other entity can interfere with an individuals ability to store or move bitcoin on the network. There's some more fuel for your 'great story'.
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Its rough for you Leo when the answers provided don't match your world view
No, I've been proven wrong here many times over the years, and my world view now is a lot different to what it was when I first started posting. I like to learn.
DublinHead54
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I assume you agree that for the vast majority of individuals in 2020 to get Bitcoin you have to convert Fiat to BTC? You transact between the fiat monetary system and the BTC ecosystem via an exchange. A government could shut those connections making it a closed network.
DublinHead54
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I was responded to @WolfeTone, I suggest you read the question I asked and don't take sentences out of context before replying or let him respond.
Why is decentralized good? Why is a trustless currency good? Are we suddenly all going to lose faith in the United States or the European Union? History would suggest not.
DublinHead54
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I assume you agree that for the vast majority of individuals in 2020 to get Bitcoin you have to convert Fiat to BTC? You transact between the fiat monetary system and the BTC ecosystem via an exchange. A government could shut those connections making it a closed network.
DublinHead54
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I take these questions were directed to me.
Decentralized is good because it limits power and undue excessive influence.
Trustless is good, it speaks for itself I would have thought.
I don't think we are suddenly all going to lose faith the United States or European Union.
Respectfully, I'll respond if that's what I want to do Dublinbay12. It doesn't in any way prevent WolfeTone from responding also. As regards taking sentences out of context, I don't see a lack of context in my responses.
Well apparently it's beneath you but had you bothered to read the thread in which you accused me of 'not [being] willing to do anything other than back Bitcoin in every single situation', you would have seen that I've cited this as a risk which could retard the rate of development of bitcoin. Note that I don't believe that it will kill it. It will just take longer to progress.
Over the course of the next few years, I expect ongoing regulatory battles. However, to my mind, ease of use/user experience is the key determinant. If that's improved, then it won't matter a whole lot what governments do.
Duke of Marmalade
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Nice try Wolfie
When we talk of volatility we need to have what the economists call the numéraire - the basic standard which we use for evaluation. Obviously the numéraire itself has zero volatility by this metric. Thus if BTC is the numéraire then BTC has zero volatility and USD has mega volatility. Similar observations if we chose Tesla stock as numéraire.When it comes to reserve assets the correct numéraire is the operational currency of the entity as @Dublinbay12 has stated.
When it comes to currencies qua medium of exchange the correct numéraire is a basket of goods and services (which will vary according to the observer). It is the role of Central Banks to manage stability against a numéraire which is the general price of goods and services in the economy, and thank goodness we have Central Banks tasked with that mission. Measured against the price of goods and services, 1 BTC today might buy a Tesla car in 12 months time or it might be hard pushed to buy a latte.
I will give Saylor a go, though I have my mine sweeper out to avoid rabbit holes.
Yes of course, no dispute here. And on a scale which the global economy operates clearly we use the central bank issued currency as the basis which we measure all value. This is a universal approach which offers a very convenient means of communication. So in common universally accepted parlance, BTC will obviously be recognised as where the volatility lies.
But in practice when talking about direct transactions between parties, as offered by @Dublinbay12 the risk, and as such the volatility operate in exact inverse measure to each other.
So if I were to lend you with 1BTC with your promise to return it to me in six months or 12, as you identify yourself,
Ditto if I were to trade €10000 in future stocks the risk is the same on both sides of the equation, albeit in common parlance the volatility will be identified with the stock.
Here's a little snippet from a published by Fidelity Investments last week:
"Another consequence of bitcoin entering a more mature and steady stage of its life cycle is that we expect its volatility to decline in tandem, resulting in continued favorable risk-adjusted returns."
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