Topic: A cryptocurrency with volatility can't be used as money - page 35. (Read 34045 times)
Currency value fluctuations is not the yardstick to ascertaining the use of the currency. This is because the causes of currency fluctuations is the result of policy and market forces and not the currency itself.
I'm just reading an article in the newspaper. Klaus W. Wellershoff (a last chief in UBS Bank) says that's impossible to use a currency with volatility as money. If the value of the money decrease, that means the value of the merchandise decrease. For example : if you buy a flat with bitcoin and few years later the bitcoin value decrease... Your flat lose his value as well.
What do you think about this argument?
What do you think about this argument?
I think fiat money high volatility too. Volatility not only on crypto but in any commodity or investment because the price determined by market or supply and demand. The different thing is cryptocurrency volatility can not controlled
I'm just reading an article in the newspaper. Klaus W. Wellershoff (a last chief in UBS Bank) says that's impossible to use a currency with volatility as money. If the value of the money decrease, that means the value of the merchandise decrease. For example : if you buy a flat with bitcoin and few years later the bitcoin value decrease... Your flat lose his value as well.
What do you think about this argument?
What do you think about this argument?
yes, It is true. A crypto currencies with volatility cannt be used as money. I think this asset class market needs to be matured more so that its less volatile. maybe, when the demand is higher or balance than supply, the crypto will stable.
Your argument is nice but your mean just only on dollar but there are a lot of minor currencies which have a immense volatile especially in developing countries but anyway your are right that world economy cannot be based on a volatile currency because it will be a collapse but crypto currencies are too young so they are not stable but they will be much more stable in the future.
this is of course a thing that we already know and it is a simple thinking, we may think that btc is a new currency and is not even legalized so the volatility is quite normal and it can be fixed within time, it is not said that it will be like this forever.
Of course, any currency would be impossible to use if it is very volatile, but let us see its volatility first, maybe if it's daily then that would really be a headache, but if the currencies' value change in months then that is acceptable.
Throuought history we’ve used commodities to trade as currency. They always begin with volatile price structures and then as more people begin to accept it as a form of payment the volatility subsides. There is a valuable argument to why inflation may be necessary to encourage people to spend, but it does not make sense that if bitcoin becomes the standard that it would be volatile. The volume would stabilaize it if it was large enough.
I'm just reading an article in the newspaper. Klaus W. Wellershoff (a last chief in UBS Bank) says that's impossible to use a currency with volatility as money. If the value of the money decrease, that means the value of the merchandise decrease. For example : if you buy a flat with bitcoin and few years later the bitcoin value decrease... Your flat lose his value as well.
What do you think about this argument?
Well the actual value of the thing that your buying with bitcoin is not what changes, it is bitcoin that changes, a better example would be buy something for 1000$ you would pay the merchant 0.1 bitcoin the next day the price of the bitcoin would fall the merchant would have 0.1 bitcoin but 900$, so indeed the volatility of the currency does affect its adaptation, but the people who would be accepting bitcoin would be aware of this and they do it because they know that the value of bitcoin will keep on increasing, so it does not make a problem. What do you think about this argument?
Crypto currencies are already used as money despite the volatility of their prices. In fact, the volatility is another different and attractive feature of crypto currencies, because it is making this digital currencies a lot differnet than fiat currencies, and it is also encouraging many new comers and investors to start buying cryptos.
I'm just reading an article in the newspaper. Klaus W. Wellershoff (a last chief in UBS Bank) says that's impossible to use a currency with volatility as money. If the value of the money decrease, that means the value of the merchandise decrease. For example : if you buy a flat with bitcoin and few years later the bitcoin value decrease... Your flat lose his value as well.
What do you think about this argument?
Yes,I agree with that statement because if it is a currency then it need to have somewhat stable value.When it comes to the crypto currencies the volatility is very high but soon at one stage the cryptos also will have stable value when the adoption rate increases to maximum.But I don't think the value of bitcoin decreases over the years until now so it is eventually better than fiat which is a great tool can save us from inflation. What do you think about this argument?
t is true, the current condition of high volatility in the cryptocurrency market makes them very little useful as a store of value or as currencies. Personally, I have only been using bitcoin as a means of payment, since from my personal experience it fulfills that function quite efficiently, compared to more conventional methods such as PayPal or Skrill.
However, I do not believe that the current condition of volatility will last forever, and as the market grows and matures, it will be gradually difficult to see the current high volatility scenarios, with bitcoin tending to behave like fiat currencies in the long run.
However, I do not believe that the current condition of volatility will last forever, and as the market grows and matures, it will be gradually difficult to see the current high volatility scenarios, with bitcoin tending to behave like fiat currencies in the long run.
Crypto can be used as a money... Crypto is volatile, so you can consider using it as money when the price is high.. You will end up paying less USD..
I get the volatility argument in general, but that example is pretty weird if not downright dumb.
When the value of a money decreases it means that its purchasing power decreases. This means that -- ignoring deprecation -- the value of a commodity stays the same, while the price -- as measured in the money in question -- increases. That's what happens during inflation. Not only that, it's pretty much the prototypical symptom of inflation.
To make this example more absurd real estate has served -- more or less effectively -- as a hedge against devaluating currencies for decades. Exactly because it doesn't lose its value as much as the money that was spent when purchasing it. Ignoring real estate bubbles, obviously.
If that really is this guy's line of thinking -- and if he's somewhat representative for his peers -- than no wonder that the traditional banking system is in the state it is.
When the value of a money decreases it means that its purchasing power decreases. This means that -- ignoring deprecation -- the value of a commodity stays the same, while the price -- as measured in the money in question -- increases. That's what happens during inflation. Not only that, it's pretty much the prototypical symptom of inflation.
To make this example more absurd real estate has served -- more or less effectively -- as a hedge against devaluating currencies for decades. Exactly because it doesn't lose its value as much as the money that was spent when purchasing it. Ignoring real estate bubbles, obviously.
If that really is this guy's line of thinking -- and if he's somewhat representative for his peers -- than no wonder that the traditional banking system is in the state it is.
Exactly. It's even the other way round from what he's saying because of missed opportunities.
He thinks that if he buys a flat for 10 BTC and next year it's worth 15 because of the lower value of BTC the flat also loses value, but it's not! Since the flat can be sold for any other good or currency, you can sell it for a gold bar that will be worth roughly as much as BTC before the crash, the value remains the same.
But what if the value of BTC goes up. You've spent 10, but now someone else can spend 5 to buy it back from you. You've screwed up. If you held you could have 2 flats instead of 1. Still the value of a sinfgle flat has not changed.
Cryptocurrency market suffers from volatility for the only reason, the market is still too young and the market cap is really low compared to other virtual assets, so the volatility level is pretty much fair for this market cap level.
Until the price of bitcoin will stabilize around a price range, it's going to be volatility as it is being used by only a short amount of people.
Until the price of bitcoin will stabilize around a price range, it's going to be volatility as it is being used by only a short amount of people.
I think you didn't understand it properly or your example is incorrect(I mean situation if its not valued in bitcoin(as I understand)) ..So when you buy a flat there is no connections with bitcoin,its just a payment method and not investment object.In my opinion today there are too many similar examples related to this,but you forgot that behind the money there is the real economy and behind the bitcoin just a revolutionary idea of applying cryptography to cash,this is the difference between bitcoin and money in this situation.
yes cryptocurrency is an asset but more than a currency we cant reply as payment system we can use as long-term storage of value and asset just like gold and land and bonds
when we talk about the fiat currency then we set a boundary, within that boundary that particular fiat is acceptable and the fiat has less volatility. But when we talk about the crypto-coins then it has no boundary. Similarly, if you choose a fiat of a country and compare with other then it could also be very much volatile.
I am not sure if that is what they meant. Let me give you the same example but replace it with Fiat currency, and a few years that Fiat currency lose value does that mean the flat loses value as well? Of course not that flat has its own value to begin with that is why their is such thing as appreciation and depreciation on properties as well as things. There is no sense if Bitcoin is volatile, once you bought that product you wouldn't care what price Bitcoin is as that product has its own value.
Fiat money can also be highly volatile.
The Ukrainian hryvnya fell more 4 times after the beginning of war in 2014 (from 8 to current 27 hryvnyas per dollar).
And yeah, due to that my flat has become 40% cheaper comparatively to when I bought it in 2011.
I think sooner or later BTC's price will normalize (it's still young and demonstrates all the "illnesses" of an adolescent) and everybody would be able to use it as a traditional currency.
The Ukrainian hryvnya fell more 4 times after the beginning of war in 2014 (from 8 to current 27 hryvnyas per dollar).
And yeah, due to that my flat has become 40% cheaper comparatively to when I bought it in 2011.
I think sooner or later BTC's price will normalize (it's still young and demonstrates all the "illnesses" of an adolescent) and everybody would be able to use it as a traditional currency.
If the value of the money decrease, that means the value of the merchandise decrease.
I think it's the reverse--if the value of, say, fiat decreases the price of good goes up. I'm thinking of hyperinflation situations in particular, where the price of stuff can go up crazy amounts. You've seen those wheel barrels with Zimbabwe dollars in them, right? Well yesterday it cost 100 dollars to buy X, whereas today it costs 10,000 dollars for X. The value of the money went down quite a bit, and as a result the price of X is high.The example of buying a flat I think is correct--if the flat was valued in bitcoin only.
As far as volatility being an impediment to bitcoin being a currency, I agree with that as well. When it's going up, that encourages hoarding of it, and when it goes down you can't spend it fast enough. You can still use it as money, of course, but the volatility is definitely a negative attribute as far as that's concerned. But that also makes it great for trading.
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