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 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.
We can still considered as a money the currency have the volatile value its because even the price itself going up and down the value are still there, you can still convert it into fiat money. Some crypto currencies now can be used as a payment system like bitcoin and if we say a payment you can also call it as a money. Bitcoin can pay the foods and shelter through online transactions.
