Topic: High volatility and sudden crashes will kill bitcoin, unless... (Read 2469 times)
High volatility is not bitcoins fault, the ones at fault are speculators that is it, the op talks as if the price of gold does not move, it does and if you are talking abut volatility look at what has happened to gold in decades prior to this, by comparison it makes bitcoin look stable.
I agree that the profit margins of these merchants are pretty high on their own but I still see no logic in that. If they wanted to multiply their sales, they could just go for a sell-out and get done with that. Why all the fuss with Bitcoin?
Because they have the additional advantage to promote themselves as "Bitcoin backers". They expand their public into the Bitcoin community. I am pretty sure that every merchant who participates in this mechanism would get much love in the Bitcoin community, above all from newbies that get burnt in crashes
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Anyway, if you think that it might work out, why no one has done that already?
Well, somebody must be the first. Maybe now someone tries it
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Further, I don't see a lot of sense in buying 20 copies of the same record just to escape being "caught by volatility"
The mechanism only can show its full potential when there is a diversity of goods available (many merchants participating). A single merchant/producer would not change much in Bitcoin's volatility. But even if there are only a few goods available, individual users will be able to benefit from it, as they could buy something they like and so cut a part of their losses in the case of a crash.
But who is going to hold the bag?
Every merchant can opt to be a bag-holder
If wishes were horses, beggars might ride
A simple question begs to be asked, i.e. why merchants would want that in the first place? Are they in for charity or what? If they don't have economic interest in that (which in most cases boils down to pure profits), they won't do anything along these lines. More specifically, they will just increase their profit margins and will ask for hefty premiums to avoid getting caught by Bitcoin volatility (or choose to abandon Bitcoin altogether). Why the American dollar is universally accepted around the globe? Right, because it is as solid as rock
In that case, the merchants needs to use a third party payment processor such as Bitpay or Coinbase, which immediately converts the Bitcoins to USD or any other fiat currency of their choice. In this way, they can insulate themselves from the exchange rate fluctuations. I am not sure about the fee charged by these payment processors. I heard that it is around 1% (still better than the 1.8% charged by Visa/Master).
This is not the point of this discussion
A simple question begs to be asked, i.e. why merchants would want that in the first place? Are they in for charity or what?
Simple: They get the opportunity to multiply their sales. Above all in the goods I mentioned the number of sales is more important than the value per sale. Producers of digital goods make profit with every copy. They will get more sales when they are "caught by volatility", because for people it will be an opportunity to escape from a crash
I don't really see how that would work in practice
I agree that the profit margins of these merchants are pretty high on their own but I still see no logic in that. If they wanted to multiply their sales, they could just go for a sell-out and get done with that. Why all the fuss with Bitcoin? Anyway, if you think that it might work out, why no one has done that already? Further, I don't see a lot of sense in buying 20 copies of the same record just to escape being "caught by volatility"
A simple question begs to be asked, i.e. why merchants would want that in the first place? Are they in for charity or what?
Simple: They get the opportunity to multiply their sales. Above all in the goods I mentioned the number of sales is more important than the value per sale. Producers of digital goods make profit with every copy. They will get more sales when they are "caught by volatility", because for people it will be an opportunity to escape from a crash.
And in every sale they make this way, their brand becomes strengthened. They can even use the "Bitcoin backing" as a marketing vehicle.
It is the same logic like behind special offers of supermarkets.
But who is going to hold the bag?
Every merchant can opt to be a bag-holder
If wishes were horses, beggars might ride
A simple question begs to be asked, i.e. why merchants would want that in the first place? Are they in for charity or what? If they don't have economic interest in that (which in most cases boils down to pure profits), they won't do anything along these lines. More specifically, they will just increase their profit margins and will ask for hefty premiums to avoid getting caught by Bitcoin volatility (or choose to abandon Bitcoin altogether). Why the American dollar is universally accepted around the globe? Right, because it is as solid as rock
In that case, the merchants needs to use a third party payment processor such as Bitpay or Coinbase, which immediately converts the Bitcoins to USD or any other fiat currency of their choice. In this way, they can insulate themselves from the exchange rate fluctuations. I am not sure about the fee charged by these payment processors. I heard that it is around 1% (still better than the 1.8% charged by Visa/Master).
Hi Ev'rybody.
Last days we witnessed a 20% crash in bitcoin, not to sepak about other crypto, including ETH that had the most solid growth till then.
These anomalies, as good as they might be for day traders, does not speak well about the BTC as a reserve currency.
As I said before, there's a reason why paper money was pegged to gold prices and reserves. Because any currency needs a reference value if it is going to avoid those dramatic ups and downs. The euphemism of USDT is just out of question.
And even though I'm strongly against any regulation of BTC or any other crypto, I have to say, leaving it freely float poses dangers such those I said, plus manipulations of speculators who can, by their own operations, affect prices at will.
So, I will insist that crypto needs a value reference. And as I said in my other posts, the best reference value is ENERGY. The most pure asset in the universe.
And there's got to be a way to tie the value of bitcoin to Joules. There's already SOLARCOIN, but to be honest I'm not sure how that is working.
Future economy has to be energy-based.
Please feel free to download my proposal in pdf: Teraflops and Terawatts at:
https://drive.google.com/open?id=0B7JgGimv_JMJaWdYQXdtb1RVZVE
Greets,
http://estaciontrend.blogspot.com/
Last days we witnessed a 20% crash in bitcoin, not to sepak about other crypto, including ETH that had the most solid growth till then.
These anomalies, as good as they might be for day traders, does not speak well about the BTC as a reserve currency.
As I said before, there's a reason why paper money was pegged to gold prices and reserves. Because any currency needs a reference value if it is going to avoid those dramatic ups and downs. The euphemism of USDT is just out of question.
And even though I'm strongly against any regulation of BTC or any other crypto, I have to say, leaving it freely float poses dangers such those I said, plus manipulations of speculators who can, by their own operations, affect prices at will.
So, I will insist that crypto needs a value reference. And as I said in my other posts, the best reference value is ENERGY. The most pure asset in the universe.
And there's got to be a way to tie the value of bitcoin to Joules. There's already SOLARCOIN, but to be honest I'm not sure how that is working.
Future economy has to be energy-based.
Please feel free to download my proposal in pdf: Teraflops and Terawatts at:
https://drive.google.com/open?id=0B7JgGimv_JMJaWdYQXdtb1RVZVE
Greets,
http://estaciontrend.blogspot.com/
I like your idea, energy-based as one of the most needed things everyday but bitcoin development doesn't run smoothly due to many people involved and they have different thoughts about how bitcoin should be.
Bitcoin still have to fluctuate, rise and drop back, its volatility give several chances for everyone to buy and sell at any rate they want.
But as long as bitcoin value keep increasing, than it will be fine even its not pegged by energy-based.
But who is going to hold the bag?
Every merchant can opt to be a bag-holder
If wishes were horses, beggars might ride
A simple question begs to be asked, i.e. why merchants would want that in the first place? Are they in for charity or what? If they don't have economic interest in that (which in most cases boils down to pure profits), they won't do anything along these lines. More specifically, they will just increase their profit margins and will ask for hefty premiums to avoid getting caught by Bitcoin volatility (or choose to abandon Bitcoin altogether). Why the American dollar is universally accepted around the globe? Right, because it is as solid as rock
I would argue for having good and strong support for defending crashes and controlling high volatility. Look at so many collisions experienced by bitcoin.
But who is going to hold the bag?
Every merchant can opt to be a bag-holder. But the losses should be minimal in all cases where the merchants sell goods with small marginal costs for them. The prime example for this are digital goods like music, movies and software.
Let's have a case where music and movie producers sell music and movies and with these assets "back" Bitcoin by guaranteeing the price for 24 hours. Now, a 20% crash happens. An "average Joe" (we must assume that he regularly buys movies and music) that has invested in Bitcoin, has the choice to accept the 20% loss or buy some music and movies for it that he wanted to buy.
If he cuts his losses and sells the coins with 20% loss at an exchange, he would drive the price further down - it's an invididual loss for him and also a loss for the Bitcoin ecosystem (at least, everybody that is owning Bitcoin).
But if he accepts to buy the media, he has made no loss monetarily (because he, as a music&movies lover, is satisfying an individual necessity), and the merchant has sold one copy more that costs him closely to nothing. So it would be extremely probable that merchants would achieve more sales in crash periods. It's a win-win situation for both actors.
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how are you going to implement backing up of a decentralized currency in practice?
It would be - a decentralized backing ecosystem
My proposal is to provide the "backing option" for plugins for most Bitcoin merchant solutions (e-commerce platforms, wordpress commerce plugins etc.) and integrate it into centralized payment providers like BitPay and also into decentralized solutions like OpenBazaar (although that is already a little bit more complicated because we'd need an "oracle" for it like in Bitshares).But who is going to hold the bag?
Who will be that wretched fellow appointed to keep up the rates by selling precious assets if panic sell-offs start all of a sudden? After all, the government which has set the fixed exchange rate for a currency backed up by some hard asset (say, gold) also happens to print that currency. So if it keeps its monetary policy lean and mean, it won't have to face insurmountable difficulties with supporting the exchange rate as it deems appropriate. Besides, I heavily suspect that it is next to impossible (if not outright impossible) with decentralized currencies as well as pretty meaningless, and still more so with currencies which are hard capped (the cap itself would serve as a substitute for a "back-up")
In fact, this task is perfectly well fulfilled by merchants and service providers just accepting a certain currency (Bitcoin in this case) as a means of payment for their goods and services. It could be said that any currency which is not directly backed up by a specific asset is backed by all the goods that can be bought for it.
Yes, but in the present situation there is a problem: most merchants use a solution like BitPay where the price of the good follows the BTC/USD, BTC/EUR etc. exchange rate. BitPay, as far as I know, guarantees a fixed price only for 15 minutes. If merchants could extend this period to 24 hours, they could really "back" the price in the case of a crash.
On the other hand there are merchants (e.g. in OpenBazaar) that accept fixed prices in BTC for their goods but can end the product sale every time. That is also only a limited "backing" of the price because in the case of a crash most merchants would retire their products until the dust has settled.
So the "price guarantee" for 24 hours should be an option widely available for merchants, in most payment platforms.
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how are you going to implement backing up of a decentralized currency in practice?
It would be - a decentralized backing ecosystem
My proposal is to provide the "backing option" for plugins for most Bitcoin merchant solutions (e-commerce platforms, wordpress commerce plugins etc.) and integrate it into centralized payment providers like BitPay and also into decentralized solutions like OpenBazaar (although that is already a little bit more complicated because we'd need an "oracle" for it like in Bitshares). As to me, having a few reference values would only make matters terribly worse
Since it will excessively complicate things while not solving the main task, i.e. making the coin less volatile. In fact, with two or more independent factors, you can never be sure that they won't change in unison thus adding to volatility, not taking from it.
Since it will excessively complicate things while not solving the main task, i.e. making the coin less volatile. In fact, with two or more independent factors, you can never be sure that they won't change in unison thus adding to volatility, not taking from it.
If taking a basket that is too small that may occur (e.g. "Oil + Soybeans + Wheat", above all, prices of agricultural goods are often somewhat related and related to oil prices).
But that isn't what I had proposed on the linked thread. The idea is to give merchants the possibility to back Bitcoin's value, and so we would have - if it is successful - a large diversity of products and services backing Bitcoin. Volatility to the upside cannot be fought by the mechanism, but it is volatility to the downside (crashes) that most people fear when they start with Bitcoin. What I want to achieve is that in a crash, people can sleep calm because they know that tomorrow they will be able to buy things at the same BTC price than today
Ultimately, you don't need that
In fact, this task is perfectly well fulfilled by merchants and service providers just accepting a certain currency (Bitcoin in this case) as a means of payment for their goods and services. It could be said that any currency which is not directly backed up by a specific asset is backed by all the goods that can be bought for it. And this is the best way for diminishing volatility (since that seems to be the final aim). On the other hand, how are you going to implement backing up of a decentralized currency in practice?
BTC can't crash if all the exchanges disallow bids & asks below the ATH.
As to me, having a few reference values would only make matters terribly worse
Since it will excessively complicate things while not solving the main task, i.e. making the coin less volatile. In fact, with two or more independent factors, you can never be sure that they won't change in unison thus adding to volatility, not taking from it.
Since it will excessively complicate things while not solving the main task, i.e. making the coin less volatile. In fact, with two or more independent factors, you can never be sure that they won't change in unison thus adding to volatility, not taking from it.
If taking a basket that is too small that may occur (e.g. "Oil + Soybeans + Wheat", above all, prices of agricultural goods are often somewhat related and related to oil prices).
But that isn't what I had proposed on the linked thread. The idea is to give merchants the possibility to back Bitcoin's value, and so we would have - if it is successful - a large diversity of products and services backing Bitcoin. Volatility to the upside cannot be fought by the mechanism, but it is volatility to the downside (crashes) that most people fear when they start with Bitcoin. What I want to achieve is that in a crash, people can sleep calm because they know that tomorrow they will be able to buy things at the same BTC price than today.
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Regarding energy, there are different types of it in respect to how much work can be done with it, electricity having the highest capacity to make work, while heat energy the lowest.
I think electricity is also what the OP is trying to peg to Bitcoin. But in his paper he doesn't explain how to exactly make the peg work. Hey OP, ¿dónde estás?
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And just in case, you shouldn't make your threads self-moderated, otherwise many people will stay away from posting in them. No one wants his posts deleted for whatever reason (whether he is in a signature campaign or not)
May be true. Will add a moderation note, as damage is already done
Suuden crash in the case of bitcoin cannot kill it not now. If it were to be other alts where a dump by the developer might make the price not to recover could kill it but not bitcoin which has grown to this point where every dip presents an opportunity for everyone to either jump in or increase the stock because by that the it will be forced back up by the time I want to increase my 0.01btc to 2btc due to the crash.
Because any currency needs a reference value if it is going to avoid those dramatic ups and downs.
I think it is not necessary to have one particular reference value. A simple backing mechanism like I'm proposing here would also help to combat volatility. But there seems to be low interest for that in the Bitcoin community. (Perhaps I should bump this idea in the next real bear market).
However, I agree with you that energy is the "purest" asset that exist in the world
As to me, having a few reference values would only make matters terribly worse
Since it will excessively complicate things while not solving the main task, i.e. making the coin less volatile. In fact, with two or more independent factors, you can never be sure that they won't change in unison thus adding to volatility, not taking from it. If they are not independent, it makes no sense to use more than one factor anyway. Regarding energy, there are different types of it in respect to how much work can be done with it, electricity having the highest capacity to make work, while heat energy the lowest. And just in case, you shouldn't make your threads self-moderated, otherwise many people will stay away from posting in them. No one wants his posts deleted for whatever reason (whether he is in a signature campaign or not)
Because any currency needs a reference value if it is going to avoid those dramatic ups and downs.
I think it is not necessary to have one particular reference value. A simple backing mechanism like I'm proposing here would also help to combat volatility. But there seems to be low interest for that in the Bitcoin community. (Perhaps I should bump this idea in the next real bear market).
However, I agree with you that energy is the "purest" asset that exist in the world.
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And as I said in my other posts, the best reference value is ENERGY. The most pure asset in the universe.
And there's got to be a way to tie the value of bitcoin to Joules.
And there's got to be a way to tie the value of bitcoin to Joules.
There were some discussions about that topic in 2011 to 2013 about a cryptocurrency whose price would be tied to energy. Now they are buried in the altcoin forum:
GEM
Encoin
some discussions here about a so-called "MordorCoin"
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I have looked at it, but I don't understand how your energy-to-cryptocurrency peg would work.
Cheers from your southern neighbors
As Dinofelis said, cash with a finite supply is inheritly volatile. Fiat is able to control giant swings with policy changes & fresh currency, this is something that bitcoin seeks to avoid. We can't add mechanisms for price control and then in the same breath call Bitcoin a "freely traded market", which imo is one of the more appetizing features of BTC.
If limited supply is the core reason for drastic fluctuations then I guess we need to switch over to satoshi based trading instead of current doing BTC based. For example dogecoin are having lesser volatility as they are having huge number of units and no total supply cap.Well I think no other alt coin can replace bitcoin as being top crypto currency.
Bitcoin will always be bitcoin. Any currency have the volatility as a player in the market.
There will always be ups and downs so no currency will be stable even though there's a high supply. That's our economy.
No not possible,huge price volatility may be a cause of panic of holders but will never be a cause of bitcoin dying.In fact price volatility is the caused why bitcoin investors earn into it,they buy at sudden drop and sell at sudden pump.Without huge proce volatility bitcoin will not rise fast
Hi Ev'rybody.
Last days we witnessed a 20% crash in bitcoin, not to sepak about other crypto, including ETH that had the most solid growth till then.
These anomalies, as good as they might be for day traders, does not speak well about the BTC as a reserve currency.
As I said before, there's a reason why paper money was pegged to gold prices and reserves. Because any currency needs a reference value if it is going to avoid those dramatic ups and downs. The euphemism of USDT is just out of question.
And even though I'm strongly against any regulation of BTC or any other crypto, I have to say, leaving it freely float poses dangers such those I said, plus manipulations of speculators who can, by their own operations, affect prices at will.
So, I will insist that crypto needs a value reference. And as I said in my other posts, the best reference value is ENERGY. The most pure asset in the universe.
And there's got to be a way to tie the value of bitcoin to Joules. There's already SOLARCOIN, but to be honest I'm not sure how that is working.
Future economy has to be energy-based.
Please feel free to download my proposal in pdf: Teraflops and Terawatts at:
https://drive.google.com/open?id=0B7JgGimv_JMJaWdYQXdtb1RVZVE
Greets,
http://estaciontrend.blogspot.com/
Last days we witnessed a 20% crash in bitcoin, not to sepak about other crypto, including ETH that had the most solid growth till then.
These anomalies, as good as they might be for day traders, does not speak well about the BTC as a reserve currency.
As I said before, there's a reason why paper money was pegged to gold prices and reserves. Because any currency needs a reference value if it is going to avoid those dramatic ups and downs. The euphemism of USDT is just out of question.
And even though I'm strongly against any regulation of BTC or any other crypto, I have to say, leaving it freely float poses dangers such those I said, plus manipulations of speculators who can, by their own operations, affect prices at will.
So, I will insist that crypto needs a value reference. And as I said in my other posts, the best reference value is ENERGY. The most pure asset in the universe.
And there's got to be a way to tie the value of bitcoin to Joules. There's already SOLARCOIN, but to be honest I'm not sure how that is working.
Future economy has to be energy-based.
Please feel free to download my proposal in pdf: Teraflops and Terawatts at:
https://drive.google.com/open?id=0B7JgGimv_JMJaWdYQXdtb1RVZVE
Greets,
http://estaciontrend.blogspot.com/
Forgive me if am slow i understand everything you said about reference but if bitcoins reference is to be ENERGY, how is it going to work, How will they implement it. I'd be happy if you can clarify that for me.
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