Is Bitcoin really too volatile to be a useful currency?

Bolt Brownie

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Quote from: jpespa on February 09, 2018, 12:15:55 AM

Imagine the hassle of a store always changing the price of their product if you will pay in bitcoin since its value changes all the time or what if the bitcoin was payed at high value then suddenly the value go down in large amount. It is like you just sold a product at loss. Well still many store online has now accepting bitcoin as payment method perhaps they have their own strategy on how to manage sales through bitcoin. As for the situation right now the price movement of bitcoin are at small difference. But if large scale of decrease happens again then it might be very hard for most of stores to remedy their loss.

I don't really agree with this point of view. I would accept it, if you mentioned high fees, but although price volatility might seem to be a problem, and it would be if the change was to rapid, I think that most merchants could just sell bitcoins as they get them. So they would just need a script to keep the prices accurate, regarding the latest changes, and then convert the coin back to fiat as soon as they got them. I'm sure there are many services from the major wallets, that would provide that service to merchants.

For instance, when you deposit bitcoin in neteller, you will get an exchange rate, and you will get fiat in your account. That service, that in this case is provided by bitpay if I'm not mistaken, could easily be used by any merchants, so the only problem I see are the fees and not the volatility.

Of course that right now, not even the fees seem to be a real problem, because segwit adoption is increasing, and LN is being developed at good pace, so things will get even better.

Uberse

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It is likely that many (and eventually all) stocks and bonds will be controlled by blockchain-based ethereum-style smart contracts -- sort of like how Augur's Reputation tokens are controlled by such a contract on the Ethereum blockchain. You can transfer, buy, or sell the Augur tokens as freely as you want, but they remain under the control of the original contract. Such contract-controlled stocks and bonds might be usable as currency. But would their volatility alone prevent such use? No! In fact such use could increasingly be the market for such stocks and bonds -- a decentralized worldwide stock/bond/futures market. You stop at a Quickie Mart for some beer and cigarettes. You slide your card, and some fraction of the present or future value of your share or bond or its future dividend or interest payment is deducted. Depending on economic conditions, the merchant's own contract will either instantly trade the share/bond/dividend/interest for cash or credit or bitcoins or ethereums or whatever. Or maybe the contract will keep the payment for the moment.

I don't see why this arrangement wouldn't work. The volatility is just another variable, like the futures price of hops and tobacco.

Uberse

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Quote from: pooya87 on February 08, 2018, 11:18:44 PM

Quote from: Uberse on February 08, 2018, 06:18:22 PM

We read all the time that Bitcoin cannot be a valid currency because it is too volatile.

haven't read that one exactly but it is nonsense.
the only thing that volatility or better said increasing price of bitcoin creates is less incentive for some people to spend their bitcoin. and it is not everyone. the amount of money that has been going to merchants through bitcoin is the living proof. you can check bitpay stats in the past few years and see that for yourself.

Quote

Does bitcoin's volatility hamper the dark web? Has anyone seen headlines like "Dark Web Sales Fall Flat as Bitcoin Skyrockets"?

the usage of bitcoin in dark markets has dropped in the past and continues dropping because people start to realize bitcoin has never been anonymous. and now coins with real anonymity are more popular!

Are those new coins with real anonymity more stable than bitcoin?

Marucya

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Prices for bitcoins are really unstable and strongly dependent on supply and demand. This leads to self-regulation bitcoins, which will depend on users, so bitcoins will not be used.

Granslam

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Unfortunately, yes. It is one of the major drawbacks of the said cryptocurrency. The high volatility rate itself hinders bitcoin to develop as a currency and contains it as an asset for profit. Let's hope that this instability of bitcoin would someday be solved so that we could see a bright future for the bitcoin world.

Random Seller

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Quote from: Uberse on February 08, 2018, 10:58:37 PM

Quote from: Random Seller on February 08, 2018, 10:20:41 PM

If you think 1 BTC will be worth $1 million in the future, would you use 1 BTC to buy a car that’s priced at 10k today?

If you have $10K today, would you use it to buy a bitcoin or a car? You have no idea how far in the future that million dollar bitcoin might be, but you definitely know whether you need a car now. And if you start to save up another $10K by working a better job that your new car takes you to, bitcoin might tank any number of times, giving you buying opportunities. Ultimately, you have to balance risks and opportunities.

Your looking at bitcoin as an asset in that example. Would you say the same thing if your using bitcoin as a currency.

mr.bitcoin2k17

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Bitcoin is too volatile to be a useful currency, but for now, one day this volatility will stop

krishnaverma

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Quote from: JesusCryptos on February 08, 2018, 06:59:29 PM

Yes it is too volatile. Imagine prices having to change every second on every trade portal like Amazon. Moreover, if it does not solve the problem of the high fees, it is unusable as a currency also for this reason.

As an online marketer who sells some services in Bitcoins, I agree to this. For instance, I have a product that I offer for $25. One of the buyer did not had PayPal so he asked me if I will accept PayPal. Eventually, he did not order because he wanted me to cover the fees involved. There is not that margin in all services and products.

gantez

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Quote from: BTCwin1 on February 09, 2018, 12:50:14 AM

For now, bitcoin is still hard to come by as a currency.
Because of the volatility of bitcoin, and the slow transfer rate of bitcoin, the transfer fee is very high, so it is not appropriate to use it as a currency.

I will just single out one area that you mentioned which is volatility. The volatility is one factor that bitcoin is known with, it can sweep in and out. This is one reason that investors would not see bitcoin as a store house or asset. However , the reason that is that way is because there are no regulation yet. When the government come in, there will be so many restrictions in cryptocurrency, from dumping, how much minimum and maximum to invest, name them.... Those regulations would definitely stabilize the market which will be good because it will bring in the skeptics in and the market cap will seriously increase.

hdfatboy04

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All the alt coins are volatile too. We should be neutral to said Bitcoin will be used like a currency but in digital form. I believe Bitcoin will flourish and time for crypto world has still long way to go....

verasity

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I think we're still right at the start of the journey for Bitcoin. In reality, most fiat currencies have been around for a very long time now and have gone through their growing pains and got to maturation.

As adoption grows and more people start buying and transacting with Bitcoin, it should theoretically become more stable. Likewise, when the percentage of un-owned Bitcoins falls, growth starts to taper off, and people aren't expecting massive gains we should also see more stability.

joan26

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Bitcoin is not quite the same in that it doesn't pay dividends, but the key point is the same: potential. People believe that there is a chance it becomes useful as a currency, and by that time the price will have already risen by a lot, so they buy bitcoins hoping that they will increase in value.

Carlsen

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In general I think that bitcoin is a storage of wealth, not a currency.
And for an asset being volatile is not such a big problem then it is for a currency.
Then I still see the high fees and the long tranaction times as a problem. If the lightning network will be a solution for that needs to be seen.

erickkyut

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I don't think so. If people all over the world will use Bitcoin as a useful currency, its price will most likely stabilized. It will solve the volatility problem. The current price right now is based on supply and demand and as we all know, the demand for Bitcoin now is not that high. If it will be accepted worldwide, the demand will most likely increase and the price might stabilized.

penig

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Yes volatility is one of the problems to bitcoin adoption. Thats largely because it doesnt currently have much use beyond exchange trading, so the value is determined by traders and their bots, rather than a wider economic system. Its chicken and egg, its not accepted because its too volatile, it volatile because its not accepted.

Acceptance with BitPay and similar are no solution, because the vendor does not keep the currency, its converted immediately to other local currency. i.e. it goes straight to the exchanges. In fact they are part of the problem because cheerleaders say Bitcoin is being accepted when it is not really. When a company accepts actual bitcoin to their wallet, then uses that to pay their suppliers, thats when the real economic system begins to form.

itbytes

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perhaps - but bigger problem is too many scams out there. sadly regulators need to step in. weak exchanges and fake documents undermines legitimacy. every day a new one pops up. example:
aladin coin scam
http://behindmlm.com/mlm-reviews/aladincoin-review-aic-ponzi-points-scheme/#comment-394758

avikz

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Quote from: kiver on February 08, 2018, 11:03:23 PM

Quote from: avikz on February 08, 2018, 06:51:49 PM

Volatility of bitcoin price is a serious business challenge. Even though bitcoin shows good promise, but in cash rich business like general stores and fast moving consumer goods business, the volatility throws a significant profitability challenge. Unless we find a solution to immediately settle the funds received in bitcoin, it will remain as a major roadblock for bitcoin to be accepted as a normal currency. Let me explain why,

Day 1:
Bitcoin price: $10,000
Product "A" cost: $100 or 0.01 btc
Seller sold 2 units of "A" and received 0.02 btc.

Day 2:
Bitcoin price: $12,000
Product "A" cost: $100 or 0.0084
Seller sold 5 units of "A" product and received 0.042

Day 3:
Bitcoin price: $14200
Product "A" cost: $100 or 0.0070
Seller sold 3 units of "A" product and received 0.021

So on day 3, the seller should hold (0.02+0.042+0.021) = 0.083 bitcoin for selling 10 units of "A" product whose dollar value in fiat is $1,000. TIll day 3, bitcoin price was increasing and the seller was receiving less amounts of bitcoins for the same value in dollar. Imagine, the bitcoin price crashed on day 4 and came down to $9,500. Lets calculate again,

Day 4:
Bitcoin price: $9,500
Bitcoin holding: 0.083
Dollar value: (0.083 X $9500) = $788.5

So on day 4, the seller is actually making a loss of $211.5 for the $1000 product. So unless that seller is really optimistic about bitcoin, he won't favor it to be used as a currency in his store. Either he would need a service which will help him to settle every bitcoin trade immediately using an intermediary or simple don't accept it.

Probably a big company can handle such losses, but a small trader will not be able to handle this where every penny counts. That's the business challenge I am referring to and it is a major roadblock for bitcoin to be accepted as a mainstream currency.

really good explanation for bitcoin volatility problem i my self couldn't of better unfortunately i don't smerit anymore Wink

but do you think if bitcoin and other crypto assets got a world wide acceptance as a form of payment will make it reach the point of stabilization >? that's my opinion which i hope iam right about or you could maybe refer to a better solution on the volatility of crypto market

Thank you! The best solution to it, is to have a vendor like Coinbase or Bitpay who will instantly settle bitcoin in to dollar after each sale. So the store owner will not have to bother about the price volatility. What ever the price he has used to sell a product, the amount will be instantly convert to the dollar value. However, here is another challenge about the high fees. Bitcoin transaction is costly nowadays. Unless this big vendors like Coinbase or Bitpay adopts segwit, the fees will never go down. So if the transaction fees and the vendor fees both can be lowered and can be kept within 2%-5% of the transaction value, it can be a viable solution for the small business owners.

Sky5678

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For the past decades, the financial aspect of the world has been doing great even without bitcoin. When bitcoin got introduced to some countries, the fiat currencies were also in good condition. And even when bitcoin disappears in the future, countries will still be financially stable. Bitcoin is just a cryptocurrency which can be an alternative to investment and transaction of fees. Just like the previous years when we had no idea about it, when it is gone, the financial world still keeps going.

BTCwin1

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For now, bitcoin is still hard to come by as a currency.
Because of the volatility of bitcoin, and the slow transfer rate of bitcoin, the transfer fee is very high, so it is not appropriate to use it as a currency.

Falgorn

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Bitcoin clearly demonstrates its unpredictability. Then he sets another record, taking off, and less than a day later his course suddenly drops sharply.
Bitcoin has rather high volatility; The high amplitude of fluctuations in the cost graph in equivalent to the classical currencies. This indicates the instability or even the absence of a fundamental basis for the value of the crypto currency. Other trading instruments, be it currency or stocks, have a real material base. Equity is the equivalent of the market value of an operating business, classical currencies have a course that depends to a large extent on the policy of the state and the policy of central banks regulating monetary circulation and controlling the risks for users in cash. At bitcoin, both the rapid growth of its value, and the rapid decline depend on the balance of supply and demand. Predict the future - what will be the course of bitcoin tomorrow, a week, a month - just unrealistic
Accordingly, while people have agreed that this means of exchange, bitcoin is. But if global economic actors put it in doubt, it will cease to be such a means

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