Instead of arguing with the critics about volatility, let them have that point. It still doesn't weaken the case for Bitcoin in any significant way.
We have a user on the forum who lost 70% of his bank account, and the odds of ever seeing any portion of it returned are negligible.
Compare that to a 75% unrealized loss in valuation where you never actually lose access to the funds and the odds of an eventual recovery are far higher than the odds you'll ever get your Euros back.
Bitcoin still comes out ahead.
Topic: Volatility: Bitcoin user not affected (Read 1044 times)
So the latest craze of the government media is to attack Bitcoin for its volatile price with regards to Federal Reserve Notes. One article I just read stated that the price went from $40 to $266 and back to $40 within days.
So, why does this or does this not matter for someone who actually uses Bitcoin as a currency?
Two people: Dollar spender and Bitcoin spender. Both get paid in dollars.
Dollar spender:
Friday pay check - $2,000. It goes into his account and he spends half on bills and reserves the other half for spending.
Wednesday - buy $200 boots online
Thursday - buy $400 stereo online
Sunday - buy $200 computer monitor
Total spent for the week: $2,000
Bitcoin spender:
Friday pay check - $2,000. It goes into his account and he spends half on bills and sends the other half off to the exchange.
Monday morning - converts $1,000 to X bitcoins at Y price.
Wednesday - buy $200 boots online (price went down to Y/2, costs $400 worth of his original BTC)
Thursday - buy $400 stereo online (price went up to Y*2, costs $200 worth of his original BTC)
Sunday - buy $200 computer monitor (price up for the week the average weekly gain of 10%, Y*1.1, $182 worth of his original BTC)
Total spent for the week: $1982
Think of a casino who puts a roulette table out. One player plays 5 rounds at $10 each bet on red. He may hit it big, he may lose it all or somewhere in the middle. Either way, it is unpredictable. Why would the casino owner put out such a volatile game? Because 5000 people putting $10 on red each day would end up with the house advantage averaging out to a couple percent per bet.
If you convert each paycheck to bitcoins and spend as you would your regular dollars, if you understand dollar cost averaging, any fluctuation evens out over time. And the fact that Bitcoin is a deflationary currency that gains in value, it means that the value of your money will gain a slight percentage over time as opposed to fiat money which is purposefully inflationary.
So, why does this or does this not matter for someone who actually uses Bitcoin as a currency?
Two people: Dollar spender and Bitcoin spender. Both get paid in dollars.
Dollar spender:
Friday pay check - $2,000. It goes into his account and he spends half on bills and reserves the other half for spending.
Wednesday - buy $200 boots online
Thursday - buy $400 stereo online
Sunday - buy $200 computer monitor
Total spent for the week: $2,000
Bitcoin spender:
Friday pay check - $2,000. It goes into his account and he spends half on bills and sends the other half off to the exchange.
Monday morning - converts $1,000 to X bitcoins at Y price.
Wednesday - buy $200 boots online (price went down to Y/2, costs $400 worth of his original BTC)
Thursday - buy $400 stereo online (price went up to Y*2, costs $200 worth of his original BTC)
Sunday - buy $200 computer monitor (price up for the week the average weekly gain of 10%, Y*1.1, $182 worth of his original BTC)
Total spent for the week: $1982
Think of a casino who puts a roulette table out. One player plays 5 rounds at $10 each bet on red. He may hit it big, he may lose it all or somewhere in the middle. Either way, it is unpredictable. Why would the casino owner put out such a volatile game? Because 5000 people putting $10 on red each day would end up with the house advantage averaging out to a couple percent per bet.
If you convert each paycheck to bitcoins and spend as you would your regular dollars, if you understand dollar cost averaging, any fluctuation evens out over time. And the fact that Bitcoin is a deflationary currency that gains in value, it means that the value of your money will gain a slight percentage over time as opposed to fiat money which is purposefully inflationary.
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