so the question is at what point does any cryptocurrency become a stable store of value to begin attracting those that are trying to avoid the negative interest rates that are besetting contemporary finance? I'm assuming its merely a measure of time - but how much time? and how much stability?
When I win the lottery and start buying in.
Seriously, though, it'll probably be once the monetary inflation of bitcoin drops significantly lower than most fiat currencies'.
You think so though?
I always had thought that it would take a significant increase in liquidity to become even close to stable, on the route that the ability to remain stabilized would require both an incredible price as well as the ability to encompass the collective wealth of all involved.
So, for the currency to be stable within, say, 1%, then no less than 1% of the total marketcap needs to be within +/- 1% of the price, while factoring something relating to the userbase that would be looking to trade in that 1%.
So for a currency worth 5 billion, and a price of 100$ for a unit, between the price of 99$ to 101$, i'd be looking for $50 million to be ready to go in that range for either sale or purchase. This isn't factoring a scale relating to having less available at market prices and having more available at trading prices.
I'm probably off base a bit, never really studied much economics, but have wondered what stability would look like on the charts.
I have studied Economics Major. Stability can be:
- exchange rate stability
- price stability
- neither.
In the latter part of 1800s, exchange rates were fixed (each country's currency was just a differing weight of gold). Prices fluctuated a lot based on natural events, but had an overall declining trend based on productivity increases and expansion of trade.
Now, exchange rates change widely, even big countiers' currencies (USA; EU; Russia; Japan; China) are allowed to fluctuate by up to 100% per year against each other. This does not make prices stable, however. Some contractual prices are more sticky than the others (wages denominated in own currency), giving the impression of stability where nothing exist.
The prices have never been stable. We should not think that it could be possible in cryptoeconomy either. The whole goal is absurd and should be rejected.
Oh I see, currency stability is a mirage that I've accepted over not enough years of watching prices and remembering them throughout the seasons, and likely a misleading gimmick if used as a specific selling point. This makes a lot of sense, thanks!
Honestly, thinking about this more, I shouldn't have said that those would be the conditions for it to be stable. (Besides my lottery comment, which was somewhat of a joke.) Those conditions might be the conditions for it to go *up*, not become stable.