• Home
  • Bitcoin
  • Ethereum
  • Blockchain
  • Cryptocurrency Hackers
  • Ripple
  • Litecoin
  • Contact Us
Newsletter
Crypto Hoarding
  • Home
  • Bitcoin
  • Ethereum
  • Blockchain
  • Cryptocurrency Hackers
  • Ripple
  • Litecoin
  • Contact Us
No Result
View All Result
  • Home
  • Bitcoin
  • Ethereum
  • Blockchain
  • Cryptocurrency Hackers
  • Ripple
  • Litecoin
  • Contact Us
No Result
View All Result
Crypto Hoarding
No Result
View All Result
Home Bitcoin

Bitcoin Shows Us That Not All Volatilities Are Created Equal – Forbes

Admin by Admin
April 9, 2021
in Bitcoin
0
Bitcoin Shows Us That Not All Volatilities Are Created Equal – Forbes
189
SHARES
1.5k
VIEWS
Share on FacebookShare on Twitter
Bitcoin (BTC) Smashed The $50.000 Milestone For The First Time Ever

IMAGE:

NurPhoto via Getty Images

For many people, the main obstacle to using cryptocurrencies is that they are volatile; their value fluctuates sharply across time depending on, apparently, many different factors.

To put the issue in context, the original paper on bitcoin was published in late 2008 and the first transaction in early 2009: since then, its value in dollars or euros has risen by more than 15,000%.

The evolution of the bitcoin in relation to both dollar and euro.

BTC/USD and BTC/EUR

E. Dans

In contrast, over the same period of time, the parity between the dollar and the euro, has varied by a few percentage points up or down. No surprise therefore that bitcoin is seen as highly volatile and unsuitable for transactions, and at best, a store of value, subject to the systemic risk that arises every time the authorities or a government make decisions that could affect it. China talks of banning bitcoin mining and its price falls. Elon Musk uses part of Tesla’s reserves to buy bitcoin? Bitcoin rises. Janet Yellen calls bitcoin extremely inefficient? Bitcoin falls again. This instability has encouraged speculation, while others are wary of the risk.

Why is bitcoin so volatile? In a sense, the issue is structural and part of a process: bitcoin, by the very nature of its algorithm, consists of a fixed number of units, twenty-one million, of which, as we see in the graph, about 90% have already been issued. During this time, the bitcoin adoption process is subject to social and legislative factors of all kinds and conditions, which, while not affecting the currency’s mechanism per se, do cause, as we have already seen, temporary fluctuations, sometimes significant. However, its algorithm continues doing its job, based solely on mathematics, and nothing that any legislator says can really affect it in the long term. A country could ban bitcoin, but in practice, this is the same as trying to limit the use of any technology: if its value proposition attracts a sufficient number of users, such bans are a waste of time. And since the value proposition of bitcoin in the long run — a currency with self-contained rules, monetary policy and consensus rules implemented by software and with an independent value unaffected by the actions or decisions of any particular actor — is evident, it will remain in use.

Related articles

What ‘crypto winter?’ Schwab launches ETF giving investors significant cryptocurrency exposure – CNBC

August 10, 2022

Have Bitcoin and Ethereum Prices Bottomed Out? What Experts Say – NextAdvisor

August 10, 2022

MORE FOR YOU

In short, bitcoin’s volatility is simply a reflection of adoption mechanisms. Since not everyone understands how it works or has accepted that it is the future of money, it remains subject to volatility, which will continue as long as its process of price discovery does not stabilize. This has not happened yet, because on the one hand, not all bitcoins have been issued, nor has it been adopted en masse yet. What happens when all bitcoins have been issued and more and more people and entities become aware of its value proposition? Its use increases, the value-setting process converges, and it becomes valuable as a transactional currency. We are, quite simply, witnessing that process in real time.

What will happen to currencies such as the dollar or the euro? Their volatility is of a different order. These are currencies that respond to the decisions of the governments of a country or countries, which in many cases are dealing with natural catastrophes, pandemics, bailouts, other spending priorities, or simply the need to “reactivate the economy”, and which, therefore, form part of an imperfect system in which it is necessary to continue generating money and stoking supposedly “healthy” inflation, with all that this entails in terms of increased inequality. In reality, currencies such as the euro or the dollar, although they provide us with a false sense of stability — in part because we mistakenly believe there are reserves behind them — they are much more unstable and subject to random factors that are impossible to control.

So yes, bitcoin is volatile, but a different type of volatile. Bitcoin is convergent in the long term and a price will be established by mathematical means, while traditional currencies are subject to hard-to-predict political decisions and processes, as well as structural inflation, and governed by rules that are, as such, contradictory.

Once we reach a certain level of consensus about the value proposition of a technology, its mass adoption becomes unstoppable and inevitable. Next time somebody mentions bitcoin’s volatility, remember that.

Share76Tweet47

Related Posts

What ‘crypto winter?’ Schwab launches ETF giving investors significant cryptocurrency exposure – CNBC

by Admin
August 10, 2022
0

What ‘crypto winter?' Schwab launches ETF giving investors significant cryptocurrency exposure  CNBC

Have Bitcoin and Ethereum Prices Bottomed Out? What Experts Say – NextAdvisor

by Admin
August 10, 2022
0

Have Bitcoin and Ethereum Prices Bottomed Out? What Experts Say  NextAdvisorBitcoin and Ethereum jump on inflation news, talk of 'summer rally'  FortuneFirst...

Bitcoin Rally Ignites Lackluster Performance Of Crypto Stocks | Bitcoinist.com – Bitcoinist

by Admin
August 10, 2022
0

Bitcoin Rally Ignites Lackluster Performance Of Crypto Stocks | Bitcoinist.com  Bitcoinist

First Mover Asia: Bitcoin Snaps Its 4-Day Rally Tuesday; Troubles in Cryptoland? Not at Korea’s Muted Mega-Blockchain Week – CoinDesk

by Admin
August 9, 2022
0

First Mover Asia: Bitcoin Snaps Its 4-Day Rally Tuesday; Troubles in Cryptoland? Not at Korea's Muted Mega-Blockchain Week  CoinDeskBitcoin, Ethereum Technical...

Bitcoin (BTC) Slumps, Ending a Four-Day Rally, as Volatility Reigns – Bloomberg

by Admin
August 9, 2022
0

Bitcoin (BTC) Slumps, Ending a Four-Day Rally, as Volatility Reigns  BloombergBitcoin braces for US inflation data as CPI nerves halt BTC...

Load More
  • Trending
  • Comments
  • Latest
Major Changes Coming to XRP Ledger As Ripple-Backed Startup Launches Key Amendment in Beta Testnet – The Daily Hodl

Major Changes Coming to XRP Ledger As Ripple-Backed Startup Launches Key Amendment in Beta Testnet – The Daily Hodl

April 21, 2021

SteveWillDoIt reveals hacker stole his crypto wallet: “I lost a lot of money” – Dexerto

July 26, 2021
Forte’s PTI gets financial transaction licenses for blockchain games – VentureBeat

Forte’s PTI gets financial transaction licenses for blockchain games – VentureBeat

February 11, 2022

Blockchain Use in Supply Chain Leads to Greater Benefits – The National Law Review

August 25, 2021

Ethereum just pulled off its final test run ahead of one of the most important events in crypto – CNBC

0

Rivals Ripple and R3 partner up | PaymentsSource – American Banker

0
Ripple seeks shelter in D.C. from Libra’s political storm – American Banker

Ripple seeks shelter in D.C. from Libra’s political storm – American Banker

0

Litecoin Gets Bullish Speculation, at Last, as Upgrade Approaches – Coindesk

0

Ethereum just pulled off its final test run ahead of one of the most important events in crypto – CNBC

August 11, 2022

What ‘crypto winter?’ Schwab launches ETF giving investors significant cryptocurrency exposure – CNBC

August 10, 2022

Hackers have stolen $1.4 billion this year using crypto bridges. Here’s why it’s happening – CNBC

August 10, 2022

Have Bitcoin and Ethereum Prices Bottomed Out? What Experts Say – NextAdvisor

August 10, 2022
Crypto Hoarding

We bring you the best Premium WordPress Themes that perfect for news, magazine, personal blog, etc. Check our landing page for details.

Categories tes

  • Bitcoin
  • Blockchain
  • Cryptocurrency Hackers
  • Ethereum
  • Litecoin
  • Ripple

Newsletter

[mc4wp_form]

  • Home
  • Bitcoin
  • Ethereum
  • Blockchain
  • Cryptocurrency Hackers
  • Ripple
  • Litecoin
  • Contact Us

© 2017 JNews - Crafted with love by Jegtheme.

No Result
View All Result
  • Home
  • Bitcoin
  • Ethereum
  • Blockchain
  • Cryptocurrency Hackers
  • Ripple
  • Litecoin
  • Contact Us

Copyright (c) 2021 - Crypto Hoarding - All Rights Reserved - web design by TechyRack