If you want money that can't be seized, can't be frozen, can't be manipulated, Bitcoin is your asset. If you want to be able to send money across continents, bitcoin is your asset. If you want to hedge against USD risk, bitcoin is a great choice (very very different fundamentals, and almost always rises with political instability). Some people want that badly enough for at least some of their portfolio that they are willing to accept the volatility risks.
The volatility is a detractor, but that definitely doesn't mean it's good only for speculation. Bitcoin keeps coming back crash after crash because there is real value in owning some.
Bitcoin certainly isn't useless, but "money" is something that is widely acceptable in exchange for goods and services. Living in the tech bubble might skew your view somewhat, but I don't think Bitcoin is more widely accepted than tons of other commodities.
I'm no economist, but can't it be argued that moderate inflation is a good thing? The reasoning, as I understand it, is that it maintains liquidity since the progressive loss of values nudges towards expenditure.
Inversely, massive deflation means you're "making money" just by saving it, ergo people would rather save than spend.
Again, I'm no economist, but assuming I'm not wrong in my understanding of inflation/deflation, I'm going to doubt the rest of your claims on the grounds that they smell like oversimplification.
Better in relation to deflation.
Money works like any other commodity; there is supply and demand. We hedge towards inflation to ensure that the currency circulates (holding it is "bad") and to ensure there is no excess demand that prevents financial transactions.
Let's be real, the vast majority of the development into crypto currencies is due to the speculative qualities that comes from having a limited supply of coins.
Stable currencies works fine only in cases where there's significant power structures/momentum behind them. If Bitcoin didn't increase in value with increased usage, barely nobody would use it (since nobody/nothing would support it). Bitcoin had neither when it launched.
Or it shows that the market still hasn't figured out a reasonable price for it.
> It could literally drop to zero tomorrow if something happened to it (like a major country making it illegal, for example).
There are use cases for it in the illegal markets that keep it from dropping to zero IMO (holding files for ransom, moving capital out of china, buying illegal goods etc), a major fall in price is possible though.
Agreed.
> If I buy a loaf of bread for $1 now, I should be able to buy a loaf of bread for $1, 10 years from now.
Don't agree.
> Currency inflation is BAD, and so is currency deflation.
Don't agree.
> Stability is GOOD.
Agree. But stability doesn't mean the value of currency doesn't change, it only means the value is predictable. A currencies value need only be predictable, not stable.
Stable value of a currency is impossible, you cannot keep the loaf of break the same price over a decade and you certainly can't even attempt to do it without the power to inflate or deflate the currency.
The things you want from a currency, i.e. unchanging value without inflation or deflation is simply not possible. Wealth isn't fixed in supply, it fluctuates drastically over time and thus so much the supply of money if you want to attempt to keep the value stable and that's why we inflate the value of our money ever so slightly each year, to maintain predictable value over long periods of time while avoiding the negative feedback cycle inherent to deflating it.
We had a currency that relatively stable in supply, gold, it made a horrible currency because as wealth fluctuated in supply, and there was no ability to manage the supply of gold, the only natural thing that could happen did, the value of the gold supply fluctuated wildly, exactly what you see happening in bitcoin. If you want stable value from a currency, you need the ability to inflate and deflate it to maintain parity with the fluctuating supply of wealth in the world.
Yeah, nobody is using Bitcoin...
> The only way I would trust bitcoin for anything would be for short-term holding to transfer value from point a to b, and then convert it back into a stable currency.
So use Bitcoin that way yourself. And as more and more people with this mindset use Bitcoin, the price will rise due to increased demand, even if only to hold for a short duration.
You may argue that it is not fulfilling the role it was intended too, but the discussion around what bitcoin is "supposed to be" is a complex one.
It is natural that Bitcoin works differently than our existing notion of currency because it IS new. So when you say "Currency isn't SUPPOSED to be this volatile", that's nothing more than saying the currency you know works that way.
I also think it's inconvenient, but I don't think that's how it's "SUPPOSED" to work.
No, the point of currency, as a medium of exchange and more particularly a unit of account, is that it should be stable (it can have a long term change trend, but it should not be volatile.)
Volatile but appreciating may be an acceptable thing in a store of value, but not a currency.
Of course I know the qualities of a currency. But that's what we've learned in classes. But is this some absolute law of nature that's been around since the beginning of universe? No, it's just a man-made concept. And man-made concepts change along with human evolution.
You can choose to believe whatever you want, but your belief doesn't change the fact that people are actually spending bitcoins to make transactions online.
Volatile currency isn't a disruptive new thing; many past currencies have been volatile.
One might, perhaps, reasonably argue that Bitcoin has other features which warrant using it as a currency despite its volatility, but that volatility is bad for the purposes which define currency isn't mere conventional wisdom born from ignorance of anything different than the modern dominant forms of currency.
Who said being volatile is disruptive?
> One might, perhaps, reasonably argue that Bitcoin has other features which warrant using it as a currency despite its volatility, but that volatility is bad for the purposes which define currency isn't mere conventional wisdom born from ignorance of anything different than the modern dominant forms of currency.
Like you said, "volatility is bad for the ..." doesn't make it NOT a currency. It just makes a "bad currency". Just like how being slow is bad for file downloads but people download files through Bittorrent all the time. It's "bad" in terms of "conventional wisdom", but obviously people are using it for file transfers, so you can't say it's NOT a file transfer protocol. It's just a shitty one. Except that with the shittiness it brings some novel benefits.
I was specifically criticizing your point about how it's NOT a currency. There's a difference between "it's a bad form of currency" and "it's NOT a currency". No one is godly enough to say the latter. If people buy and sell stuff using seashells then it IS a currency, you can argue it's a bad form, but you are no in place to decide whether it is or not, since it already is.
It doesn't seem that obvious to me. Every time price stability is forced onto something, it just destroyed its market.
It's self-evident that a stable currency is preferable to volatile, though I'm interested in reading an argument to the contrary.
volatile: liability to change rapidly and unpredictably, especially for the worse.
stable: not likely to change or fail; firmly established.
Currency is NOT supposed to be an investment mechanism in and of itself.
If I buy a loaf of bread for $1 now, I should be able to buy a loaf of bread for $1, 10 years from now.
Currency inflation is BAD, and so is currency deflation.
Stability is GOOD.
The fact that bitcoin's value keeps skyrocketing proves that it is a speculative currency which is too volatile for use. The only way I would trust bitcoin for anything would be for short-term holding to transfer value from point a to b, and then convert it back into a stable currency.
The only way I would invest in Bitcoin is if I was totally okay with potentially losing every penny I invested. It could literally drop to zero tomorrow if something happened to it (like a major country making it illegal, for example).