Post
Topic
Board Economics
Re: For now, bitcoin only suitable as a store of value
by
hominin
on 16/04/2013, 03:47:30 UTC
Catch-22

BTC is too volatiles to use for commerce so it has no exchange value.
BTC's store-of-value is based on its ability to be exchanged, it only has store-of-exchange-value
If it has not exchange value then it has no store or value.


Normally you can't have both. USD can not work as a store of value since it inflates continously, but it works as a medium of exchange. Gold do not work as a medium of exchange but they hold value

And, low liquidity does not mean no exchange value, if price greatly swing between 30-300, it's just high volatility, you have to either deleverage or buy some derivatives to hedge the risk, if you don't have the time to care about exchange. I have explained before that majority of people will not pay bitcoin for daily consumption, since fiat money already works enough good

A retirement saving medium is where bitcoin will succeed first, if you have started to save in bitcoin each month since last year, now your retirement saving account is worth many times more than a fiat money saving account, even after this crazy rally and crash

I'm with Impaler on this; What is happening right now is; buyer purchases some BTC for a transaction, by the time the transaction occurs, his bitcoins drop in value so he can't afford what he was planning to get so buys less goods and services. the seller (of goods and services) gets his BTC but by the time he converts to $, BTC has lost value so he's not getting as much for his product. How long do you think that can continue before people stop buying and selling goods and services with BTC?? And when they do, how do you hold the exchange value of a currency that you can't buy or sell anything with?!