Quote from: jaysabi on October 24, 2017, 06:05:01 PM

Quote from: astralliam on October 24, 2017, 02:13:08 PM

The other thing is money creation. Now we have central banks and commercial banks creating money (as debt) and feeding it down to companies, who use it to pay staff. This creates massive stability (inertia?) in the current system. It seems much more likely that an alternative crypto-based economy grow in parallel to this old paradigm, without some major innovations this can only happen very slowly in the margins and it will take a long time to gain critical mass.

Perhaps one day noone will ask how much a bitcoin is worth today. Rather they will ask how much a USD is worth today. But the truth is this could take long time.

If BTC crashes it could go down like the nasdaq in 2001 and take quite a long time to come back up. I think it will. If I can a stash of bitcoins, I'd definitely hold some right now, but I'd also be looking to divest some into safe stores of wealth.

I agree with just about everything you wrote, but want to highlight the bolded section. It seems to me that this is an impossibility, because nobody can afford to transact in btc or store value in it with such volatility. Any producer or merchant accepting btc as a payment option has to immediately convert the transaction into fiat or risk having their profit margin eaten away by the volatility. It seems impossible to me to have a parallel btc-denominated system grow along side the fiat-dominated system because everything to sustain a btc-only system is not produced presently. There will still be points where btc has to be converted in order to interact with the larger economy, and god help you as a businessman if btc is in a down period when you have to buy new supplies, because all the transactions you would have done in btc over the previous period would now be at a loss.

Yes, I can't argue against this either. Anyone producing goods for instance with fiat based upstream costs would probably find selling in BTC (and holding it) a risky strategy. couple of pounts:

i) There's the upside potential to consider too. If you sold your carrots for some bitcoins a few years ago and you'd very happy about it today. (but you'd have to have been able to afford to hold them).
Basically volatility isn't a problem in you can afford the risk.
Say, if I'm a comfortably well off consultant who own a home, my running cost are quite low I can afford to charge my services in BTC knowing they might go up for down Vs Fiats. In general suppliers who can afford to take the risk on a portion of their income will find this much easier.

iii) Conversion to more stable values stores is always an option. If I sell my BTC and convert to fiat as soon as I sell my goods there a lot less risk. It's important to remember, fiats can go up and down too. The UKs brexit referendum dropped GBP by 20% over a few days and this affected importers significantly. It's not BTC level volatility but just pointing out there is no ultimately stable currency.
(Maybe BTC will become the ultimately stable currency one day? once everything has been mined and there a no more forks its possible BTC becomes ridiculously stable. I'm not really sure this is likely and it's not necessarily easy to define what stable actually means, for now it means compared USD but that may not always be the case.)
The downside of simply selling in BTC and converting to fiat is that BTC prices will be equally volatile.