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BTC bubbles

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Re: BTC bubbles

#51
post #45
post #28

Earlier quoted context omitted.

Other commodities are volatile for different reasons. Natural gas is volatile because it's literally volatile, so storing and shipping it is expensive. Grains are volatile because of variable growing seasons. Onions are volatile because US Congress banned futures markets for onions. Even so, none of these are nearly as volatile as BTC has been.

Right, my point is just that futures markets will of course reduce BTC volatility, but they're not going to make it nearly as stable as TIPS or something. Parent was saying it was going to "really stabilize." Speculating, I think an optimistic outcome is that it will end up with volatility similar to an equity index (which themselves effectively have futures markets).

In a perfect world, you're right. But it's inconceivable that there would be a BTC futures market with enough liquidity to make this happen, since a) the BTC supply is relatively small and b) no CFTC-regulated exchange is going to touch BTC as long as it exists its current quasi-legal state.

Re: BTC bubbles

#52

Earlier quoted context omitted.

> particularly its deflationary nature Which IMHO is what will kill it; it's just a terrible feature for a currency.

why?

Currencies are meant for spending, money that's worth more tomorrow than today doesn't get spent, it gets hoarded by investors, it has a built in deflationary spiral. Bitcoin is a terrible currency. The ability for a fiat currency to be inflated is not a bug, it's a necessary feature. The supply of wealth to be traded in the world is not fixed, nor can the supply of the tool we use to exchange it be.

That bitcoins are divisible completely misses the point that prices go up faster than they go down, i.e. they are sticky, and deflation is painful and feeds back into itself leading to a recession. Divisibility is not the correct solution, inflation is the correction solution, i.e. add more money rather than expect all prices to go down to adjust to the supply of a fixed currency.

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