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Comment by rawtxapp | Hacker News Reader

It does work, they have been using it in El Zonte town for quite some time now [1].

The volatility will come down as the market caps get larger, but it'll never go away (I mean even fiat currencies and gold's price fluctuate on a daily basis).

The energy usage (not waste if you consider it to be a useful thing) will only go up as the price goes up, but it'll use increasingly renewable % and stranded energy and even bankroll new renewable power plants that wouldn't have been profitable to start.

1: https://www.forbes.com/sites/tatianakoffman/2020/07/14/this-...

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This "volatility will come down as the market cap gets larger" keeps getting thrown around, yet Bitcoin just lost 50% of its value at a market cap of 1 trillion USD. What market cap is required for Bitcoin to stop being volatile?

Well, how little volatility is needed to be called stable? Over a few years, large swings can happen with major forex pairs. Take GBP/USD for example: High of 1.71602 in 2014. Low of 1.14926 in 2020. It currently trades around 1.4.

So, not the same kinds of returns and drawdowns as BTC/USD, but enough to make one's eyes water and stomach churn. Forex has always had a reputation for volatility.

I think it is more useful to look at inflation / deflation as the comparison point for a currency rather than forex pairs.

I mean even gold (which is a centuries old asset) is pretty volatile on a yearly basis (high of ~2100$, low of ~1650$ this year).

I think when Bitcoin approaches Gold's price, you can expect similar volatility because by then large institutions/countries would be holding it.

Also on a long term basis, it appreciates an average of ~300% year over year which is much better than the dollar which is depreciating on purpose.

Gold is not a used directly as a currency anymore, in part for the reason that it's hard to control the value of an asset. It turns out that having some control over a currency's inflation/deflation is very powerful and good for economies to function.

Fiat currencies fluctuate too, even a big pair like USD/EUR has a high of ~0.9 and low of ~0.8 this year and if we are talking about smaller currencies like say the Turkish Lira, you're looking at much larger changes.

Gold isn't used directly because it's not convenient, are you gonna transport a heavy metal that you can't divide into small portions to pay for stuff? No! Lightning network wallets makes even tiny payments of couple satoshis very easy/instant/almost free.

Gold is also a very bad currency.

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