Bitcoin is dying? | Hacker News Reader

Bitcoin is dying?

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8 pointsraullen6 comments

Over the years Bitcoin has had a tendency to have spikes of speculative trading. Most of these spikes last for fairly short periods of time and tend to settle a standard trading rate.

I don't think it's indicative of the viability of the currency itself. Just think of oil. There are frequent speculative spikes in price and subsequent falls in price but the oil still flows and people still buy it.

On the contrary, I think the observation that Bitcoin's behavior is similar to that of other commodities speaks volumes about its (non-)viability as a currency.

Could you elaborate on this? As massive "Bitcoin deposits" cannot be discovered and Bitcoins cannot be consumed for any useful purpose, most of the causes of rapid price changes to commodities do not apply. What prevents Bitcoin from having a stable price while permitting the U.S. Dollar to have a stable price?

Liquidity, a highly desireable property of currencies, is confered by virtue of 'healthy' levels of inflation. Bitcoin is, somewhat by structure, lacking in inflationary pressures, leading to the tendency for it to behave as a commodity, which makes it undesirable as a currency.

While commodities can't inflate like a fiat currency, the rate of change of supply for most commodities can respond to changing demand to at least some extent. For example, take fossil fuels: we've known about the potential of oil sands and fracking for a very long time, but nobody bothered with them because the price wasn't high enough to make it worthwhile to chase after those sources. Now that's changing, and the extra fuel that comes from exploiting them helps to keep the market price a bit more stable.

Bitcoin, by virtue of having a pre-determined and constantly diminishing growth rate, doesn't even have that. Which makes it even less desirable a form of currency. It's like an instant deflationary spiral. Just add economy!

Bitcoin was alive?!

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