While it is really volatile, it is always going up and up. At least that seems to be the trend.
This is a revolution. This is total free market. The rules are new and might not be near similar to any other trading.
This is a revolution. This is total free market. The rules are new and might not be near similar to any other trading.
They go up and then no one wants to sell. If you check out certain areas on localbitcoins you'll find the sellers have disappeared. It's not good for liquidity.
Imagine if it was doing a spike down and there were no buyers? Markets are two way streets.
As a store of value, gaining value exponentially is a sign of danger, because it is clearly unsustainable, even in the short term. While it gains though it seems a one way bet and lots of people will take it, as they did during the south sea bubble, the railway bubble, the dotcom bubble, housing bubbles, tulips etc. Each time it was different, and we'd achieved a new paradigm where old rules no longer applied (and in some sense in each case this was true, but people got carried away).
As a currency, volatility over hours, days and months is deadly - who wants to transact in a currency when you can't tell what the value of what you hold will be tomorrow or later today?
As a currency, gaining value rapidly all the time is also difficult - who wants to transact in such a currency instead of just holding on to it and spending other currencies or bartering? It becomes more an investment than a currency (see gold when paper money is available).
Still it's an interesting currency and I certainly wouldn't discount it (though it has not taken over the world just yet!) - just wary of irrational explanations for its huge rise in value over the last few months.
> As a currency, gaining value rapidly all the time is also difficult - who wants to transact in such a currency instead of just holding on to it and spending other currencies or bartering?
That's another argument that keeps popping up and doesn't make sense, it's basically a myth. Economists and opinionologists dread this imaginary situation where people will starve before spending their deflationary coins. Hint: The world did just fine for thousands of years using gold. And no one starved to death with Bitcoin either yet.
If you have other currencies to spend or stuff to sell, you could have used them to buy more Bitcoin, and use Bitcoin to buy whatever you need at whatever price it is at the moment, so not spending Bitcoin and spending other things instead doesn't make any sense either.