Bitcoin Volatility
Some people say that volatility of Bitcoin prices makes it poor “store of value”. You never know how much exactly do you have today: $10500, $9600 or $11201. When you pay for something you may pay 5% more than what it was just a minute ago. Or, if you are a merchant, you may receive 5% less than what you expected. That could be a problem.
We asked experts and got some evidence that it is not quite correct. Bitcoin has been a great store of value over the past 4 years. Almost everyone who invested in Bitcoin and kept it for more than a year enjoyed gains from 200% to 4000%. This means that 10% daily volatility is no longer a problem. When you pay with Bitcoin you enjoy more than 90% discount. Who cares if it’s one day 91% instead of 93%?
Similarly, merchants who consistently accept bitcoins and keep most of them around are compensated for small losses on volatility with big gains on their savings. For the past two months I was paying for bagels nearby with bitcoins and half of the time the price was going slightly down one hour after the payment. However, in overall, the guy accepting them finally made more than three times what he would receive in euros. Of course, last two months were better than in average, but over a one-two year period everyone was better off no matter when they invested.
Those merchants who do not want to invest in Bitcoin, but wish to enjoy zero-fee transactions without fraud, can use BitPay or Coinbase.
Bitcoin is both volatile and is a great store of value so far.
PS. This is not an endorsement to buy Bitcoin. You should not do that based only on the price history. If it was a Ponzi scheme or a huge bubble, the price would look the same. You should only invest if you study what Bitcoin is and how important it may (or may not) become in the future. Otherwise, do not put more than a dollar in it.