ebitcoinics news 12 Aug, 2019 news.eBitcoinics.com Views: 41
Unchained Capital to Bitcoin Critics: Bitcoin is not too Volatile
One argument that Bitcoin and crypto critics have used against the industry is that they are too volatile to be useful both as a currency and as a store of value. However, Unchained Capital has come up to argue against this popular idea. In a publication titled “Bitcoin Is Not Too Volatile”, the blockchain financial services company listed a number of reasons why Bitcoin can be considered a very good store of value despite its volatility.
The article stated that Bitcoin’s volatile nature is one of the characteristics that distinguish it from conventional money and has only increased users’ faith in cryptocurrency.
“People that store wealth in bitcoin are forced to think through first principles in order to understand characteristics of bitcoin which otherwise seem, on the surface, to contradict an establishment view of money, which ultimately hardens convictions. Bitcoin volatility is one of these oft-criticized characteristics,”
Bitcoin has seen a rather dramatic price increase in 2019 and also throughout its existence. While critics still blame market manipulators and whales pumping price to dump later, Unchained Capital says Bitcoin’s relatively low supply and increasing adoption is directly responsible for the price increase.
For instance, Bitcoin circulating supply has stabilized long ago and no further significant supply is coming. At the same time, there is increasing adoption with the figure growing 12 times between 2016 and now. The value, however, keeps soaring because of these two factors playing together.
Those who consider gold to be a better store of value actually do so because they believe Bitcoin’s volatility disqualifies it from being a suitable store of value. Unchained Capital, however, argues that volatility does not make any asset an ineffective store of value, citing an example with the U.S Dollar which does not seem volatile but is a bad store of value as it has lost its value consistently for decades.
Despite the volatility issue with cryptocurrencies, their popularity keeps soaring with each passing day.
Just recently, China which is known to put up the most resistance announced it will be launching its own government-issued national digital currency. Other key leaders have expressed optimism that Bitcoin has a bright future despite the volatility.
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