Volatility of Crypto & Store of Value

Volatility of Crypto & Store of Value by Junius Matlby

vol·a·til·i·tyˌväləˈtilədē/noun

  1. 1. liability to change rapidly and unpredictably, especially for the worse.”the succession of new rulers contributed to the volatility of the situation”
  2. 2. tendency of a substance to evaporate at normal temperatures.”the volatility of chemicals in an indoor environment”

“Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.” Alan Greenspan on Gold 1966

One of my arguments against Cryptocurrency being viewed as a “unit of account”, “medium of exchange”, “money” is the absolute chaotic volatility that surrounds it’s every day (and night!) price fluctuations.  Whether it is the constant trading done by computers and individuals striving to make a quick buck or larger players at work, the valuations of various cryptocurrency titans seems to whip hither and thither as if in a maelstrom.

Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Litecoin (LTC) to name a few, cannot be considered “stable stores of value” when there are 20-40% price moves.

Look at last night for example.  BTC was in free fall with 150,000 jammed up orders on the Blockchain as panic ensued and people rushed for fire exits.  One theory I have on why we saw BTC plummet to $5,800 today from a high of over $7,900 recently is the money rushing into these bizarre “hard forks” such as Bitcoin Cash and Bitcoin Gold.  What ever happened to the fixed 21,000,000 units eh bro?  These hard forks perk some serious skepticism within me, however that is another topic.

With money rushing from BTC to its two bastard children, people holding BTC saw a marked decrease in the valuation of what they were told was a “stable store of value”, “free of manipulations!”, “decentralized”.

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Junius Maltby

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