Profile

Why doesn't Bitcoin Volatility Matter?

Why doesn't Bitcoin Volatility Matter?

Why is Bitcoin's price so volatile? Does it matter? In this short video, shot in east Pompano Beach, I discuss the aspects of Bitcoin's price volatility, and why the ...

Transcription

Chris: Whats up, party people? Chis DeRose here off the Atlantic Avenue Bridge and with me is Mark. Say hi, Mark. Mark: Hi. I'm Mark from Minnesota. Chris: Mark from Minnesota's going to join us today. So today I want to discuss a little bit about Bitcoin volatility, price volatility and my opinions on it, and really to address the question, 'Why doesn't the volatility of Bitcoin matter?' So let's get started.

With Bitcoin obviously a lot of people are very into the price of Bitcoin. I mean it's a big part of the allure when your friends and your relatives come out of the woodwork and they really start to get involved. It's typically around the price and then similarly, when the price is down, a lot of people start to lose interest and they say that Bitcoin has failed, or that the CEO of Bitcoin is on strike, whatever absurdity is the current news of the day. But for a lot of us that have been doing Bitcoin for a while, I think that what's really important is that Bitcoin works independent of the price and I think that it's important that the volatility really not enter the equation in many people's minds and there's a couple of easy ways to understand why. We talk about the ways that Bitcoin works as a payment mechanism and the way that merchants will be using Bitcoin. And there's companies like BitPay that will servicing these merchants.

What we will see happening, what is already happening, is companies like BitPay have underwritten the volatility risk for their merchants. When a consumer goes and spends their Bitcoin on the merchant side, that Bitcoin is converted immediately to dollars in the price denoted on the cash register. There's no risk to merchants of volatility problems. As such, volatility isn't an issue in that case. So you may say, 'Well, what about the consumer side or would consumers care?' What will similarly happen is Bitcoin develops our solutions that'll target the consumer end and which will present the consumer a US dollar denominated amount which will be converted at the time of sale into Bitcoin and sent to the point of sale register. So in the same way you'll have the reciprocal effect on the consumer side.

The consumer will open up a bank account app, maybe it'll be their Wells Fargo app, the CitiBank app, maybe their Starwoods Credit app, and on that will listed their net 30 payment terms of their account that's denoted in US dollars. When they go to the register they initiate a payment either by QR code or NFC. It'll be converted at that point on the fly to Bitcoin. That volatility will be unwritten by some agency, maybe BitPay. And then again, on the other end, on the receiving terminal, that volatility would be underwritten. So at that point, volatility will be completely removed and Bitcoin will be used for transmitting value, and on both ends of the connection there's no risk whatsoever to the volatility that could exist.

I think that in addition to that, CounterParty itself will play in. When CounterParty assets using Bitcoin and using the intrinsic value of itcoin, we have the ability to create user-defined assets, which are themselves not subject to the changes in the Bitcoin price. You may define an asset such as XUSD that is kept in a central location and in that way you will transmit US dollars over the Bitcoin network, and it'll be completely extracted away from any change in the Bitcoin price. Certainly to any significant degree, transactions will cost some amount of mining tip, of course, and maybe that'll vary between 2 to 4 cents or some such thing, but that's a negligible enough price to where it won't matter. And similarly, we'll see things like gold being transmitted, perhaps user tokens of various kinds, but in all these different ways the price volatility of Bitcoin doesn't matter. I think that a lot of people will start to consider Bitcoin as more of a commodity than a traditional currency even, though perhaps currency is just as relevant, I don't really know.

I think a lot of these terms are starting to change. I think that in the way that money used to work Bitcoin is different and I don't know that a lot of people really need to ascribe the same importance of the volatility in the way that Bitcoin is a programmable transfer value mechanism. So that's it. Do you have anything to add to that? Mark: That sounds good. Chris: That sounds good to you? Mark: I'm a believer. Chris: You're a believer? Mark: Yeah.

Chris: Wonderful. How long have you known about Bitcoin? Mark: Quite a few years. Chris: Really? Mark: Yes. Chris: That's good to hear. Mark: I've been tracking it and the ups and downs, but I think it's a store of value, ultimately, and it's more dependable than coins, sometimes, so. Chris: Look at that.

Mark himself is a Bitcoin aficionado. Who would have guessed? Well, thank you, very much for being on the show today. Mark: Yep, thank you. Chris: You're welcome back anytime. And for the rest of you, subscribe to the channel if you like this. DeRoseTech is my Twitter handle and my e-mail address is chris@chrisderose.

com, so keep those questions coming. And thanks again.