2
$\begingroup$

I've been looking up stuff about bitcoins for some time now and i have two question stuck in my mind:

How is the value of bitcoins so unstable?

And can there be bitcoin inflation?

$\endgroup$
  • $\begingroup$ There is a lot of research about bitcoin. I'm too lazy to provide a summary. Check it here. $\endgroup$ – luchonacho Apr 25 '17 at 19:37
  • $\begingroup$ thank you, but it doesn't answer my question @luchonacho $\endgroup$ – Liam Apr 25 '17 at 19:40
  • 1
    $\begingroup$ You mean my comment? Yes. That was not my goal. I was merely pointing you towards that research. $\endgroup$ – luchonacho Apr 25 '17 at 19:45
  • $\begingroup$ Take a look at the right. There are tons of papers (mover across pages). One of them must address the issue. $\endgroup$ – luchonacho Apr 25 '17 at 19:49
4
$\begingroup$

The price is unstable because there's a fairly small free float (the quantity available for buying and selling with true currencies) compared to the level of transactions.

It's a Ponzi scheme, so demand is driven by Bitcoin marketing: it is in immediate financial interest of the holders of Bitcoin to drive up the price by "ramping" it: talking up the market price. The amount of attention that the media gives Bitcoin goes up and down - this affects demand, and that drives the price, as supply is fairly stable.

The originators of Bitcoin, and the original hoarders, have most to gain: it was easiest for them to create Bitcoins. It would be rational for them to slowly release their hoard into the market as price goes up.

It's also attracted a lot of gullible but evangelical supporters: for them, continuing to hold Bitcoin is a means of validating their beliefs, and even validating the identity they've built for themselves around it. That's why the free float tends to stay low.

$\endgroup$
0
$\begingroup$

The value of bitcoin is not unstable, the market price of the bitcoin is. It is because BitCoin stocks are very speculative currently. It is an alternative tool to currency but is however yet to be popular with common use. The markets are pricing it in a way they expect it to be the popular tool of currency in the near future or countries making it the legal tender.

Bitcoins can be mined through data mining, it is however like the supply of gold and is finite in nature. To find out more, you should redirect your questions to the BitCoin stack exchange community. Yes, there is one.

$\endgroup$
  • $\begingroup$ Can you explain your differentiation between value and price? Some sources to back your claims would also be good. $\endgroup$ – luchonacho Apr 26 '17 at 11:26

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.