Werner's Blog — Opinion, Analysis, Commentary
Bitcoin Volatility

The Bitcoin phenomenon continues. Views on the topic are still wide apart. Contrastign views were articulated in two recent stories in the New York Times. Nobel-prize winning economist Paul Krugman argues against bitcoins (Bitcoin is evil) and internet entrepreneur Marc Adreessen argues in favour (Why Bitcoin matters). While I appreciate the technological innovations behind bitcoins, the notion of bitcoins becoming a substitute for fiat currencies such as the Canadian Dollar or the US Dollar is far-fetched. To quote from Krugman's article:

‘To be successful, money must be both a medium of exchange and a reasonably stable store of value. And it remains completely unclear why BitCoin should be a stable store of value.’

That is my view as well. The volatility of bitcoin prices shows clearly that this medium cannot be trusted to function as a store of value even if it is a useful and functional medium of exchange.

Current prices of Bitcoins can be found at bitcoincharts.com.

Posted on Tuesday, January 21, 2014 at 13:30 — #Finance
© 2024  Prof. Werner Antweiler, University of British Columbia.
[Sauder School of Business] [The University of British Columbia]