What determines the buying power of the cryptocurrency? How does the price stabilize, or what is required to stabilize it? If I would buy some bitcoins, who can manipulate the value of that?
The buying power of bitcoin is determined in the exactly the same way that the buying power of the euro,
the British pound sterling, the Japanese yen, or the U.S. dollar is determined: through market forces of supply and demand, in international liquid markets operating around the clock.
One of the fundamental differences, is that bitcoin trading never ceases. It has been going continuously for 12 years. The network never stops. Every ten minutes on average, Bitcoin’s heart beats and transactions are processed.
The exchanges never close. There is no closing price for bitcoin.
It is a rolling average. In that trading, a market with a capitalization of approximately $1 trillion is now traded internationally.
What is $1 trillion for a global currency? It’s like a guppy, swimming in shark-infested waters.
Every trader, every whale, goes in there and just kicks that price around.
Right now, the experience of living on bitcoin, which I have been doing full-time, is a rollercoaster.
It’s an absolute rollercoaster. I’ve seen shifts of twenty or thirty percent in a day. And yet, if you look at the long-term trend, volume and transactions go up, while volatility keeps dropping.
The beauty of it is… I can’t sell that to an American or British citizen.
I don’t need to sell it to an Argentinean, a Brazilian, or a Venezuelan citizen.
I went to Argentina, and one Argentinian told me: “I’m not worried about bitcoin’s volatility. Our currency has downward volatility like downstairs. Bitcoin has upward volatility, like upstairs. I would rather go with volatility upstairs.”
And you don’t need to tell them why – their government threw people out of airplanes not more than 35 years ago, for disagreeing.
They already know why the separation of state and money is a good idea.
So, volatility is relative.