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Bitcoin is behaving as a currency

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cmason

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As many of you, I was worried about the price of Bitcoin declining, then I realized it wasn't declining in Canadian dollars. It fact, it's been fairly stable for months. What was actually changing was the value of the Canadian and US dollars.

If anything Bitcoin was a great hedge against the US dollar for Canadians. This suggests to me the US price changes have nothing to do with Bitcoin. It only means the US dollar has either been rising or falling.

When the US dollar price of Bitcoin goes up or down, we need to consider if this is reflected in the same fashion in other currencies, and if not, the story is about the US dollar, not Bitcoin.

I think it's time to stop thinking about Bitcoin in terms of US dollars. We need a global basket of commodities to compare it to.

Thanks,

Chris

Posted on October 6, 2015 at 7:19 PM
Last Edited: October 6, 2015 at 7:28 PM

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• adam

  

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  Posts: 1980
  Location: California, USA

  The really relevant question is what do you think of prices in terms of. That is the hurdle that needs to be overcome and I don't really think its something that can be rushed. So long as most prices you deal with are set in dollars or euros it's going to be very difficult not to think about the money you use in those same terms.

  Posted on October 7, 2015 at 4:45 AM
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• adam

  

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  The really relevant question is what do you think of prices in terms of. That is the hurdle that needs to be overcome and I don't really think its something that can be rushed. So long as most prices you deal with are set in dollars or euros it's going to be very difficult not to think about the money you use in those same terms.

  Posted on October 7, 2015 at 4:45 AM
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• larekare

  

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  Location: In a parallel world

  I've noticed this too, with NOK-EUR-USD. The NOK went down compared to the EUR because of the collapse in oil prices (may be changing back). But in the same period the EUR lost ground to the USD. To me, XBT isn't looking that bad...imagine how it would look if you were holding BRL!!!

  I agree that it would be interesting to measure Bitcoin versus a basket of currencies and commodities. But the USD is still the biggest and most influential currency out there. Even in the terrible state of the US economy, investors flee to the USD at any sign of trouble. USD zone is 60% of world GDP (http://www.economist.com/news/special-report/21668717-america-centre-global-monetary-disorder-thrills-and-spills). The USD is the world reserve currency that every central bank wants as a large chunk of their reserves. The USD is easily recognizable and still trusted throughout the world. Moreover, the USD has an offshore market of bonds created outside the US borders worth more than half of the US GDP.

  We just simply can't get around the fact that the USD is the outsized currency that is relevant to everything financial for the moment.

  To me, I rarely look at prices in Bitcoin because I rarely buy stuff, and when I do, I usually use fiat cash that I have long since withdrawn from my bank account to prevent them from lending it out to other people who are using it for God knows what and to lower the risk of not getting it back at all.

  Bitcoin has another value to me than the dollar value – it has a value in freedom that is far far higher...and that is why I consider it a great buy opportunity every time I have spare fiat around.

  Posted on October 12, 2015 at 12:24 AM
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• mic

  

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  Location: Nairobi

  Can we use the Yuan as a base instead? I read it is now tied to a basket of currencies.

  Posted on January 7, 2016 at 1:05 PM
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• Dr.Forum

  

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  Bitcoin to me is something so stable so that cam not be ruined here and there. You know one thing the bitcoin has been doing is being able to stabilize. This fluctuation is something that is always expected and all we need to do is being able to consider the factors that are behind the bitcoin since they are the one that will contribute to the prices of the bitcoin. I however have confidence that this year, the bitcoin will come to a stable price where we will have no drastic fluctuations like the ones we have experienced in 2015

  Posted on January 8, 2016 at 10:07 PM
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