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Bitcoin may be optimally positioned to become preferred currency for world trade

59 points| DocFeind | 5 years ago |ir.citi.com | reply

99 comments

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[+] waynecochran|5 years ago|reply
How can a currency that is so volatile be used for actually buying and selling stuff? If you were going to put your car up for sale today and you had to set a price in bitcoin how could you possibly choose a number? Will bitcoin ever settle down to a stable currency?
[+] agumonkey|5 years ago|reply
Maybe (maybe) volatility will die after this cycle. It's one theory thrown on the web.

Other than that news regarding cryptos these days should be avoided.

[+] Terretta|5 years ago|reply
When the Euro was careening +/- anywhere from 20% to 100% against USD twenty years ago, everyone still managed.

“Euro’s a dollar, Euro’s a dollar twenty, oh, Euro’s a dollar again” just sounds less dramatic than “Bitcoin’s $40K, Bitcoin’s $50K, omg, Bitcoin’s lost $10K and is $40K again!”

While Euro is more stable now, it still changes real time and the system has to handle that. Same methods can apply.

[+] JoshTko|5 years ago|reply
BTC's main purpose is as a store of value not as a currency. Volatility will eventually go down, think 30+ years.
[+] pazimzadeh|5 years ago|reply
During a bull market you could sell the car at a discount, and during the bear market, at a markup.

FYI, every single time I have sold bitcoin or ethereum (even at historical peaks) it has a been a "mistake" in the sense that 2-3 years later it was worth more than before.

[+] 3np|5 years ago|reply
For the past 10 years or so , bitcoins long-term volatility has consistently gone down. This is yet not as intense as 2017, for example.

This is one trend I expect will continue. Eventually if will stabilize.

[+] jerry1979|5 years ago|reply
You don't have to set the price in Bitcoin. Thinking in terms of opportunity cost tells us that all prices are already set Bitcoin (and every other easily fungible asset).
[+] payne92|5 years ago|reply
You advertise the price in the fiat currency you want.

Bitcoin is only used in transit.

[+] marakv2|5 years ago|reply
Okay this may come off as naive, or even completely wrong, so give me a break but...

What if you tied the price to a trade able good. Eg: $x USD in BTC. While it completely negates the idea of BTC, allows you to list an item for sale at a stable value.

[+] mam2|5 years ago|reply
wide acceptance would MAKE it stable
[+] danieldrehmer|5 years ago|reply
As a seller you'd simply denominate the prices in USD, keep some percentage of the btc as it is very likely to appreciate and convert the rest to USD as soon as possible to mitigate fluctuation risk.

As a buyer, you'd just purchase btc in the moment preceding the transaction or spend from your own hodlings if it seems like a good moment to reduce exposure.

Volatility is not that big of a deal.

[+] jm4rc05|5 years ago|reply
A few large holders commonly referred to as whales continue to own most Bitcoin. About 2% of the anonymous ownership accounts that can be tracked on the cryptocurrency’s blockchain control 95% of the digital asset, according to researcher Flipside Crypto.
[+] paxys|5 years ago|reply
Is that number substantially different for any other currency?
[+] glitchc|5 years ago|reply
Flipside Crypto is a co-author in this report.
[+] thendrill|5 years ago|reply
Also another thing that has to be remembered is that a large amount of crypto in circulation is actually stolen crypto.

Anyone that has been in crypto pre 2016 has lots of it being stole or lost. MtGox, Cryptsy, Poloniex, DarkWeb. Most of these coins just went to other wallets.

Also alot of whales just have a ton of wallets, so we will never know....

I just know that a 1000 btc at the moment is enough to move the market billions.

And alot of people have bigger wallets

[+] mtnGoat|5 years ago|reply
Except it can’t handle the transaction volume. Who writes these things?
[+] justaman|5 years ago|reply
Simple. People trying to pump the price up. Bitcoin went from a way to buy drugs to a hype-fueled pump and dump scheme.
[+] 3np|5 years ago|reply
Layer 2 solutions. Apart from Lightning and Liquid, I think we should also count the tokenizations on Ethereum (tBTC, renBTC and others).

It’s still early days. Give it another 10 years.

Oh and hey, who knows, maybe the block size will increase one day.

Of course companies like Citi and MasterCard aim to capture the majority of transactions inside their own private networks (hence stripping all the benefits and limitations of bitcoin for “the user”)

[+] brink|5 years ago|reply
Someone who just put their life savings into it and is looking to make a buck.
[+] tgv|5 years ago|reply
People without a conscience.
[+] djschnei|5 years ago|reply
But of course you understand Bitcoin can be transacted in off-chain, yes?
[+] fs2|5 years ago|reply
Bitcoin was the first famous crypto currency. But it has been surpassed by many other digital coins with lower fees, more transactions per second, better technical design and all these things combined. Bitcoin also suffers from whales routinely mass selling and buying to make profits at the cost of traders, resulting in volatility.

I'm sure it will rise again a few more times but there are better alternatives available.

[+] bitcharmer|5 years ago|reply
Bitcoin is terrible as a currency. It's OK as commodity but these are two separate things.
[+] dariusj18|5 years ago|reply
Well, international trade is generally a higher stakes lower frequency operation. So bitcoin as a commodity should work fine for it if it stabilizes.
[+] exabrial|5 years ago|reply
Please no. It's an environmental disaster, transaction time is stupid long, fees are too high, and it's vulnerable to attack by state-level actors.
[+] ldbooth|5 years ago|reply
How is it an environmental disaster? I hear you on energy use but that if we get to 99% renewables the excess generation/load capability could turn this statememt on its head.

The US gov will sacrifice their place in the world order by undermining US dollar sanction power tho!

[+] tzfld|5 years ago|reply
Can a deflational currency really be the preferred method for trade? Not only limited amount for a theoretically increasing demand, but existing amounts being locked in inaccessible wallets. I have doubts.

As long as bitcoin can't be a currency (and it certainly can't), it's fate is doomed. A more suited criptocurrency still yet to come.

[+] nullserver|5 years ago|reply
In other news there has been an unusual spike of unlicensed micro nuclear plants found in peoples back yards.
[+] lovedswain|5 years ago|reply
Optimally positioned, as most mining happens in China and the only other candidate is the Yuan? :)

I wonder if the Citi analysts knew of the mining farms installed in Iran by Chinese businesses in order to access cheap electricity. If Bitcoin's value is derived solely from narrative, it's going to be great to see how the world reacts to that story finally turning up in the mainstream press.

[+] epx|5 years ago|reply
Yeah, with 7tps
[+] diegocerdan|5 years ago|reply
Enough to be the first settlement layer of the whole finacial system. On top of that layer, you can have country fiat coins, centralized exchanges and others.
[+] dmichulke|5 years ago|reply
Reminds me of the transaction speed of gold back in the days they called it a gold standard.
[+] stunt|5 years ago|reply
How can a currency that is so tied to two brands become mainstream? Those two brands are Satoshi Nakamoto and Elon Musk. What happens to Bitcoin if Elon Musk for any reason decides to sell Tesla's coins and announce it on Twitter?
[+] CyberDildonics|5 years ago|reply
This sounds like what a bot would say after reading only the last three months of headlines and nothing else.
[+] RcouF1uZ4gsC|5 years ago|reply
Bitcoin is still vulnerable to nation state manipulation. I would guess that greater than 50% of the mining capacity is in China. If the Chinese government decides they want to screw with Bitcoin, they can.
[+] sprash|5 years ago|reply
This is not true. Network consensus is not reached by miners but by the nodes in the network that recieve/transmit transactions and blocks.

If you want to protect Bitcoin from "chinese nation state manipulation" simply run a full node.

[+] esja|5 years ago|reply
Amusing to read the conclusion then flip to the next page listing their other reports. Top of that list: "Financing a Greener Planet".
[+] cs702|5 years ago|reply
A common criticism of Bitcoin that I've seen on HN and elsewhere is that Bitcoin is far too volatile with respect to established currencies like the US dollar and the Euro. Just look at any historical USD-per-BTC chart and judge for yourself: https://www.xe.com/currencycharts/?from=XBT&to=USD

Until recently, this criticism has made sense to me... But as Bitcoin adoption has increased worldwide, I've come to think this criticism isn't as valid, because from the perspective of a growing number of Bitcoin owners, ALL established currencies are incredibly volatile.

For example, the US dollar's exchange rate has bounced from a low of ~5000 Satoshis in 2017, to a high of ~30,000 Satoshis in 2018, to a low of ~8,000 Satoshis in 2019, to a high of ~20,000 Satoshis in 2020, to a low ~2,000 Satoshis at present.[a]

From the perspective of holders of Bitcoin, the US Dollar is insanely volatile. Just look at any historical BTC-per-USD (or Satoshi-per-USD) chart and judge yourself: https://www.xe.com/currencycharts/?from=USD&to=XBT

If and as more people start using Bitcoin (or Satoshis) as their frame of reference, their perception of volatility will change accordingly.

--

[a] 100,000,000 Satoshis = 1 Bitcoin.

[+] endisneigh|5 years ago|reply
I'm curious to see how Bitcoin does vs. a 10 year period of decline worldwide. If you consider that Bitcoin was created basically just before the worlds longest and greater bull run you can see that it's lacking experience in surviving a greater decline.
[+] rdudek|5 years ago|reply
Aren't BTC's biggest issues volatility and transaction speed? I can understand volatility eventually settling once all the BTC are mined but the transaction will take longer and longer, not to mention a huge power consumption to do so?
[+] shams93|5 years ago|reply
Except that in another 2 years it will take more energy than 10 suns to mine one coin.
[+] buzzdenver|5 years ago|reply
Obviously I didn't read the whole thing since it's over a hundred pages, but the paper says that BTC will used to do the mechanics of the trade, but settlement will be in fiat currencies.