Dear Readers,
Bitcoin spends a lot of time in the news. More so during “bull runs”, but it’s still a mainstay of mainstream media even when times are tough. One topic that newscasters and influencers seem to be unable to ignore is Bitcoin’s “volatility”.
Bitcoin has been priced from its inception and all the way through the current day in fiat terms. While I believe firmly that a Bitcoin-based economy is well on its way, the reality is that the world still runs on government money.
Nowhere is Bitcoin’s volatility more apparent than in its exchange rates with fiat. In the early days of Bitcoin, you could acquire Bitcoin in exchange for a few pennies, either by expending electricity through mining or by finding someone on the Bitcoin forums willing to make a trade. But these days acquiring a whole Bitcoin, either through mining or on an exchange, will set you back thousands of dollars.
That level of growth in value is nearly unheard of. Bitcoin’s growth in value has been anything but linear though, especially on shorter time frames and when priced in fiat terms. For example, the chart at the top of this article shows Bitcoin’s “price” in U.S. dollars over the past month. With charts like that, it’s not hard to see why people think Bitcoin is volatile. But understanding Bitcoin’s “volatility” is much more complex than reading a fiat-based price chart.
