Volatility is by no means unique to cryptocurrencies. Gold is a safe-haven asset prized by investors for its stability, but only because it is no longer the standard value underpinning national currencies. During the era of the Gold Standard, gold prices were incredibly volatile.
Paper money is no different – between the First and Second World Wars, the value of Weimer Germany's Reichmarks hyper-inflated to impossible proportions, ruining the country's finances. The same thing happened less than a decade ago in Zimbabwe when the farming industry was redistributed.
Importantly, these historical instances of currency volatility occurred because of government intervention – something that cryptocurrencies are pretty well shielded against since they share no central authority. In this sense, cryptocurrencies – especially Bitcoin – are somewhat like gold:
- Both are durable. Neither gold nor cryptocurrencies "expire" in any meaningful way, like paper money does.
- Both are fungible. Fungible currencies are ones where a specific unit can be replaced for any other. An ounce of gold is worth an ounce of gold once it is melted and purified. A Bitcoin is always worth whatever the market says Bitcoins are worth at the moment.
- Both are scarce. There is a finite amount of gold on Earth. Likewise, the Bitcoin protocol stipulates a hard limit of 21 million BTC – the most that will ever exist.
When it comes to cryptocurrencies, volatility happens for a slightly different reason – speculation.
Thanks for adding , bitcoin as it is right now is something valuable that we have within our grasp and all this volatility we have right now because of whatever reason speculation included could be called a great buy fest as people are being spooked out of their bitcoin .
During volatile periods, it's best to buy USDT: https://steemit.com/usdt/@crypto-insider/5-reasons-why-usd-tether-is-important
USDT is a great tool. I have used it a lot throughout the past two weeks and it works well even though the yields aren't that great, it is a necessity when day trading. IT IS NOT TO BE UNDER-RATED .