No. of Recommendations: 11
"Here and elsewhere Syke6 has patiently explained (most recently on the Berkshire board) to enthusiasts why Bitcoin will not soon (probably never) become the reserve currency, basis for a monetary system, etc. - most of it boiling down to “it’s volatile.”
Its volatility is mostly because it is so scarcely traded.
And yes, before some Bitcoin enthusiast sprouts off on the daily volume of Bitcoin, it is scarcely traded compared to actual currencies. Bitcoin trading volumes are tiny, small, miniscule, fraction of a fraction of a fraction of a percent of the volume that real currencies such as the dollar do. If Bitcoin trading volume was even just 10% of the dollar, it's volatility would drop.
However, it is literally impossible for the volume of Bitcoin trading to be 10% of volume of dollar trading. There is simply not enough electricity generated on this earth to power computers to calculate and record the transactions to come anywhere close to that level of trading volume.
The distributed nature of blockchain so attractive to its enthusiasts is what makes it so horribly inefficient (and therefore expensive) to trade the mass volumes required to be a currency.
