That you bought something and had it go up is great for you, but it does not mean the volatility is low. Indeed, if it went up a lot, it means volatility is high. Volatility is the inverse of stability.
A currency can be as volatile as it wants from day to day, but if over a very long time the value appreciates consistently then wouldn't that make it a good value store? You're hedging day to day against a long term win, surely?
Nope: long term appreciation may make it a good investment but a poor store of value.
Lets say you have two magical safes, and you put $100 in each one.
The first safe gives you the real-dollar value of what you put in, less $0.50 per-month. So a year later, you get $94 worth of inflation-adjusted dollars no matter how high or low inflation has been over the course of the year.
The other safe gives you an additional dollar for each day you keep the money in it, but there is a 70% chance all but $10 catches on fire when you open the safe. So one year later you have $465 or $10, statistically averaging $149.5 .
The second safe might be worth gambling on as statistically you get almost a 50% return on investment: but if you need to be certain the value you put in is maintained, the first safe is the better option. Therefore, the first safe is a far better store of value.
Gotcha. I've been thinking a lot about BTC recently, but I'm useless when it comes to economics and there is a lot of "faffing" around it. Thanks for the information. :)
Bitcoin has a relatively fixed supply, but that doesn't mean it's guaranteed to appreciate over time.
Bitcoin is only valuable because people choose to find it valuable. One example of how it could crash in value is if a competing cryptocurrency starts to gain momentum, and people jump ship, or if a major flaw is found.
There are many plausible scenarios for bitcoin going to 0.
That you bought something and had it go up is great for you, but it does not mean the volatility is low. Indeed, if it went up a lot, it means volatility is high. Volatility is the inverse of stability.