Most people think of currency as a medium of exchange. A currency has three functions; a medium of exchange, unit of account and store of value. First it has to enter the store of value stage before it becomes a medium of exchange stage. You have to hold it and trust it to store value in it before eventually enough of a network effect occurs to where the price becomes stable and the market penetration high enough to where I want to go spend it, which might be a decade from now. So that’s where, for example, the BCash narrative was just, it was just too soon, the store of value stage has to occur first.

Most people think about money as their government money, most people don’t transact in gold, most people don’t own gold. So for them, bitcoin was a foreign concept, it was really hard to wrap your head around, so they tried to compare it to existing fiat money which only serves one function which is the medium of exchange. Fiat money is a very poor store of value as it continually loses value year over year. It’s not volatile, it consistently loses value. But for a lot of people, they have a lot of financial planning that they have to do so they don’t like to think about an asset that’s super volatile to store value in because they are just living day to day and need something that will pay my bills tomorrow.

So with bitcoin, bitcoin was going from $0 all the way up to where we are now with no market makers with no institution buy-in, no university buy-in, no government buy-in… that price discovery process of bitcoin going from literally a group of people on an email newsletter thread to now where 100m+ people in the world own bitcoin, that wasn’t going to be a nice linear smooth path. That price discovery process is very choppy as bitcoin price increases people become more aware of it and that’s where we see in those bubbles the price spikes, tonnes of people come in, people come for the speculation, some stay for the sound money, and that creates the floor for the bear market.

So volatility is bitcoin’s calling card. It’s actually a beautiful mechanism that pulled in awareness and adoption for bitcoin. Volatility isn’t a bad thing, it merely means it’s a new asset that is being discovered and being discovered by many many more market participants. If we look at bitcoin over a long time horizon, it consistently grows in value. Yeah sure, it’s chopping in the short term but zoom out and have some patience.

Bitcoin is not volatile when priced in gold.

Don’t be fooled by fiat money volatility (against BTC).