> Because if it goes to five when I need to use it for groceries, I’m in a bit of a pickle.
Why? You're out $45. That sucks, but since you're not a Bitcoin speculator who holds all their assets in Bitcoin, you only have to open your phone and exchange something for another $50 worth of Bitcoin so you can use it to buy groceries.
Maybe you could use the $50 you made that time your $50 in Bitcoin turned into $100 and then you used half of it to invest in something else because you're not a Bitcoin speculator who needs more than $50 worth of Bitcoin at any given time.
> That does not happen with the USD/Euro/whatever.
When you're measuring dollars in bread rather than Bitcoin in dollars, the consequence is that a loaf of bread costs more dollars. People are complaining about this happening right now.
So I’m not using it for currency, then? If it’s value can range from $100 to $5, it is unusable as daily currency, and the only reason to hold it is because I’m hoping today is the day it’s $100, and if it’s not, I’m going to use my real currency to buy things.
You’ve just made speculation small scale and complicated.
And my bread costs 8% more dollars than it did a little while ago. My dollar didn’t lose 92% of its value. They’re entirely different issues. My fifty USD will still buy enough bread for the week. My fifty BTC might if I happen to want bread at the right time.
In the past year the difference between the low and the high for Bitcoin was about 100%, i.e. if you bought at the low and sold at the high your $50 turned into $100 and if you did the opposite your $50 turned into $25. This is the variation over the last year, not the last day, and only if you picked the worst (or best) to days to transact. In the past seven days the net change was <1%. This is more variation than US dollars have but it's not unreasonable when you're only holding small amounts -- as you would when using it as a currency.
You use it as a currency because you can't email someone dollar bills and digital payment processors charge higher fees. Because you want to buy something that isn't tied to your name, or don't want everything you buy tied to your name. Because you want to write a piece of code that lets people buy and sell directly without relying on a mercurial third party that can steal anyone's money or close their account without recourse. And if you want to, to pay your phone bill.
> You’ve just made speculation small scale and complicated.
Actually buying investment securities with a $50 cryptocurrency gain was a joke. You could do it in theory but what you're really going to do is not buy anymore Bitcoin until you've spent the $100 worth instead of buying $50 more after you'd spent the original $50. The point is that the volatility generally evens out. It doesn't really matter if you replenish your Bitcoin wallet after 5 days one time and 10 days another if it averages out.
Moreover, the more people use it, the less volatile the price is. It's understandable that people don't immediately use this to buy groceries, but if they use it to buy digital subscriptions or build distributed systems or what have you, the more people use it for those things the less volatility there is. And then at some point people may start using it to buy groceries.
