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how much counterparty risk does the rapid price fluctuation result in? Can't imagine pricing a contract in bitcoin, as someone's getting screwed at payment if

how much counterparty risk does the rapid price fluctuation result in? Can't imagine pricing a contract in bitcoin, as someone's getting screwed at payment if the BTC/fiat rate has changed during the lifetime of the contract

cambalache 6y ago
You can peg the contract in USD (or better put, the original price was in USD) and just accept the bitcoins within a very small window, say 30 min/1h.
Andrew_nenakhov 6y ago
We just accepted the price of bitcoin in USD at the time the client bought BTC, and I accepted the risks of fluctuating price to myself. I actually gained somewhat, though, way less than if I'd just hold those coins till today. :)
TheCoelacanth 6y ago
Don't you have a similar problem with Russian currency? From Jun 2014 to Jan 2015, it lost more than half of it's value relative to USD.
- Andrew_nenakhov 6y ago
  In the past 110 years Russian currency depreciated against USD at a something like trillion times. It's a safe bet that it'll continue the trend (with some occasional and not too long lapses of stae slowish decline), and actually bitcoin is a rather safe bet against rouble. After all, it's not backed by Putin's government!
  - arcticbull 6y ago
    This is an utterly ridiculous statement. Not only is the trillion fold devaluation not at all a reasonable assessment of the situation, the exchange rate only matters at the time of the exchange, not after. That's the point.
    - Andrew_nenakhov 6y ago
      I was answering to a person who said that RUB lost half of its value against USD in a span of a year. I just pointed that it is a part of a general trend, what do you find ridiculous about that? Btw, 'a trillion times' is an understatement. Exact figure in 2014 was... 57 460 000 000 000 000 (fifty seven quadrillion four hundred and sixty trillion) times [1], and just add some more since that time. Still thinking that bitcoin is a risky currency, huh? [1]: https://zhartun.me/2014/12/usd.html https://zhartun.me/2014/12/usd.html
      - arcticbull 6y ago
        Yes of course it's the risky investment. BTC has seen 3 drawdowns of -86% in the last couple of years, and also, what happened to XRP shows that the football can be deflated in seconds with the right SEC memo. Currency isn't an investment. Currency has never been an investment. You're not supposed to hold currency. You're supposed to use currency to buy assets. A spot exchange rate means absolutely nothing. This is ECON-101.
        Andrew_nenakhov 6y ago
        Is gold an asset or a currency? Now it is definitely the former, but throughout history it was mostly an asset and a currency, with rather vague lines between them. Bitcoin is not a USD replacement. It's more of a gold replacement: finite supply, great malleability, but with modern benefits regarding storage and transfer.
        arcticbull 6y ago
        > Bitcoin is not a USD replacement. It's more of a gold replacement: finite supply, great malleability, but with modern benefits regarding storage and transfer. This is an opinion that Bitcoin advocates throw out every time someone criticizes Bitcoin's ability to be a currency. As soon as someone criticizes its ability to be an asset, someone trots out that its actually been a currency this whole time. It's bad at both. It's bad at both in no small part because it tries to bring back the asset-backed currency approach, which was dreadful last time around, and that's why it was ended.
candiodari 6y ago
every currency transaction creates this risk. Nothing to do with Bitcoin. I suppose you could say that this is a problem Bitcoin doesn't fix ... but judging by the Bitcoin market cap, it's not as much as a problem as normal banks.
- rualca 6y ago
  > every currency transaction creates this risk. This is a disingenuous straw man and a desperate attempt to brush away Bitcoin's failure as currency. The OP explicitly referred to cryptocurrencies' inherent high volatility, and volatility is not a mere transaction risk. Seeing your debt explode, because you either borrowed or deferred payments, due to cryotocurrency volatility is not a transaction risk. It's simply the fact that cryptocurrency fails as being money.

cambalache 6y ago

You can peg the contract in USD (or better put, the original price was in USD) and just accept the bitcoins within a very small window, say 30 min/1h.

Andrew_nenakhov 6y ago

We just accepted the price of bitcoin in USD at the time the client bought BTC, and I accepted the risks of fluctuating price to myself. I actually gained somewhat, though, way less than if I'd just hold those coins till today. :)

TheCoelacanth 6y ago

Don't you have a similar problem with Russian currency? From Jun 2014 to Jan 2015, it lost more than half of it's value relative to USD.

Andrew_nenakhov 6y ago
In the past 110 years Russian currency depreciated against USD at a something like trillion times. It's a safe bet that it'll continue the trend (with some occasional and not too long lapses of stae slowish decline), and actually bitcoin is a rather safe bet against rouble. After all, it's not backed by Putin's government!
- arcticbull 6y ago
  This is an utterly ridiculous statement. Not only is the trillion fold devaluation not at all a reasonable assessment of the situation, the exchange rate only matters at the time of the exchange, not after. That's the point.
  - Andrew_nenakhov 6y ago
    I was answering to a person who said that RUB lost half of its value against USD in a span of a year. I just pointed that it is a part of a general trend, what do you find ridiculous about that? Btw, 'a trillion times' is an understatement. Exact figure in 2014 was... 57 460 000 000 000 000 (fifty seven quadrillion four hundred and sixty trillion) times [1], and just add some more since that time. Still thinking that bitcoin is a risky currency, huh? [1]: https://zhartun.me/2014/12/usd.html https://zhartun.me/2014/12/usd.html
    - arcticbull 6y ago
      Yes of course it's the risky investment. BTC has seen 3 drawdowns of -86% in the last couple of years, and also, what happened to XRP shows that the football can be deflated in seconds with the right SEC memo. Currency isn't an investment. Currency has never been an investment. You're not supposed to hold currency. You're supposed to use currency to buy assets. A spot exchange rate means absolutely nothing. This is ECON-101.
      - Andrew_nenakhov 6y ago
        Is gold an asset or a currency? Now it is definitely the former, but throughout history it was mostly an asset and a currency, with rather vague lines between them. Bitcoin is not a USD replacement. It's more of a gold replacement: finite supply, great malleability, but with modern benefits regarding storage and transfer.
        arcticbull 6y ago
        > Bitcoin is not a USD replacement. It's more of a gold replacement: finite supply, great malleability, but with modern benefits regarding storage and transfer. This is an opinion that Bitcoin advocates throw out every time someone criticizes Bitcoin's ability to be a currency. As soon as someone criticizes its ability to be an asset, someone trots out that its actually been a currency this whole time. It's bad at both. It's bad at both in no small part because it tries to bring back the asset-backed currency approach, which was dreadful last time around, and that's why it was ended.

candiodari 6y ago

every currency transaction creates this risk. Nothing to do with Bitcoin. I suppose you could say that this is a problem Bitcoin doesn't fix ... but judging by the Bitcoin market cap, it's not as much as a problem as normal banks.

rualca 6y ago
> every currency transaction creates this risk. This is a disingenuous straw man and a desperate attempt to brush away Bitcoin's failure as currency. The OP explicitly referred to cryptocurrencies' inherent high volatility, and volatility is not a mere transaction risk. Seeing your debt explode, because you either borrowed or deferred payments, due to cryotocurrency volatility is not a transaction risk. It's simply the fact that cryptocurrency fails as being money.