One of the most popular arguments that opponents of Bitcoin and other cryptocurrencies produce is that of excessive volatility. Thus, the sometimes extreme price fluctuations on the crypto market are a major hurdle for the mass adaptation of cryptocurrencies as a means of payment. But are cryptocurrencies really so much more volatile than some fiat currencies, which are taken for granted as a means of payment?
The volatility of a cryptocurrency is also its curse and blessing. A blessing because it enables high profit margins, especially for short-term day traders. Curse, however, when it comes to reliable and predictable payments, such. As salary payments or non-speculative purchases goes. A stable external value is obligatory for a single currency in order to enable efficient economic management.
Volatility also an issue in Fiat currencies
Volatility is always measured relatively. That is, one currency - whether crypto or fiat - behaves volatile to another currency. This is the only way to calculate the foreign trade value of a currency. Not only crypto currencies, but also Fiat currencies are traded against each other - with a much larger volume. The foreign exchange market is the largest market in the world with around $ 5 trillion in daily turnover, while the crypto market is just $ 15 billion at the same time.
Of course, the higher liquidity of the foreign exchange market makes it much less volatile than the crypto market. However, the stability of the foreign exchange market as a whole does not mean that there are not even local currencies with extremely high volatility.
The same applies in reverse for the somewhat more volatile crypto market. There can be cryptocurrencies, which show relatively stable over a longer period of time. Crucial here are not just the individual crypto currencies themselves, but above all the general market sentiment.
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