"So what? BTC is a medium of payment. The businesses accepting BTC as payment are largely converting it into their preferred currency, so the volatility isn't very important."

Really. Why don't you name a few? From where I stand no real business is keeping balances in BTC. All their prices are in USD and their payment processor (such as coinbase) is paying them in USD.

You realize how dumb your statement is? You think any business is going to forgo double-digit profits or accept double-digit losses by quoting a stable price in BTC? Good luck with that concept!

-Matt

You are conveniently forgetting the conversion to and from USD also involves transaction fees. Not only that, but you also have to trust the trading institution that is holding your dollar balance to not abscond with your dollars, otherwise you have to ALSO transfer your dollars into and out of the institution immediately.

So we are now talking about three transaction fees at a minimum, and five transactions if you don't trust the institution doing the dollar conversion. Plus someone has to eat whatever change in trading value occurs during the period where the transaction is being stored in BTC.

This immediately causes numerous problems, not the least of which being that the trade value of BTC is no longer deflationary if nobody doing real commerce is holding a balance in BTC. In addition to the fact that it won't be deflationary anyway because there can be any number of crypto-currencies in existence.

We are considering the question of volatility and whether it matters. The answer is: Yes, it does matter, and for some obvious reasons.

Consider the two holders of BTC. The speculators, and those trying to use it for commerce. You need stability for commerce-users to hold a BTC balance of any significance. Without stability the only people holding BTC are the speculators. When speculators are the only game in town, instability is guaranteed.

Now consider the so-called deflationary property of BTC (which is a phantom property in my view... wishful thinking at best). What happens to the two holders of BTC if you actually get deflation? What you get is hoarding by the commerce users (i.e. it stops being used for commerce) and more speculation by the speculators. Result == even worse volatility. Hoarding can easily destroy any currency as has been proven over and over again throughout history.

-Matt

And you haven't bought or used bitcoin for anything else since, right?

Fortunately I'm old enough to know just how stupid remarks like yours are. In this unverifiable world of social network postings, anyone can claim anything. It might make for good entertainment, but only a fool actually believes people like you.

-Matt

"At the other end, the seller receives the amount of the purchased goods or services in the amount of USD advertised to the sellersâ(TM) customer at the time of transaction, and can fulfill their customerâ(TM)s order. In other words, the seller takes no risk on Bitcoin value fluctuation"

In otherwords, all prices are still in US Dollars and neither Square Market nor the seller assume any of the risk. Plus the Bitcoin holder gets to have fun reporting every single last sale's exchange value to the IRS, and has no protection against any fraud that might occur. Which, honestly, doesn't really further the cause.

Bitcoin holders are now learning the hard way that bitcoins are not the magical deflationary stores of value they thought they were.

-Matt

Ah, you don't understand the scale. Yes, people still do trade like this (manually, that is, though with some computer support for convenience). For very large orders it's still highly effective.

Small orders you can just throw onto an exchange because it's hard to front-run a small order. Large orders... you can't do that without seriously compromising your trade.

-Matt

No, you didn't read the article carefully enough (or at all). The order did in fact vanish. The HFT has bids or asks up on all the exchanges. When they see a large order fill on one exchange they front-run the order on all the others (which involves canceling the order on the other exchanges and then taking some other action) before the originators order reaches the other exchanges.

The other point here is that many of these exchanges offer special order types designed to allow HFTs to take advantage of normal investors. For example, orders which either match instantly or auto-cancel if instant execution cannot occur. And many other types beyond the standard market, limit, and split-the-difference orders.

So, yes, the potentially matching orders went poof.

-Matt

Best article on HFT that I've ever read. Explains in fine detail how institutional players get fleeced by high frequency traders. Took a while to read the whole thing, but well worth the time.

One thing to note to all of us retail investors, though... our tiny orders aren't really getting fleeced, and with spreads on most stocks of only $0.01 our trading overheads are miniscule compared to 20 years ago. Standard brokerage fees trump (by several orders of magnitude) HFT losses for people like us.

-Matt

No, not really. It's a waste of power and an unnecessary extra cost to throw a ton of dram into a SSD when the main system is likely going to have far more ram for caching purposes available. Remember that OCZ already tried the large-cache approach and it was a complete failure. It is far, FAR more important for the SSD to have a large enough capacitor to be able to at least flush flash meta-data on power loss, and you can't do that if you have a lot of power-hungry ram or have a lot of dirty data in that power-hungry ram that needs to be flushed.

More to the point, these large caches can't be used to buffer writes without serious data loss. They are really only useful for buffering reads. And, beyond that, nearly all operating systems use asynchronous writes and nearly all operating systems do some manner of write combining themselves, and tend to be IOPS-limited for reads anyway. So there's no point having the SSD cache a large number of writes, and no real benefit from having the SSD cache a large amount of read data either.

Write pipelining is accomplished by limited the number of tags one uses for write commands. The size of the cache available for writes is irrelevant because most OS flushes are going to fill it up nearly instantly anyway when they flush. So if you don't limit the number of tags you use for write commands, you will starve read commands no matter how small or large the SSD's cache is. Generally speaking, 4 tags (out of the 32 supported by SATA) is plenty for writes.

Larger write caches do not improve SSD write throughput at all, and generally won't improve read throughput either.

-Matt

In other words, you have this insane idea that since a few people have made out like bandits from Bitcoins extreme volatility, that it is somehow this magical deflationary entity that is a better investment than any of the thousands of securities one can purchase on the regulated stock market. That, somehow, magically, is a store of value that can beat inflation and, somehow, will magically be able to beat all the other umpteen crypto currencies out there that anyone can create with a flick of a finger (literally).

You also seem to believe that bitcoin exchanges are somehow magically governed by banking and securities laws that allow people to 'invest' and 'trade' safely, and that one can be insured against theft by putting their trust in unknown third parties running piss-ant little companies who happen to be able to set up a web site and throw some glitter on it.

I will tell you what Bitcoin is. Bitcoin is worthless as a currency (too volatile and too illiquid), meaningless as a commodity (because anyone can create their own crypto currency with a flick of a finger), not even remotely deflationary except in the minds of the true believers, and unusable as any sort of store of value except by idiots who think that quoted numbers on an exchange lend it credibility and back-of-the-hand calculations that someone, somewhere has gotten filthy rich trading it (ignoring the thousands of people who have gone broke trying to do the same).

There are always a few people with crazy views. It doesn't mean the views are any less crazy just because the internet lends them a voice. You actually believe that the stock market is some kind of scam and that bitcoin is somehow magically better? The level of stupidity required to form your opinion is beyond my comprehension.

-Matt

There are plenty of ways to hedge against inflation through a standard brokerage account. Literally thousands of ways to do it.

Bitcoin is not one of those ways. A whole lot of people seem to think that Bitcoin has a magical deflationary property simply because there's a limited supply of it, and that it can simply be hoarded. That's grade-school thinking at best. It's nature gives it no such property.

-Matt

Not quite true. Nobody has lost any insured money in a bank failure. Up to the FDIC limit. Plenty of people have lost money due to bank failures who had more than the insured amount in their account.

Strangely enough, very few people with balances over the FDIC limit actually lost any money due to the larger bank failures which occurred in 2008 and 2009, because the U.S. government brokered agreements with other large banks to buy their assets whole in exchange for some big tax breaks. Wells Fargo's purchase of Wachovia, for example.

Wells Fargo took on almost $30B in liabilities which would normally have made the purchase impossible, but the U.S. government relaxed some laws and allowed Wells to declare those liabilities against future profits to reduce their tax bill. Essentially, the U.S. government bailed out the bank customers of Wachovia.

However, a good chunk of the bank failures since 2008 were liquidations and any customer with a balance greater than the FDIC limit will have lost the difference.

-Matt

What regulations surrounding the dollar? Perhaps you mean regulations on banks and brokerages. Unfortunately, MtGox was neither a bank nor a brokerage. Plus they are run out of Japan, so they are hardly going to be subject to U.S. law.

Customers who got creamed by MtGox were idiots. I feel sorry for them, but sometimes it takes a hard lesson to punch through blind idealism.

-Matt

If you are looking for a riskless investment that maintains your buying power over time then no such beast exists anywhere in the world.

I haven't paid a single dime in bank fees in over 30 years. If you are, then you don't have the minimal amount of sense required to avoid it. It isn't rocket science. Or perhaps you are just parroting what the media heads are shoveling into your head?

The stock market in 2008 crashed. And it recovered. Big difference between that and something crashing and not recovering ever. My parent's retirement portfolios dropped 40% in 2008. And 2 years later they had recovered completely.

-Matt

Hey, that would be great... because, ya know, all the MF Global customers are likely to get all of their money back (if you haven't been keeping track of it). But the victims of MtGox and other exchanges that have gone dark probably never will.

I'd say MF Global is a case that shows just how good regulation can be when the shit hits the fan. Even if they didn't follow the law, there was enough there to make it recoverable for the customers, including the freezing of funds at the target institutions that had already been transfered out of MF Global.

-Matt

I think you are confusing Intel's under-powered mobile cpu's with the cpu's they are stuffing into the Chromebox and Chromebooks. These cpu's are MUCH faster than anything ARM has on offer.

-Matt