Bitcoin - Part 2

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The Don said:
Recently ? 20% ? That would be like the dollar hitting $1.80/£ in a couple of days.
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I think Oct 7-8 1998 against the yen. One does not forget those moments when one was up close.

Actually for that matter, today the dollar fell (intra day) by 30% against the Swiss franc but is now down about half that. Admittedly that is a Swiss move not a dollar one.
 
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The Don said:
I didn't mean that 100% of my business was transacted in bitcoin but rather that when I received bitcoins that I spent them on goods and services as bitcoins rather than coverting them.
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The Don said:
If my business is supposedly underpinned by the value of my bitcoin assets or liabilities and these can vary by as much as +/- 20% in a day or -75%/+1000% in a year then I think my bank manager and shareholders are going to want to have words with me.
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Those two quotes don't mesh well.

You clearly don't know the petrol retail industry in Australia. Petrol prices frequently jump up and down by 20% or more and the retailers make bugger all margin on the petrol sales. If it wasn't for the extras they sold, many service stations wouldn't survive.

Ultimately, a business that deals in bitcoin is expecting an increased turnover on its other stock as a result.
 
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psionl0 said:
Those two quotes don't mesh well.

You clearly don't know the petrol retail industry in Australia. Petrol prices frequently jump up and down by 20% or more and the retailers make bugger all margin on the petrol sales. If it wasn't for the extras they sold, many service stations wouldn't survive.

Ultimately, a business that deals in bitcoin is expecting an increased turnover on its other stock as a result.
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My highlighting,

A 20% change in prices overnight ? Evidence.

Also, a petrol retailer's "stock" accounts for a few days of turnover whereas our putative business dealing in bitcoin could acquire considerable bitcoin assets and/or liabilities. For example my business currently has liquid assets which amount to over a year of turnover. These assets are denominated in my local currency (UK pounds) and are held in bank accounts and low risk investments. Unless there is a banking system and stock market collapse (in which case all bets are off) then the value of those assets is unlikely to change significantly. OTOH if those same assets were held in bitcoin, their value could change +/- 20% in a day.

That's not a big deal because my business doesn't have significant borrowings, doesn't much aged debt and so the bank isn't continually looking over my shoulder. A former client of mine was a debt-funded management buy-out. It was a profitable business but because of the level of debt, the bank kept a very close eye on it and imposed some restrictive banking covenants. If that business had dealt in bitcoin then the value (in local currency) of its bitcoin denominated contracts, debtors and assets could have significant daily variance which could quite reasonably cause it to breach its covenants.
 
Francesca R said:
I think Oct 7-8 1998 against the yen. One does not forget those moments when one was up close.

Actually for that matter, today the dollar fell (intra day) by 30% against the Swiss franc but is now down about half that. Admittedly that is a Swiss move not a dollar one.
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Thank you. I forgot about $ - currencies other than the £ :o

As you point out Oct 7-8 1998 there was a 9% change in the $/Yen rate (and close to 15% intra-day).
 
The Don said:
My highlighting,
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Maybe you should have highlighted the first part of the quote. You seem to be posting about businesses that deal exclusively with bitcoins even though you have acknowledged that this doesn't happen.

Those businesses that use bitcoins do little more than just allow customers to pay with it. Even then, they use a third party like coinbase as an intermediary or sell the received bitcoins shortly thereafter. Businesses that settle accounts between each other using bitcoin is almost unheard of.

The Don said:
A 20% change in prices overnight ? Evidence.
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www.fuelwatch.wa.gov.au/

Of course, the artificial fuel price cycle is the source of many gripes in Australia. https://www.accc.gov.au/consumers/petrol-diesel-and-lpg/about-fuel-prices could tell you more.
 
psionl0 said:
Maybe you should have highlighted the first part of the quote. You seem to be posting about businesses that deal exclusively with bitcoins even though you have acknowledged that this doesn't happen.

Those businesses that use bitcoins do little more than just allow customers to pay with it. Even then, they use a third party like coinbase as an intermediary or sell the received bitcoins shortly thereafter. Businesses that settle accounts between each other using bitcoin is almost unheard of.
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And that's kinda the point, a business will convert Bitcoin receipts immediately into something useful. Bitcoin doesn't seem to behave like a currency but more like a (very volatile) commodity. It's like swapping your goods and services for livestock, cheese or bolts of fabric, to pay your creditors you have to convert it to an actual currency unless you can persuade them to take this volatile commodity instead.


psionl0 said:
www.fuelwatch.wa.gov.au/

Of course, the artificial fuel price cycle is the source of many gripes in Australia. https://www.accc.gov.au/consumers/petrol-diesel-and-lpg/about-fuel-prices could tell you more.
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From what I can see, those changes still aren't close to 20%, 10% seems to be the variation over the cycle.

edited to add.....

and the cycle seems, well, reliably cyclical (within the confines of international oil price movements) as opposed to Bitcoin which seems to absolutely random
 
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The Don said:
And that's kinda the point, ...........
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Actually, the original point was to answer the question, "....and how do I reflect them in my accounts ?" but the topic drifted when I suggested that it would be like any other stock.

How much of this "stock" a business would hold would depend on the individual but we both agree that due to the volatile demand for this commodity, most businesses that are not into speculation would not hold much of it.
 
The Don said:
My highlighting,

A 20% change in prices overnight ? Evidence.
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You've never seen it? A few days ago, gas here was 1.69. Then the next day it was 1.99. Then the day after was 1.74.

I still think my favorite was around 15 years ago. Every day on the way to school I watched as the price has been lowering consistently until it fell to 0.69. The very next morning it was over 1.70 again.
 
Francesca R said:
I think Oct 7-8 1998 against the yen. One does not forget those moments when one was up close.

Actually for that matter, today the dollar fell (intra day) by 30% against the Swiss franc but is now down about half that. Admittedly that is a Swiss move not a dollar one.
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Didn't Bitcoin fall 20% relative to just about every currency on Earth though? I know the dollar can fall steeply against a single currency every once and awhile (like the Franc), but I'm not a currency trader (or a swiss importer), so the drop in value relative to the Franc went unnoticed. In my life time, I've never had the purchasing power of my American money fall 20% in such a short time. For the past 30 years, inflation has mostly been below 4%.
 
ehcks said:
You've never seen it? A few days ago, gas here was 1.69.
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I've never seen prices that volatile here in the UK.

ehcks said:
Then the next day it was 1.99. Then the day after was 1.74.

I still think my favorite was around 15 years ago. Every day on the way to school I watched as the price has been lowering consistently until it fell to 0.69. The very next morning it was over 1.70 again.
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0.69 to 1.70 overnight :eek: - where/when did this happen ?
 
The Don said:
I've never seen prices that volatile here in the UK.



0.69 to 1.70 overnight :eek: - where/when did this happen ?
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Sounds like two gas stations in a local price war or something like that. Or some reason very specific to one particular gas station. Probably the national average price didn't change all that much.
 
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