> I'm ignorant. From my perspective it seems like the value of bitcoin changes too much,
The value of Bitcoin fluctuates UP and DOWN too much *when compared to the US Dollar*.
But compared say, to the Mexican Peso or say (more extremely) Venezuelan Peso, it has gone steadily up. So for us who don't live in a place with a sufficiently stable central bank and a trustful government, Cryptocurrencies are one avenue to safeguard the value of our income.
If what you are saying is true, then there is a huge arbitrage opportunity there, unless there are sufficient transaction costs or legal deterrents involved.
If the value of bitcoin relative to MXN is steadily going up (meaning that MXN is losing value relative to USD), then it automatically mean that the value of MXN is also steadily losing value relative to USD. So at the end, from a "value" point of view, nothing will change for you because both currencies are "pegged" to USD. If parity doesn't hold, there is an arbitrage opportunity there; suppose
1 USD = 2 BTC
1 USD = 4 MXN
The implied exchange rate MXNUSD would be BTC = 2 MXN. But imagine as you say that for some reason, this doesn't hold, and actually 1 BTC = 5 MXN in Mexico. I have then an incentive to buy 1 BTC at 0.5 USD, use that 1 BTC to buy 5 MXN, and sell all that MXN at the original rate of 0.25 USD, earning 1.25 USD.
I can understand that it may be easier to physically hold BTC as opposed to fiat USD in that situation, but I don't get the value store proposition. Anyone saying that they see Bitcoin as a store value, are implying they believe that in the future, some people will want to pay for 1 Bitcoin the same amount (or higher than) it's currently worth. It's a perfectly valid claim to make, but what is this belief based on?
The value of MXN is going down relative to BTC and to USD at the same time. There is no arbitrage opportunity, beyond the obvious slow drip of money moving between the two and maintaining this balance.
You know, this is one of those things that would go away with the snap of a finger if the leaders cared about their country. Okay it's harder than that because the IMF is completely backwards but let's assume that the Venezuelan government was willing to listen and the IMF actually understood economics. It wouldn't take a year to fix the problem. Shortages may last longer because the real world is slow.
The value of Bitcoin fluctuates UP and DOWN too much *when compared to the US Dollar*.
But compared say, to the Mexican Peso or say (more extremely) Venezuelan Peso, it has gone steadily up. So for us who don't live in a place with a sufficiently stable central bank and a trustful government, Cryptocurrencies are one avenue to safeguard the value of our income.