Another opportunity cost of Bitcoin

beauty-of-bitcoinApart from

The opportunity costs of mining for money

there is another opportunity cost of Bitcoins to bear in mind and that is related to its volatility.

Suppose you want to purchase a suit or a dress, you assess your other needs. You finally decide, yes, I need and want a new suit or dress and you purchase it by paying with dollars, or euros, or any other currency.

If you pay in your domestic currency, the exchange rate is of no concern. If you decide you want that gorgeous thing directly from an Italian tailor, well you pay in euros and you factor in the exchange rate. The exchange rate has usually no wild swings.

However, if you pay with Bitcoin you have to harbor second thoughts. It is the ludicrous volatility of this currency. How would you feel when you paid for your suit/dress and a week later the value of Bitcoin has gone up by 25%?

So with Bitcoin businesses run the risk that customers defer a purchase for two reasons: on the one hand to wait for a better rate and on the other the reluctance to see the payee benefit undeservedly.