The author is editoratlarge for finance and markets at Reuters News. Any views expressed here are his own
LONDON, May 21 Reuters Bitcoins wild ride this week is far from unusual for the largest crypto token but the rollercoaster is also its inherent contradiction.
Speculators betting for years on bitcoin becoming a stateless digital currency thats widely used for online retail and payments are largely responsible for its parabolic price rises. But they also seed the sort of blinding volatility that makes that ambition almost untenable.
Bitcoins 30 plunge on Tuesday after another Chinese government crackdown is not unique. Daily moves of more than 20 have been frequent during the past 6 years. At almost 4.5, median daily price swings over that time period are more than 6 times that of the main Transatlantic eurodollar exchange rate.
And while some online retailers might accept bitcoin as payment for goods priced in dollars, few could manage the potential accounting chaos of sticker pricing in bitcoin if its value can routinely shift by a fifth in just hours.
The flipside is true for buyers. If you think bitcoins price keeps on rising over time much like the latest quadrupling over the past 12 months then why would you surrender those gains by paying for anything with bitcoin today?
And so if that role as a transaction currency or stable store of value remains elusive, its essentially just a game of hoarding a finite number of tokens by small groups of people that…