>in the past 2 weeks we've seen its value appreciate by 50%, something that just doesn't happen with traditional currencies
You do not see deflation with fiat currencies because the issuers of the currency print more to counteract deflation. Gold however is prone to extended periods of deflation, and that does not prevent gold being useful as a medium of exchange and as a vehicle for investment or savings. (The reason gold stopped being used as a medium of exchange is that paper money is more convenient, not because of its vulnerability to deflation.)
If your reply to this comment is that Bitcoin cannot be compared to gold because gold has "intrinsic" value whereas Bitcoins are just an artificial construction, you do not understand monetary assets.
True, gold has probably not deflated as rapidly as Bitcoin has over the last 2 weeks. That would be because the fraction of the world's savings invested in gold is much higher than the amount invested in Bitcoins. If a greater percentage of the world's savings come to be held as Bitcoin, Bitcoin's price would probably act more like gold does now.
Indeed I agree that a changing price doesn't necessarily mean that the currency is useless as a medium for transporting wealth just that when the exchange rate is volatile it's much more attractive to see BitCoins as a speculative vehicle. That's what drove the bubble last year and could very well be the same thing that's happening now. The growth rates are similar (although starting from a higher base) and that's primarily what I'm worried about.
And don't worry I'm quite familiar with fiat currencies ;)
Yet again I agree with you, the BitCoin economy needs more investment in it in order to counteract the issues that I highlighted. Thankfully that seems to be happening (I believe YC just accepted its first BitCoin based start up) and as time goes on the market should stabilize. I think that's when we'll start to see BitCoin spread outside the high tech sector and I'll gladly count BitCoin among all the other "proper" currencies.
You do not see deflation with fiat currencies because the issuers of the currency print more to counteract deflation. Gold however is prone to extended periods of deflation, and that does not prevent gold being useful as a medium of exchange and as a vehicle for investment or savings. (The reason gold stopped being used as a medium of exchange is that paper money is more convenient, not because of its vulnerability to deflation.)
If your reply to this comment is that Bitcoin cannot be compared to gold because gold has "intrinsic" value whereas Bitcoins are just an artificial construction, you do not understand monetary assets.
True, gold has probably not deflated as rapidly as Bitcoin has over the last 2 weeks. That would be because the fraction of the world's savings invested in gold is much higher than the amount invested in Bitcoins. If a greater percentage of the world's savings come to be held as Bitcoin, Bitcoin's price would probably act more like gold does now.