Pierre Rocheard, strategist at Krakens Bitcoin, believes that bitcoin is the perfect defense against uncertainty, despite the high volatility.

In an interview with Cointelegraph, Rochard noted the separation of uncertainty and risk. While the former is measurable, the latter applies to situations where probabilities cannot be calculated.

Due to its volatility, Bitcoin is a high risk asset. However, the volatility of bitcoins can be insured against the use of derivative contracts.

And he notes: “You can insure against instability by buying monsters or selling futures contracts.”

As Rohhard noted, measurable risks are much less than the magnitude of uncertainty. The latter can be effectively protected by bitcoins thanks to four main functions.

The first feature is a high degree of accessibility, which allows anyone to send and receive bitcoins in an unauthorized way. Conversely, paper currency is subject to a high degree of uncertainty because it depends on the security of third parties.

Another property is absorption resistance, which makes it difficult to confiscate bitcoins from other assets.

“If you look at the expected cost of confiscating bitcoin, it is slightly higher than the expected cost of confiscating gold or cash, especially a bank account.”

The third is censorship resistance, which is ensured by the way transactions are transferred to the network and then written to the blockchain.

Rohhard said he was unlikely to cut back on transactions, given the financial incentives that miners offer to mining units.

Finally, fixed fixed coverage for bitcoin supplies reduces the uncertainty that affects all currencies that depend on the monetary policy of the central bank.

According to Rochard, using the power to print an unlimited amount of money, the authorities “maximize exchange rate stability.” However, this is due to increased monetary uncertainty.

Source: CoinTelegraph

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