Why is bitcoin inherently volatile?

inherent_volatility.pdf

1. An ideal money would have no holding cost or provide any return beyond those justified by productivity growth. The cost of holding a fiat currency balance (like the ones we have now) would be its devaluation and the uncertainty of its value relative to the mentioned ideal. Fiat currencies rarely provide a positive expected return, just a convenience yield matching the holding cost.
2. Unless the supply of an asset can increase, issuing substitutes implies shorting it naked. This is a non-ergodic strategy and very different from issuing gold substitutes when its price rises, which can be backed by future gold production and hence an ergodic strategy.
3. If you cannot suppress price growth perpetually, suppressing it in the sort run is economically impossible. It is like giving money away for free.
4. I'm not familiar with this argument, sorry.

From my points 1, 2, and 3:

1. Pay attention to the difference between predictable vs. unpredictable returns. I was making the narrow point that in expectation and in equilibrium, you'd expect the return to be 1/discount_rate, which is the risk-free rate.

2. I'm not sure how useful it is to define away the subjective discount factor and treat it all as risk. Are people indifferent between a guaranteed 1 util today and a guaranteed 1 util in one year? Also not sure if this changes my interpretation of your argument or not.

3. This point is circular, so I don't see how it proves anything about a hypothetical world where we used S&P or Bitcoin as money. If we denominated salaries in S&P shares, there would also be no uncertainty in nominal income.