In 2008 Satoshi Nakamoto released the paper “Bitcoin: A Peer-to-Peer Electronic Cash System” which fundamentally became the birth of the cryptocurrency Bitcoin. While nobody still knows who Mr Nakamoto really is, many people quickly became aware of the existence of Bitcoin. The debate surrounding the cryptocurrency has been lively with many supporters and equally many sceptical. While many believe that the underlying technology with blockchain will revolutionize fundamentals around transactions, not just when it comes to money, far from all is convinced that Bitcoin is a given success.

As we closed 2015 we wanted to assess how the Bitcoin was doing from one particular angle, stability. Our belief is that any given currency need to provide some degree of  stability in underlying value in order to be broadly adopted. Currencies which doesn’t carry that characteristic will likely be seen as too risky or speculative.

We made a simple comparison by indexing the Bitcoin to USD value, where January 1 2015 was set to 100 and compared that index with a SEK (Swedish Krona) to USD index. The below graphs clearly show the developments of the two currencies.

It is pretty clear from this simple comparison that the Bitcoin was much more volatile in 2015 compared to the Swedish Krona (SEK). The below tables makes the comparison even more clear.

Category Swedish Krona Bitcoin
Median: 107,83 78,67
Average: 107,78 86,33
Max: 112,97 146,08
Min: 100,0 55,91
Variance: 6,061589814 348,089183
Standard deviation: 2,462029613 18,65714831

To summarise the differences, below is a calculation of the standard deviation as percentage (%) of the average price for the different currencies.


We are not saying that the Bitcoin has failed, we believe that is too early to say. However, with the current volatility we believe the Bitcoin is not working as an effective currency and that it will struggle to get much broader adaptation simply because it comes with too much uncertainty and risk.

Source: Deutsche Bundesbank Data Repository, Blockchain