Bitcoin Forum

Hi Ev'rybody.
Last days we witnessed a 20% crash in bitcoin, not to sepak about other crypto, including ETH that had the most solid growth till then.
These anomalies, as good as they might be for day traders, does not speak well about the BTC as a reserve currency.

As I said before, there's a reason why paper money was pegged to gold prices and reserves. Because any currency needs a reference value if it is going to avoid those dramatic ups and downs. The euphemism of USDT is just out of question.

And even though I'm strongly against any regulation of BTC or any other crypto, I have to say, leaving it freely float poses dangers such those I said, plus manipulations of speculators who can, by their own operations, affect prices at will.

So, I will insist that crypto needs a value reference. And as I said in my other posts, the best reference value is ENERGY. The most pure asset in the universe.
And there's got to be a way to tie the value of bitcoin to Joules. There's already SOLARCOIN, but to be honest I'm not sure how that is working.

Future economy has to be energy-based.

Please feel free to download my proposal in pdf: Teraflops and Terawatts at:

https://drive.google.com/open?id=0B7JgGimv_JMJaWdYQXdtb1RVZVE (https://drive.google.com/open?id=0B7JgGimv_JMJaWdYQXdtb1RVZVE)

Greets,

http://estaciontrend.blogspot.com/

There are coins linked to almost every other asset - Oil, Gold, Energy, even Dollar.  ::)
While these are interesting concepts, Bitcoin has achieved scale and has large hashing power backing it. So it won't be easy for an alt to displace it.

My opinion is that the threat is the effect of the btc to our economy and not the btc itself. It is how people would use or utilize the power of btc. Transaction cannot be easily hacked unless brute forced but it would takes millions of years so therefor it is untouchable and it is just the patronizers that reality is going beyond it's purpose. You also right that it needs to be energy based because it general it is generating a new era that can function without a barter trade or it is only a one sided trade.

High volatility can no longer kill bitcoin since bitcoin holders are now smart and are always ready when a dip or when the bubble burst. If you notice the trend that after a dump bitcoin can recover fast and that is because the bitcoin dump was being expected to occur and many bitcoin buyers are waiting for that event. While those who bought bitcoin at a higher value does not sell their bitcoins but patiently waits for a increase in value so they can sell it in a higher value compared to the price they bought it.

I don't think Bitcoin will undergo major downs in coming days as it does before. In past we have seen it crashing by 50-60% but the last crash was only of about 10-20% which also recovered its the in a day, this shows Bitcoin adopters have increased overtime and more users means more stability.

Somehow mass adoption helps in lowering percentage of crash, though the crash were happen really fast just like in a day its totally arising then when midnight fall it lower which is unexpectedly.

One of the things that atracted several investors were the high volatility it has, being able to crash 20% in one single and recover those on the short-medium period, bitcoin is a cash machine for some people, who play forex can make huge loads of money with it, and daily traders as well investors should know already about the risks.

I slightly have different opinion on this, I don't think it will kill the bitcoin in any ways. Yes, it might affect the price badly but it won't destroy the bitcoin. Believe me or not but there are many people with cash in their banks are waiting outside bitcoin to enter in it at a right price and in every crash such people jump in with their fiat balance so it doesn't affect the price as it is supposed to as per the over supply principle.

The volatility can let day traders mint money, but their entire capital can also get wiped out if their calls go wrong.
High volatility is a double-edged sword. Of course, gamblers couldn't care less.

Right on point, that's why I strongly suggest we stop spreading false news in order not to cause newbies to panic and sell what they own. At this stage of Bitcoins career is where everyone should be confident to invest because whatever dumping that may occur as a result of the volatility will be restored back to normal as readily available enthusiasts are waiting to get onboard in such circumstances.

Such things promote panic selling even in the little loss but that is nothing as compared to the loss of the long-term (the profit forgotten just because of early exits). We have to understand the fact that there are traders and even institutional investors entered in the bitcoin and their actions will create short-term volatility on the price chart but in the long term we will have actual growth of bitcoin through user base point of view and that would be the strong growth of it.

You are overreacting, this is not the first time Bitcoin has crashed (note: after much bigger rise). It's not anomalies, just profit taking, if an asset grows too fast, people start thinking that it's overpriced and start selling. What happened to Bitcoin and alts was just a healthy correction





The value of energy is just as relative as everything else, in some places it's easy to generate, in others it's hard. If someone will build tomorrow a powerful and cheap fusion reactor, your energy-backed cryptocurrency will crash much harder than Bitcoin crashed recently and probably won't recover.

Hahaha Solarcoin will save us all.
Good joke.

A coin that is good for... nothing.
Nobody uses it. Check their block explorer:
https://chainz.cryptoid.info/slr/

Empty.


And that 1mw one coin crap , those are just fancy words on a wordpress theme.
In reality nothing will work as the "devs" or pumpers dream.

Bitcoin is being constantly developed, there will be only 21 millions of Bitcoins in the world and some of them already disappeared, people lost them. Bitcoin was "programmed" to price a lot on long term, but it's not instantly, takes some time to reach to the goal and the way we are going involves high price flutuations, all the time. I believe in the future the price will become more stable, so people can use it like currency and not speculative asset.

Bitcoin has already a value reference and it is the people. This is the best value reference because the people are the one who are using bitcoin and as long as there are people using bitcoin, bitcoin will never lose value.

Volatility and price crashes has always been there, they coexist with Bitcoin because it is Bitcoin. It is normal to see bitcoin in a volatile nature and seeing crash on the market is very normal and does not bother most of the users. I short, volatility and sudden crash will never trigger the death of bitcoin.

naah, completely wrong.
We're just along for the ride with IMHO relatively small percentage (people that bought bitcoin in 2010 don't exist, they don't anymore, newspaper bullshit, they sold ages ago), where will all the bad guys, from terrorist, arms dealers, drug dealers,.... and I don't know what bad sort of people, and people hiding their assets from the government keep their money if not in bitcoin and altcoins?

All we, the spectators/speculators, can do is provoke a small panic attack that results in about 20% drop for about 2 weeks, they don't panic, they don't care, they have most of the coins.  ;D

This volatility is not good if it stays this way, but remember, we are still in the early years of bitcoin. As time goes on, the volatility should gradually change over to stability and steady gain in value.

The volatility of bitcoin is something that is not out of the ordinary for someone who is already involved like you and I and this is largely explained due to the growing nature of the coin. However, the central regulation is something that would definitely negate the fundamental principle for the establishment of bitcoin. I believe that in due time when the entrants stabilizes then volatility will also be minimise to a large extent.

Exactly, Bitcoin keeps evolving and the path to evolution wouldn't becstraight or stable until we get there so I'll urge all to exercise patience and adopt to the volatility while we journey along to riches.

Correct. We already know how bitcoin is very unstable and yet we go with the flow. Its how the nature of bitcoin is from the start its volatile. If you don't want volatility then bitcoin trading is not for you. And having a reference value for bitcoin will not be good for the market as well, again because its boils down as to how it is design. Decentralized and psuedo anonymous and volatile.

Yes and moreover those sudden falls and high volatility are not new to bitcoin prices also bitcoin market is known for its unpredictable fluctuating nature. Bitcoin's investors have traveled along with those hard time and they still enjoying their stay just due to bitcoin remains dominant in its vertical. As long as bitcoin has such supporters, never need to worry about volatility/crashes, yes it will bounce back to new ATH for sure. This time too. We can expect new ATH in June again.

Athe current situation volatility is quite an attraction to bitcoin.  Several investors and speculators are jumping in to bitcoin economy just to take advantage of this situation.  This might be not good to those who does not know how to dance with bitcoin volatility but this is great for those who are well versed with it.  Bitcoin will be boring and will not cater much attention of it started as stable currency though I believe  and I agree once saturation  level is met, the price will become stable.

You are basically asking for a stable price so when you bought coins at $2600 there will be something in play to keep the price above $2600?
Bitcoin without these fluctuations is nothing, volatile price is what makes it interesting. This makes no sense, if you lack the guts to take the risks then you are not made for this market. There has been no crashes, why would people call this a crash? if some big whales suddenly decide to dump their coins it's an opportunity for others and it's not a crash, you could call it crash if price drops to sub $500 and stays there for a month.

Yeah, we cannot say bitcoin is completely crash proof. It would be almost impossible situation. But yes, it is now out of danger situation where individual assume he made too much profit one day and loose everything the next very day. Most of the altcoins are currently at this stage.
But bitcoin is now mature enough to sustain big dumps with little price fall and situation rectify soon after.

You can't expect an aspiring reserve currency that is still tiny (less marketcap than some business brands) to not be very volatile. You should see that as a positive because it means the market is still not mature.

Once bitcoin reaches 6 figures per coin and stabilizes this will not be a problem. You can't artificially create stability because that wouldn't be a decentralized freemarket anymore, which is why bitcoin needs to reach 6 figures with a marketcap similar to gold's in order to protect itself against wild price swings.

BTC should be 6 figures in the next decade if it consolidates itself as the world crypto reserve.

To a degree, crypto day traders like high volatility.

More price swings over time translate to greater opportunities to generate profits.

If BTC's price moves 1% in 24 hours that means the most traders could hope to profit is 1%.

Larger and more frequent price movements make it easier to profit and also increase the maximum amount of potential profits.

Volatility isn't the cause of price decline btw.

Big BTC holders look to be cashing out & selling BTC off their crypto in high volume.

That seems to be the reason behind some of the larger BTC declines we've seen of late.

The traders know what happened in the price of bitcoin and they know that in the trade of any asset the same thing happen so they will not leave bitcoin having that feature and will use bitcoin for their trade. If anyone saw it for the first time then in the future they can secure themselves. If everyone will learn about that thing then they will not leave bitcoin and bitcoin will survive.

If you really consider the amount of energy consumed to mine one bitcoin you will know that it is really an energy consuming coin,take into account the electronic wastes it creates in the form of obsolete mining hardware's and the amount of power it is using world wide,to be frank it is a complete waste of energy,we need to have some economic solution for these things which i know is not possible. ;D Bitcoin is volatile from the start and it did not kill the coin and i think it wont.

the danger is the impact of the bitcoin to our economy and not simply the bitcoin. It is the way individuals would utilize or use the energy of bitcoin. Exchange can't be effectively hacked unless beast constrained yet it would takes a great many years so therefor it is untouchable and it is recently the patronizers that the truth is going past it's motivation. You likewise right that it should be vitality based in light of the fact that it general it is producing another period that can work without a deal exchange or it is just an uneven exchange.

Bitcoin is pegged to something though. Security, continuing usage by people/others, transaction validation, store of wealth etc. All of these things are built into having bitcoin. These are not built into a dollar. Many other systems have to operate to validate dollar spending, mobile armored cars used to transfer money to banks, security in vaults/storage, etc.

A whole system compromises the worth of a dollar, which you rightly point out has gone down due to not being attached to gold any more. Remembering back to the time of buying a hershey bar for 5 cents, now it is a dollar or more. The dollar has been devalued many times over, some say by over 97%.

BTC is fine with what it has, but needs innovations to bring in more user friendly options for mass adoption.

You don’t seem to take into account that crypto is a completely new market that did not existed 10 years ago and when a new market emerges then there is great instability, so I think it is a bad idea to try to stabilize something that by its simple nature is going to be unstable let bitcoin find its level as anything else, with the market and old supply and demand.

Crypto currencies is still at the early stages and as such we expect price manipulation, hard forks issues and pump and drop by greedy traders. But time will come that its capitalization will increase to the level that it can't be manipulated. We need all this manipulation of price now to create popularity for crypto currencies in general. Renewable energy project is also good.

that's true , cryptocurrency market has pretty different characteristic compared to any other digital market or any market . i even think the high volatility could live for long time enough as it's how the crypto market work , it could be a new trend . we have face several shocking crash , and so far we pass it and even getting better situation after that crash .

Those prehistoric crash are little indicator of other on believing on bitcoins when there's certain downfall occuring on it thats why we can see another great pumps after it to be happen and time before are different from now since adoption and its votality are further more increasing and I think Big crashes will not occur on this point since price will actually reach for more after for years will pass on it.

Crypto can be a value reference.

John Nash's "ideal money", for example, involved a currency's inflation rate to be as close to zero as possible without being negative.  The idea was that everything else could be measured against it, like a meter or something.

With a limited supply, if it was a kind of "reserve currency" the value would be far more stable.

I don't know why people really love to make things complicated thinking off that crypto currency do really works on this way they are might some disadvantages but people do still love to engage with it.Period. and theres nothing to debate off.If you don't like the volatility then you can anytime leave and stick into the tradition old ways as simple as that.

If you find yourself stay away as stated by the above mate. No need of making it an big issue, from my opinion users who mostly use bitcoin loves the volatility. It is the one that helps get a profit, which is not possible with any other traditional currency. How hard you manipulate or adoption goes on the volatility always stick to it.

Crashes like this are just mild compared to what have been witnessed in the past which in the real  sense does not kill bitcoin rather makes it come back stronger and more popular. To me, I see the crashes as lessons to both outsiders and those in the know that bitcoin is not a quick rich scheme that will just continue to increase like that but a little set back for us to go back to the drawing table and set our priorities right.

Unless the support will be strong enough to defend the crashes and control the high volatility and we are witnessing it right now because if you see some crashes in bitcoin, it still pump and fighting back to the top.

well in skyrockets and crashes are pretty normal in cryptocurrency market so, if you don't know how dance with it you will lose money and the crash happened a few days ago is not the worst compared in the past which is doesn't kill bitcoin instead they came back stronger and became popular

also the volatility makes the bitcoin more interesting to investor and they used the volatillity of bitcoin to make profit.

To the bitcoin holders sudden crash and volatility means opportunity and profit. To the early adopters way back to 2013 when we speak of sudden crash it would cause a big panic and many will lost their capital. But today bitcoin holders are no longer affected by sudden volatility. If they see a huge price spike it would mean time to sell and if they see a huge dip it would mean an opportunity to buy.

Author, you started a good topic about volatility of bitcoin and other crypto. It`s a good question of how to tie bitcoin to real economy assets to avoid sudden ups and downs. But your idea of solar energy or other sounds little utopian. How to count energy, especially solar energy, it does not belong to anyone and is almost infinite.

Yes there are people who are loving the extreme volatility of bitcoin markets. They must be traders who can enjoy the ups and downs of bitcoin price movements to make use of them for their trading.

But when we are thinking from the point of innocent investors who are entering into bitcoin and losing their investment with sudden crashes, might be leading to have negative impression about bitcoin investment and which may end up not suggesting to their friends to guide them getting into bitcoin ecosystem.

Hence I think we need bitcoin prices to be more stable like it should move up to +/- 10% per day. But I do not think it would be possible to have such ideas to be implemented.

I agree that volatility is bad for a currency used to transact. As Dinofelis said, cash with a finite supply is inheritly volatile. Fiat is able to control giant swings with policy changes & fresh currency, this is something that bitcoin seeks to avoid. We can't add mechanisms for price control and then in the same breath call Bitcoin a "freely traded market", which imo is one of the more appetizing features of BTC.

I think the adage applies here "don't invest what you aren't willing to lose".

That being said, I definitely think it's a mistake to dislike volatility (speaking being we are all here for profit). It's more the natural progression of a trend, look how slow price started rising from $200 and how volatility (ups & downs) progressively got bigger and bigger as price rises. This is something we see repeat in nearly every market. A good example is a 10 year graph of Amazon/Google, look how slow it started and how it's basically going straight up now.

It's more about people feeling they are on the "sidelines" and buying in so they don't "miss out". Little do they realize, they were buying at the top before a very large correction. There is a reason most profitable traders on Wallstreet are contrarians. The goal is to use human psychology against your peers.

Bitcoin to me is a vehicle for speculation now a days, nothing more. If we want to talk global currencies, we got to start USING them as global currencies. Right now it's just a hoarding game.

As most people say "smart money buys bitcoins, dumb money sells bitcoins". That's a self-fulfilling prophecy for continually rising prices. That's NOT how a currency is supposed to be used, if anything we use Bitcoin more like Gold than a currency. It's a really volatile store of value (oxymoron lol)

PS - as a trader, I love the volatility, as I'm sure many of my peers do. Bitcoin has made me some of the greatest pecentage gains over the years.

If limited supply is the core reason for drastic fluctuations then I guess we need to switch over to satoshi based trading instead of current doing BTC based. For example dogecoin are having lesser volatility as they are having huge number of units and no total supply cap.

Honestly I think that's a great idea and have often wondered why we haven't started yet. I think it's a much bigger barrier for the average joe to have to put up $2000 to get 1 btc (which in their head makes them feel like small fish, not worth the time, missed the boat, etc) than volatility will ever be.

If we can get fees sorted out, which it looks like we are finally closing in on a solution, I could see trading in smaller increments as a giant boon for Bitcoin. Think of it like when Google hit's $1000 bucks then they stock split 1:10 in order to make the share price $100 again. It makes Google once again more accessible to the average joe.

We all remember as kids preferring ten $1 bills as opposed to one $10 bill. More is always better (even if it isn't actually more lol).

Nice name btw, cheers.

no it won't!
the only effect that a high volatility always had and will continue to have is that it will make people think twice before using bitcoin as a currency and prefer it more as their investment and the thing they trade.

and it is not an strange or even restricted to bitcoin only thing. it happens with every new technology that has a growing demand.
someone actually posted a screenshot (that i will add if i can find it) of Apple shares and it has a very similar movement to bitcoin price.

this is how all the markets work.
smart money comes in first, then the masses find out and start FOMO buying, price go up fast. smart money sells to make profit and because they know a correction is on the way. price comes down in correction, smart money buys back more shares.
in bitcoin, unlike stock market, there are a lot more newbie wannabes that will panic easier and they make the movements even bigger.

Correct, in fact I have some problems calling the reduction in price we got a crash at all, bitcoin even at the lowest did not go below the previous level, it only went as low as 1900 so that was not a crash at all that was just the market trying to find the price of bitcoin and the ups and downs were nothing but a signal the market was having some issues to find the right price

I totally agree, this was no crash but a periodic volatility before it settles , those of us who have been following Bitcoin for sometimes now never panicked because we are used to this and was confident it will be coming back to normal after a few balances here and there.

Nobody will kill bitcoin in any way what bitcoin competitors do though they have the same sma bitcoin. Believe it or not but there are a lot of people with cash in their bank waiting outside bitcoin to include it at the right price and in every accident.

As to me, that's sheer nonsense

And it is not nonsense just because the idea is conceptually flawed (though it still is) but since there cannot possibly be a value reference point that would remain the same in any "coordinate system", so to apeak. In other words, whatever you may choose as a reference point (for taking or copying the value off it), it will be prone to value changes on its own (in respect to other valuable assets). You may take energy and you may even take time itself (which looks a better idea) as a basis for reference, but you will still face and have to deal with the change in the values of these references themselves. This is what any hard currency backed up by some asset is set to face inevitably. In this way, just limiting the number of coins to 21M is a step ahead since it allows to get rid of such issues altogether

Forgive me if am slow i understand everything you said about reference but if bitcoins reference is to be ENERGY, how is it going to work, How will they implement it. I'd be happy if you can clarify that for me.

No not possible,huge price volatility may be a cause of panic of holders but will never be a cause of bitcoin dying.In fact price volatility is the caused why bitcoin investors earn into it,they buy at sudden drop and sell at sudden pump.Without huge proce volatility bitcoin will not rise fast

Well I think no other alt coin can replace bitcoin as being top crypto currency.
Bitcoin will always be bitcoin. Any currency have the volatility as a player in the market.
There will always be ups and downs so no currency will be stable even though there's a high supply. That's our economy.

I think it is not necessary to have one particular reference value. A simple backing mechanism like I'm proposing here (https://bitcointalk.org/index.php?topic=1926913) would also help to combat volatility. But there seems to be low interest for that in the Bitcoin community. (Perhaps I should bump this idea in the next real bear market).

However, I agree with you that energy is the "purest" asset that exist in the world.


There were some discussions about that topic in 2011 to 2013 about a cryptocurrency whose price would be tied to energy. Now they are buried in the altcoin forum:

GEM (https://bitcointalk.org/index.php?topic=47628.0)
Encoin (https://bitcointalk.org/index.php?topic=49683.0)
some discussions here about a so-called "MordorCoin" (https://bitcointalk.org/index.php?topic=179918.0)


I have looked at it, but I don't understand how your energy-to-cryptocurrency peg would work.

Cheers from your southern neighbors ;)

As to me, having a few reference values would only make matters terribly worse

Since it will excessively complicate things while not solving the main task, i.e. making the coin less volatile. In fact, with two or more independent factors, you can never be sure that they won't change in unison thus adding to volatility, not taking from it. If they are not independent, it makes no sense to use more than one factor anyway. Regarding energy, there are different types of it in respect to how much work can be done with it, electricity having the highest capacity to make work, while heat energy the lowest. And just in case, you shouldn't make your threads self-moderated, otherwise many people will stay away from posting in them. No one wants his posts deleted for whatever reason (whether he is in a signature campaign or not)

Suuden  crash in the case of bitcoin cannot kill it not now. If it were to be other alts where a dump by the developer might make the price not to recover could kill it but not bitcoin which has grown to this point where every dip presents an opportunity for everyone to either jump in or increase the stock because by that the it will be forced back up by the time I want to increase my 0.01btc to 2btc due to the crash.

If taking a basket that is too small that may occur (e.g. "Oil + Soybeans + Wheat", above all, prices of agricultural goods are often somewhat related and related to oil prices).

But that isn't what I had proposed on the linked thread. The idea is to give merchants the possibility to back Bitcoin's value, and so we would have - if it is successful - a large diversity of products and services backing Bitcoin. Volatility to the upside cannot be fought by the mechanism, but it is volatility to the downside (crashes) that most people fear when they start with Bitcoin. What I want to achieve is that in a crash, people can sleep calm because they know that tomorrow they will be able to buy things at the same BTC price than today.


I think electricity is also what the OP is trying to peg to Bitcoin. But in his paper he doesn't explain how to exactly make the peg work. Hey OP, ¿dónde estás?


May be true. Will add a moderation note, as damage is already done  8)

BTC can't crash if all the exchanges disallow bids & asks below the ATH.

Ultimately, you don't need that

In fact, this task is perfectly well fulfilled by merchants and service providers just accepting a certain currency (Bitcoin in this case) as a means of payment for their goods and services. It could be said that any currency which is not directly backed up by a specific asset is backed by all the goods that can be bought for it. And this is the best way for diminishing volatility (since that seems to be the final aim). On the other hand, how are you going to implement backing up of a decentralized currency in practice?

Yes, but in the present situation there is a problem: most merchants use a solution like BitPay where the price of the good follows the BTC/USD, BTC/EUR etc. exchange rate. BitPay, as far as I know, guarantees a fixed price only for 15 minutes. If merchants could extend this period to 24 hours, they could really "back" the price in the case of a crash.

On the other hand there are merchants (e.g. in OpenBazaar) that accept fixed prices in BTC for their goods but can end the product sale every time. That is also only a limited "backing" of the price because in the case of a crash most merchants would retire their products until the dust has settled.

So the "price guarantee" for 24 hours should be an option widely available for merchants, in most payment platforms.


It would be - a decentralized backing ecosystem ;)  My proposal is to provide the "backing option" for plugins for most Bitcoin merchant solutions (e-commerce platforms, wordpress commerce plugins etc.) and integrate it into centralized payment providers like BitPay and also into decentralized solutions like OpenBazaar (although that is already a little bit more complicated because we'd need an "oracle" for it like in Bitshares).

But who is going to hold the bag?

Who will be that wretched fellow appointed to keep up the rates by selling precious assets if panic sell-offs start all of a sudden? After all, the government which has set the fixed exchange rate for a currency backed up by some hard asset (say, gold) also happens to print that currency. So if it keeps its monetary policy lean and mean, it won't have to face insurmountable difficulties with supporting the exchange rate as it deems appropriate. Besides, I heavily suspect that it is next to impossible (if not outright impossible) with decentralized currencies as well as pretty meaningless, and still more so with currencies which are hard capped (the cap itself would serve as a substitute for a "back-up")

Every merchant can opt to be a bag-holder. But the losses should be minimal in all cases where the merchants sell goods with small marginal costs for them. The prime example for this are digital goods like music, movies and software.

Let's have a case where music and movie producers sell music and movies and with these assets "back" Bitcoin by guaranteeing the price for 24 hours. Now, a 20% crash happens. An "average Joe" (we must assume that he regularly buys movies and music) that has invested in Bitcoin, has the choice to accept the 20% loss or buy some music and movies for it that he wanted to buy.

If he cuts his losses and sells the coins with 20% loss at an exchange, he would drive the price further down - it's an invididual loss for him and also a loss for the Bitcoin ecosystem (at least, everybody that is owning Bitcoin).

But if he accepts to buy the media, he has made no loss monetarily (because he, as a music&movies lover, is satisfying an individual necessity), and the merchant has sold one copy more that costs him closely to nothing. So it would be extremely probable that merchants would achieve more sales in crash periods. It's a win-win situation for both actors.

I would argue for having good and strong support for defending crashes and controlling high volatility. Look at so many collisions experienced by bitcoin.

If wishes were horses, beggars might ride

A simple question begs to be asked, i.e. why merchants would want that in the first place? Are they in for charity or what? If they don't have economic interest in that (which in most cases boils down to pure profits), they won't do anything along these lines. More specifically, they will just increase their profit margins and will ask for hefty premiums to avoid getting caught by Bitcoin volatility (or choose to abandon Bitcoin altogether). Why the American dollar is universally accepted around the globe? Right, because it is as solid as rock

I like your idea, energy-based as one of the most needed things everyday but bitcoin development doesn't run smoothly due to many people involved and they have different thoughts about how bitcoin should be.
Bitcoin still have to fluctuate, rise and drop back, its volatility give several chances​ for everyone to buy and sell at any rate they want.
But as long as bitcoin value keep increasing, than it will be fine even its not pegged by energy-based.

In that case, the merchants needs to use a third party payment processor such as Bitpay or Coinbase, which immediately converts the Bitcoins to USD or any other fiat currency of their choice. In this way, they can insulate themselves from the exchange rate fluctuations. I am not sure about the fee charged by these payment processors. I heard that it is around 1% (still better than the 1.8% charged by Visa/Master).

Simple: They get the opportunity to multiply their sales. Above all in the goods I mentioned the number of sales is more important than the value per sale. Producers of digital goods make profit with every copy. They will get more sales when they are "caught by volatility", because for people it will be an opportunity to escape from a crash.

And in every sale they make this way, their brand becomes strengthened. They can even use the "Bitcoin backing" as a marketing vehicle.

It is the same logic like behind special offers of supermarkets.

This is not the point of this discussion


I don't really see how that would work in practice

I agree that the profit margins of these merchants are pretty high on their own but I still see no logic in that. If they wanted to multiply their sales, they could just go for a sell-out and get done with that. Why all the fuss with Bitcoin? Anyway, if you think that it might work out, why no one has done that already? Further, I don't see a lot of sense in buying 20 copies of the same record just to escape being "caught by volatility"

Because they have the additional advantage to promote themselves as "Bitcoin backers". They expand their public into the Bitcoin community. I am pretty sure that every merchant who participates in this mechanism would get much love in the Bitcoin community, above all from newbies that get burnt in crashes ;)


Well, somebody must be the first. Maybe now someone tries it ;)


The mechanism only can show its full potential when there is a diversity of goods available (many merchants participating). A single merchant/producer would not change much in Bitcoin's volatility. But even if there are only a few goods available, individual users will be able to benefit from it, as they could buy something they like and so cut a part of their losses in the case of a crash.

High volatility is not bitcoins fault, the ones at fault are speculators that is it, the op talks as if the price of gold does not move, it does and if you are talking abut volatility look at what has happened to gold in decades prior to this, by comparison it makes bitcoin look stable.