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December 17, 2013, 04:51:13 PM |
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People using Bitcoin to purchase merchandise don't care what the price is. They just purchase Bitcoin of value equal to what they want to buy, use it to pay for the item, and the merchant changes it back to dollars as quickly as possible.
These merchants and customers have no exposure to the long term price trends of Bitcoin. But what scares them is the real possibility that there will be a sudden 30% price drop while someone is holding the Bitcoin.
This doesn't happen often, but when it does, it creates a narrative which discourages Bitcoin's wider adoption for transactions.
What would be the pros and cons of Bitcoin exchanges adopting circuit breakers, where trading is suspended for various periods of time on movements of the Bitcoin price by certain percentages.
If people could be certain that the price movement in a single day would be limited to, let's say, 5%, it would remove the remaining psychological impediment to using Bitcoin to buy things in everyday life.
Taking a week to drop 30% wouldn't be a big deal to speculators, but it would give merchants and store customers insurance against taking any significant loss when things are bought with Bitcoin.
Please discuss.
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