On the downside a regular business can't price anything in bitcoins because of the deflationary nature of it. They would need to reevaluate the price every several hours.
I believe stable national currencies more or less grow with the economy with some inflation.
I'm not an economist either.
prolom.
Even the value of standard currency fluctuates throughout the day, to a certain extent. I think we need to remember that virtual currency is at a very primitive stage. As its use becomes more widespread, and as more and more governments begin to accept its presence, the value of bitcoins will also stabilize.
As far as re-evaluating the product prices is concerned, businesses can easily set a price point for the day, rather than evaluating it every hour. They might end up over-charging or under-charging at different points of the day, but at the end of the day, it will all average out. As far as the customer is concerned, it really is up to them whether they choose to pay by bitcoins or by standard currency.
Now, we are also talking about bitcoins in its current scenario, where its value only exists in the form of certain number of dollars or something. Businesses would need to reevaluate bitcoin value periodically because at the end of the day they have to convert it to dollars, to pay their suppliers and others. Imagine if their suppliers started accepting bitcoins. In such a case, there would be no need to monitor virtual currency values against standard currency, since they no longer have need to convert it to any other form.
As the use of virtual currency becomes more widespread, the need to convert them to standard currency will reduce, and stability in bitcoin prices will increase.
It really is no different from businesses indulging in international currency. If a store accepts dollars, euros, rupees, and other currencies, they too have to re-evaluate their prices periodically in accordance with international forex rates. This is done because they ultimately bank in one currency, and have to convert all funds to that currency. If they didn't need to do that; if their suppliers started accepting orders in various currencies, then they could fix their prices for those currencies, and not need to consult forex rates.
If every business in the world started accepting bitcoins, then the dependency on standard currency would decrease, and it would become a true worldwide currency. I believe that this is bound to happen eventually.
I believe this is how standard currency was too, in its initial stages.
