Deflation aside, is there any cure to volatility?

[don giovanni]

This is the real problem to bitcoins adoption, no serious retailer will adopt a payment system that can wipe out their profit margins in the time it takes to confirm a payment. What is the free market solution to volatility?

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[Mike Christ]

Age, I believe   All money had to start somewhere.

[hawkeye]

Adoption.  The more people that own bitcoins, the less volatile they will be.

[Kluge]

Adoption.  The more people that own bitcoins, the less volatile they will be.

What if 100k of 1m people are as fickle as 1k of 100k people when doom&gloom or sunshine&roses reports are made, then repeated by other news outlets?

If Walmart accepted Bitcoin today, it would be the "start of Bitcoin."

If Walmart stopped accepting Bitcoin in a year, it would be the "end of Bitcoin."

Should a large handful of major B&M stores accept BTC, it still only takes a few months of "Bitcoin is crashing, doomed to failure" for them to abandon Bitcoin. Once one drops out, they'll all stop dropping out, and that's the "end of Bitcoin." It's like HD-DVD vs. Blu-Ray. Once a couple major organizations dropped support, Blu-Ray won. Currencies we're used to don't have this problem, because the government forces everyone to accept that one currency. If I took out a BTC loan from - Idunno, AmericanJohn... he would necessarily need to accept USD for repayment in a court of law. He can't say "Oh, no - you can't give me USD. I gave you BTC, and that must be returned." The judge will tell you to GTFO before he rips up the paper giving you any reparation at all.

Bitcoin can always be replaced by something new and can always be abandoned. It creates a lot of uncertainty.

[hashman]

This is the real problem to bitcoins adoption, no serious retailer will adopt a payment system that can wipe out their profit margins in the time it takes to confirm a payment. What is the free market solution to volatility?

Arbitrage bots also do quite a bit towards removing volatility. 

[blablahblah]

Futures markets? Are there any?

[porcupine87]

Adoption.  The more people that own bitcoins, the less volatile they will be.

Exactly. And we need more speculator. And I understand there not trader, who buy, when exchance rate rises, but sell. And traders which buy, when the course is going down. Speculators always decrease the volatility. But the main point is a increasing community that use bitcoins. So to say bitcoins need to be considered not only as savings account. Bitcoins has to endow other advanteces for user than the increase in value (purchase power).

[Adrian-x]

Adoption.  The more people that own bitcoins, the less volatile they will be.

To add, volatility helps spread adoption, individuals imagine a value at a point it time and look for opportunity,  the changes in value  "volatility" triggers the opportunity and resulting adoption.

Likewise fewer owners of Bitcoin without volatility is problematic as the value increase the more like a ponzi scheme it will be. (This is a result of new coins being introduced faster than or before new Bitcoin adopters.)

Volatility is a sign that organic adoption rate is healthy.

[nestor]

Most of the times a potential scaling and widening up of real markets with a growth in user base and amount of real market transactions is seen as an appropriate cure of Bitcoins intrinsic volatility.

I guess it's never going to happen this way. The uneven distribution in Bitcoin ownership will always allow the biggest hoarders to make/manipulate the market.

There are two possibilities to change this. The biggest hoarders change their mind and start to manage their bitcoin deposits to balance the Bitcoin to a reference value that makes trading in Bitcoins calculable.

Or Bitcoins become part of a secondary currency financially based on financial instruments ( e.g: a commodity basket including Bitcoins as assets ) which are set up to secure the secondary currency against inflation, to guarantee a stable and unique value of measurement. In this case Bitcoins would be put immediately on the market in case their value grows beyond a certain threshold or more Bitcoins would be bought in case the value would fall below a predefined threshold.

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Futures markets? Are there any?

https://icbit.se/