Can Bitcoin Volatility Be Controlled?

[Kyraishi]

I have read some posts and some concerns that it is the volatility of Bitcoin that is preventing many people and many businesses to fully adopt Bitcoin. This can be the main factor why big online shopping stores are not yet adding Bitcoin into their payment facilities (though there is now a circulated petition for this but I doubt if it can make a dent).

Some are really saying that if volatility can be managed then we can see Bitcoin going mainstream. I am wondering then: Is volatility something that we should find a way to control and how do you think it can be done?

I really do not see a need to control bitcoin volatility whatsoever.

The free market can decide whether or not bitcoin is mature enough, and when it is mature(aka a lot of merchants accepting it all across the world), then volatility will be greatly lessened naturally because the value of bitcoin is essentially backed by actual goods and services.

What we need is not a central bank, but rather merchants pledging to keep their prices constant in bitcoin. Using bitpay does not help because ultimately the merchant is still accepting bitcoin for its USD value.

[d5000]

The most obvious way would be to introduce a bitcoin central bank, where one entity controls much of the monetary supply. But this is entirely against the reason for having bitcoin in the first place, so i don't think that anyone will endorse this idea.

I agree, but is not necessary that the "central bank" is really centralized. The "Federal Reserve" proposal instead parts from a decentralized approach - every "central bank" member decides if he wants to participate, with how much money, and for what timeframe - he can cancel his participation at any time.

The 24h price lock is viable, and definitely interesting. Although within 24 hours you'd expect bitcoin not to fluctuate that much anyways, and normally you'd see a maximum of 10% fluctuation within a day.

That is exactly the key - a merchant can analyze volatility and if she is comfortable to give sometimes a discount of 5 to 10% (in extreme crash cases, 15 to 20%) if this boosts her sales, then she has an incentive to participate with the "backing" mechanism.

If enough merchants support the proposal, a regular Bitcoin user can sleep well every night (without having to convert Bitcoin to fiat) because he knows that in the case of a crash he will be able to buy goods and services for "the old Bitcoin price". That will also minimize panic sells - and so minimize volatility.

PS: I would appreciate some comments in my thread about that "backing" proposal - don't fear that it's self-moderated, I will only delete insults and totally-off-topic replies.

[noictib]

I have read some posts and some concerns that it is the volatility of Bitcoin that is preventing many people and many businesses to fully adopt Bitcoin. This can be the main factor why big online shopping stores are not yet adding Bitcoin into their payment facilities (though there is now a circulated petition for this but I doubt if it can make a dent).

Some are really saying that if volatility can be managed then we can see Bitcoin going mainstream. I am wondering then: Is volatility something that we should find a way to control and how do you think it can be done?

Are you sure that want to stable in the price of the price , because here I am using Bitcoin for making money which is possible only when we can hold and sell after increase in the price , And also doing trading which is a big thing for many people because trading is only a business in the Bitcoin which gives us the ease to make money .
If Bitcoin will get stable then I don't think that I will use Bitcoin for long term because I am a Bitcoiner who is making money due to volatility of the price in the Bitcoin .
And also you can think that if Bitcoin will became stable then what will be main difference between Bitcoin and fiat money .
Since Thier are many businesses in Bitcoin to make profit without change in price but still I don't think that it will be better for me the stable price .

[Hypnosis00]

The volatility of bitcoin cannot be controlled by the people who are using bitcoin or the people who just want to control it. Bitcoin cannot be controlled because it is not owned by anyone and it is only depending on the buyers and sellers in the market so as long as there is buyers and sellers in the market then the volatility will continue and it will not make any change for that.

[Kidmat]

The volatility of bitcoin cannot be controlled by the people who are using bitcoin or the people who just want to control it. Bitcoin cannot be controlled because it is not owned by anyone and it is only depending on the buyers and sellers in the market so as long as there is buyers and sellers in the market then the volatility will continue and it will not make any change for that.

Yes it cannot be controlled as bitcoin is desired its volatility. As bitcoin is decentralized and there is massive adoption that market is depends on the users.

[hatshepsut93]

I have read some posts and some concerns that it is the volatility of Bitcoin that is preventing many people and many businesses to fully adopt Bitcoin. This can be the main factor why big online shopping stores are not yet adding Bitcoin into their payment facilities (though there is now a circulated petition for this but I doubt if it can make a dent).

Some are really saying that if volatility can be managed then we can see Bitcoin going mainstream. I am wondering then: Is volatility something that we should find a way to control and how do you think it can be done?

It could definitely be controlled.

An example of this would be, say we have a bitcoin stability fund that holds half of its assets in bitcoin and the other half in USD. The fund has to be quite large, at least $10 million to make bitcoin really less volatile. The idea is simple, if bitcoin goes up, then the bitcoins are sold to offset the rise and bring bitcoin back to its normal resting level. And bitcoin goes down, the USD is used to buy into bitcoin causing a rise.

However, this is only going to centralize bitcoin. And that's not something that anyone wants in my opinion. And bitcoin should be volatile, it's actually quite attractive to investors this way. If bitcoin is pegged with USD all the time, then whats the difference between bitcoin and USD?

I think Bitcoin stability fund is actually great, and it can't cause centralization in terms of network in any way, and if it's funded by a bigger amount of people, there won't be financial centralization either. And no, volatility is not good, it doesn't attract investors, it deters users and merchants and attracts traders, who cause even more volatility. Only stable Bitcoin with low fees can compete with traditional currencies, otherwise it will be a "digital gold" instead of currency.

[Mometaskers]

The volatility is why people are here in the first place. Take that away suddenly and they might just pull out their money and invest it elsewhere. Controlling for this might have to require centralization, the one thing people are avoiding when they got into bitcoins. It might become less volatile as more and more of it is mined but probably only if that comes with wider adoption. If only a few people have hundreds of bitcoins at in their wallets, then they can affect prices as they see fit, at the expense of everyone else.

[jc89]

Bitcoin's volatility is associated with Bitcoin's demand and supply in the market. As long as Bitcoin's price is dependent on its number of demand with respect to its available supply then stability in Bitcoin's price is difficult to attain, if not completely impossible. A possible way to cope with this is eliminating the 21 Million limit to Bitcoin and have a supply just like fiat which is infinite (this is very unlikely to happen and impossible on my part). Having a mass adoption could be a way (I am not entirely sure of this) but the price will be so high and it is not too practical for an individual. The very best that I can think of is using Bitcoin as a currency and eliminating the "Bitcoin as an investment." This way, if Bitcoin behaves like a currency more than an investment, stability will be achieved.

[tigershark]

I have read some posts and some concerns that it is the volatility of Bitcoin that is preventing many people and many businesses to fully adopt Bitcoin. This can be the main factor why big online shopping stores are not yet adding Bitcoin into their payment facilities (though there is now a circulated petition for this but I doubt if it can make a dent).

Some are really saying that if volatility can be managed then we can see Bitcoin going mainstream. I am wondering then: Is volatility something that we should find a way to control and how do you think it can be done?

Because bitcoin is still new, the price will vary if there is any good or bad news that affects bitcoin. When it becomes more established, more people will invest more long term so there won't be so many buys and sells. Also right now there are individuals or groups that own enough bitcoins or can buy enough to manipulate the price on exchanges.

[SmartLoitmer]

By now nope... But maybe in the future we can find a surprise. So i'm not completely sure.

[Pattberry]

By now nope... But maybe in the future we can find a surprise. So i'm not completely sure.

The magic recipe to control the volatility is when more people start using bitcoin and if the amount of users in the bitcoin increases the level of volatility decreases ,if you look at the charts we are not experiencing the same level of volatility we have two years before.

[whaawh]

By now nope... But maybe in the future we can find a surprise. So i'm not completely sure.

The magic recipe to control the volatility is when more people start using bitcoin and if the amount of users in the bitcoin increases the level of volatility decreases ,if you look at the charts we are not experiencing the same level of volatility we have two years before.

Maybe I do not understand something, but it seems to me that this is a very weak way and it will not lead to anything. The fact is that Bitcoin has always been popular in some circles of IT users, but today it is also gaining popularity among the common people. This is a good way to make money and does not seem to be very much influenced by volatility.

[btcney]

By now nope... But maybe in the future we can find a surprise. So i'm not completely sure.

The magic recipe to control the volatility is when more people start using bitcoin and if the amount of users in the bitcoin increases the level of volatility decreases ,if you look at the charts we are not experiencing the same level of volatility we have two years before.

If you're looking for like fiat kind of stability then you'd be essentially asking for regulation of bitcoin from a central bank. The central bank/organization will have to have complete control of issuing new bitcoins to sell off when price is too high, and buying bitcoin with foreign reserves when the price is low. But with bitcoin this is impossible as 1) community wouldn't approve of a central bank, it is against the principles of decentralization and 2) nobody can control the entire monetary supply.

So yeah, you're spot on. The only way to do this is to try to get more merchants into accepting bitcoin. As we have seen, the more adopters we have the more stable and less flash crashes we are going to get. More adopters won't only mean more means of spending your coin, it'll also mean a more stable bitcoin in general.

[speem28]

Well, it is a pretty big risk if they accept it as a whole despite the extreme changes of prices of bitcoin. But for me, it can't really be controlled as the price of bitcoin really depends on the supply and demand of the people and we can't control them on what they should do or what they should want just to make the price of bitcoin stable so that all other big merchants will finally accept it.

[Kronos21]

Price fluctuations in a wide range can be stopped only when the number of coins in the hands of speculators will be much less than the coins of the common people. When will the bitcoin economy with trade in goods and earning coins jump stop.

[Dudeperfect]

I don't think it is possible (at least at this stage) as we are growing in terms of users and there will be more people joining us in the coming years and thus it will lead to the higher demand and indirectly the price so the price won't remain stable. Secondly, there are lot's of investors in the market and their supreme purpose is to make money through speculation so we can not predict or control their actions and hence the price volatility.

[Sled]

I don't think it is possible (at least at this stage) as we are growing in terms of users and there will be more people joining us in the coming years and thus it will lead to the higher demand and indirectly the price so the price won't remain stable. Secondly, there are lot's of investors in the market and their supreme purpose is to make money through speculation so we can not predict or control their actions and hence the price volatility.

It will be hard to control especially when we didn't have any info or details on how many and when will the countries going to accepts and implement it,ypur right that were only habing speculations and no confirmation yet so its hard to makes plan for controlling it.

If they really want to control bitcoin or make plan for it, then they need a lot of money because they need to control the supply and demand of bitcoin in order to fully control it (in market based). Controlling bitcoin is one of the hardest thing to do but worth it for those people who knows how to play it and make money with their dictated volatility.

[itsallpc]

Volatility is one of the features of bitcoin due to its decentralized nature.Due to this nature,traders gain profits by trading.Earlier chinese gamblers tried to manipuate bitcoin price by dumping but since bitcoin has now universal investors,now manipulation could not be done.Volatility could not be controlled since bitcoin price differs as per variation in demand for bitcoins.

[South Park]

I have read some posts and some concerns that it is the volatility of Bitcoin that is preventing many people and many businesses to fully adopt Bitcoin. This can be the main factor why big online shopping stores are not yet adding Bitcoin into their payment facilities (though there is now a circulated petition for this but I doubt if it can make a dent).

Some are really saying that if volatility can be managed then we can see Bitcoin going mainstream. I am wondering then: Is volatility something that we should find a way to control and how do you think it can be done?

The volatility of bitcoin does not come from bitcoin itself most of the time, it comes from the people moving their money incredibly fast in and out of bitcoin simply because they can, since there are almost no barriers when it comes to converting your bitcoin into other cryptocurrencies and vice versa, besides I think we can easily take advantage of it and make some profits that way.

[CuriousGeorge]

By now nope... But maybe in the future we can find a surprise. So i'm not completely sure.

The magic recipe to control the volatility is when more people start using bitcoin and if the amount of users in the bitcoin increases the level of volatility decreases ,if you look at the charts we are not experiencing the same level of volatility we have two years before.

Nope, The volatility depends on the demand and supply. But the main role is the demand for bitcoin itself. I mean if there will be more people are interested in buying bitcoin and that drives the market price to goes up and
Give the possibility another holders to sell the bitcoin and that makes the volatility of the bitcoin price. That caused the demand for bitcoin.