Isn't BC prone to a lot of volatiliy because it's not backed by anything physical?
The exchange rate of BC against other assets/currencies is going to depend solely on the reputation of BC, and expectations of future reputation.
There is nothing inherently valuable about BC. Yes, I know, I know, there is nothing inherently valuable about anything, but what is the likelihood that most of humanity suddenly decides they want to stop driving and oil prices collapse to zero?
What can BC do to protect itself against a massive and sudden crash caused by a spiralling loss of faith in the system? (this loss of faith could be triggered by something like a negative press report or some temporary bug in the software.)
Do you think such a crash is a possibility that we should worry about?
I think there may always be a "die hard" group of users who will back the currency. These people will step in and buy at certain prices they feel comfortable with. It will be similar to investment banks and funds supporting "beat down" stocks. Only, no one will be around to bail them out if they choose poorly. There's always a chance the situation could be remedied or corrected and this will encourage bottom speculation. I think something would have to be seriously
flawed for a sudden and permanent collapse to zero.
One should realize this sort of catastrophic collapse could happen to any stock, commodity, or currency. Modern economic theory has led us to believe there are risk free zones where one can place wealth. Politicians and Central Banksters propagate this lie through bailouts and currency manipulation.