Heging against a drop in Bitcoin value

[Nefario]

Having watched bitcoin go over the $1 mark with sheer joy; my heart has sunk as I have watched it fall.

Now I didn't buy btc with cash, being one of the lucky ones who did some mining while the difficulty was quite low. But I still don't want what I have to lose value, or I'm worried about them having a lower value when I need to buy good and services.

So my solution was to buy ahead some services that I'm using. I've just paid for an extra 2 months on Mullvad (6 btc for 30 days, can't beat that) while still having 21 days left, giving me over 80 days to allow btc to crash and recovery before I need to buy again. I'm doing the same with my hosting.

It may turn out that my fears are unfounded but for these things, especially my VPN I want security, so I pre-bought.

This may also have the effect of stimulating the bitcoin economy a little, tiny bit.

[Mahkul]

All it takes is a major buyer on mtgox that will buy serveral thousands - then your price will go up again.

EDIT: If it wasn't for the hassle with getting LR USD I would buy a lot of them myself.

[Nefario]

All it takes is a major buyer on mtgox that will buy serveral thousands - then your price will go up again.

Sure, I agree with this but like I said, my VPN is very important to me and I don't want to take any risks in not being able to afford it due to a temporary drop. Sure in this time 1 month of VPN access might drop to 1btc next month but I won't have to worry.

[Cryptoman]

I was thinking about this the other day.  What if someone offered a service where you could exchange BTC for gold shares?  I'm imagining that you could buy gold with BTC or BTC with gold but only withdraw BTC.  The way that this would work is the web site sells shares in a gold-related ETF like GLD.  The site owner will buy and hold GLD shares in another account somewhere to match what has been purchased with BTC.  The site owner is compensated through transaction fees, and the BTC customer gains a useful store of value should he/she be uncertain about the stability of BTC exchange rate.

You can also exchange your BTC for USD on MtGox and just park it there for awhile.  I'm not sure you've gained any stability by holding USD though.

[BioMike]

I think the $1 value was just a rally because many people from the USA wanted to have it at $1.

I don't know about Mullvad, but I know from Kalyhost that they adjust the price of their services when the price for a bitcoin changes, to reflect other currencies. So, if price goes up you pay less btc.
One thing you could do is split the amount it costs for your services over time. (So 60btc vps for 6 months means buy 10btc per month). Sometimes you will pay more, sometimes you pay less and if there aren't that large fluctuations, you should be fine.

[BCEmporium]

Nefario,

I'm more concerned about BTC stability. I see folks around talking about 1 BTC = 10 USD and that scares me a bit! If BTC becomes so high it will render it useless for business, unless we start to operate with 4 digit at the right of the comma (i.e. 0,0001 BTC).
Stability is good for create business around BTC, whereas instability is good for traders and exchangers... let's see the outcome of it.

[error]

Nefario,

I'm more concerned about BTC stability. I see folks around talking about 1 BTC = 10 USD and that scares me a bit! If BTC becomes so high it will render it useless for business, unless we start to operate with 4 digit at the right of the comma (i.e. 0,0001 BTC).
Stability is good for create business around BTC, whereas instability is good for traders and exchangers... let's see the outcome of it.

You won't really need even a third decimal place until you get 1 BTC = 100 USD. That will be a while, even by anyone's most optimistic imaginings.

Though, I think placing the decimal point where it is was a mistake, in retrospect. If Bitcoin really gets popular, it will almost certainly have to be moved -- to the right! Though I don't think that will need to be considered seriously until 1 BTC = 10 000 USD.

[BCEmporium]

You won't really need even a third decimal place until you get 1 BTC = 100 USD. That will be a while, even by anyone's most optimistic imaginings.

Though, I think placing the decimal point where it is was a mistake, in retrospect. If Bitcoin really gets popular, it will almost certainly have to be moved -- to the right! Though I don't think that will need to be considered seriously until 1 BTC = 10 000 USD.

Ideally you must have at least the cent a minimum currency value, unless the currency unit you operate with has no value, such as Indonesia Rupiah, which ain't the case.
You have currently the cent of BTC, which is roughly 1 cent of USD, but if it goes to be more valuable per unit currency around (currently I don't know any currency being trade at 10 USD) you may need someway to match it with Dollar Cent (which would be 0.001 BTC then)