Question from a Bachelor in Econ

[sophyphreak]

I would love to see a P2P currency work, but I have serious doubts about current-day P2P currencies.

The most important thing any currency needs is (at the very least) day-to-day stability of value, and no P2P currency that I know about has that yet.

The best way to create day-to-day stability would be to peg the value of the currency to a big currency or a basket of currencies, which is what most developing and/or small countries do--at least until the currency is stable enough to be allowed to float.

I don't think it would be technically simple to create a P2P currency that works that way.

That being said, does anyone know of a P2P currency that pegs its value right now?

[hendo420]

I would love to see a P2P currency work, but I have serious doubts about current-day P2P currencies.

The most important thing any currency needs is (at the very least) day-to-day stability of value, and no P2P currency that I know about has that yet.

The best way to create day-to-day stability would be to peg the value of the currency to a big currency or a basket of currencies, which is what most developing and/or small countries do--at least until the currency is stable enough to be allowed to float.

I don't think it would be technically simple to create a P2P currency that works that way.

That being said, does anyone know of a P2P currency that pegs its value right now?

If the market cap of Bitcoin was near that of Gold, It would be very stable.

http://www.numbersleuth.org/worlds-gold/

It will happen eventually. We are seeing mass adoption right now. 

[sophyphreak]

I am still looking for an answer to my original question; however, gold itself is not stable enough to be a good currency. In the past year I believe gold's inflation rate is 25% while its deflation rate over the past 5 years is 9% per year. This is to say that gold is too volatile to act as a viably currency. Generally accepted economics today aims for an inflation rate of between 1 and 3 percent per year in order to keep away volatility, hyperinflation, and deflation.

Gold isn't stable, thus it is difficult to see how a Bitcoin market cap that is similar to a gold market cap would cause Bitcoin to have a stable price.

[hendo420]

I am still looking for an answer to my original question; however, gold itself is not stable enough to be a good currency. In the past year I believe gold's inflation rate is 25% while its deflation rate over the past 5 years is 9% per year. This is to say that gold is too volatile to act as a viably currency. Generally accepted economics today aims for an inflation rate of between 1 and 3 percent per year in order to keep away volatility, hyperinflation, and deflation.

Gold isn't stable, thus it is difficult to see how a Bitcoin market cap that is similar to a gold market cap would cause Bitcoin to have a stable price.

I think the fluctuation comes from the low market cap. If that is the case, Bitcoin just needs to reach a higher market cap.

http://www.federalreserve.gov/faqs/currency_12773.htm

Total USD in circulation is $1.23 trillion

Once BTC reaches near that it should stabilize.

The way I see it BTC is still an infant. Once it grows up some more it will be alot more stable.

Right now it just takes some balls and a willingness to assume risk to accept bitcoin as a payment method.  


Drop a bowling ball in a pool and it will make a wave and ripples all the way to the sides of the pool. Drop a bowling ball in the ocean...

[sophyphreak]

I'm sorry to break it to you, but stability does not a large market cap alone make. You sent me this link: http://www.numbersleuth.org/worlds-gold/ . It says the market cap for gold is $8.5 trillion, 7x that of USD in circulation. The USD is stable right now and has been since the end of stagflation.

A large market cap does not make gold stable; the gold market cap is much bigger than USD in circulation; thus, there is no reason to believe that a large market cap would make BTC stable.