After learning about bitcoin last year, my first thought was that if it did gain enough traction a government would find some way of making it illegal or crashing it.
I see that bitcoins hit dollar parity and then receded even as the USDX has lost strength.
I also see that according to mtgox.com the market depth is very shallow. This market is ripe for manipulation and "chart painting".
Assuming enough bitcoin users are familiar with technical patterns, using only 50k to 100k I could paint a head and shoulders pattern on the chart and then gap it down one day and watch the crash. Then pick it up at the bottom and paint a bottom.
How can we prevent this? There is no good arb right now because it is risky doing an arb trade when I'm trading a fiat currency (FRNs) against one that cannot really be used to buy anything of real value. Aka real money.
Sure I can buy some goods and services with my bitcoins (if I had some) but not real money to arb trade manipulation.
That is why I believe we need a precious metals to bitcoin market.
There are lots of problems I can think of already like ensuring delivery of metals, etc. but I know they can be solved by the intelligent minds on this forum.
Please lets create a metals pool and gold / silver / bitcoin market.
Secondly a futures market between bitcoins and bullion and even USD would be very desirable.
That way I could sell a bitcoin contract 12 months out at 3 USD per bitcoin and go and invest in hardware to mine it immediately knowing my profits are locked in.
Why would someone by the contract instead of the hardware? Maybe because their time is valuable and they know they can convert those bitcoins into real money aka precious metals, anytime they want.
If you think my ideas have merit, or you hate them and would like to purchase an argument, please donate to my tip jar:
Even 1 btcent would be much appreciated as I am a bitcoin n00b.