A solution to volatility.

[Birdy]

Great example of the worst type of regulation, it doesn't do anything to solve the problem, but hinders poor people instead.

The gold market is less volatile because the market cap is way higher, not because you have to pay more for small amounts.
In physical stuff it does make at least a bit of sense, because it requires more effort to do several small tradings instead of a big one.

Btw: Wouldn't the opposite reduce volatility? Banning the selling / buying of big amounts of BTC? So nobody could dump 2000 BTC in a day.
(Obviously this is in no way practical or desirable)

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[sidhujag]

Daytraders cause Zeno's Paradox. Before Bitcoin can get to 100 it must first get to 50 and before it gets to 50 it must get to 25 etc. As Bitcoin price goes up, it becomes unaffordable for some to buy a whole Bitcoin. Add to that the market manipulation that causes very high volatility at even the smallest fractional levels. Many people feel the solution is to name fractional amounts so they feel like the integer amounts on the left side of the decimal. It's really a false paradox.

The solution is simple. Use the gold model. Only allow whole bitcoins to be sold. Precious metal markets sort of work this way. Sure you can buy gold by the gram, but you pay a lot more so it's not something you do frequently. Gold is best bought by the Troy Ounce at a minimum. Bitcoin can also be sold in fractions, but there should be a premium to do so. This will reduce the day trading that causes the huge fluctuations that makes it feel like Bitcoin is not increasing in value. Buying a whole Bitcoin may also become an exclusive goal for the rich and attract them faster. This way, fractional amounts will not be worth gambling on the markets.

This is of course only a thought experiment and impossible to implement without strict government regulation anyway. However, it behooves the exchanges to consider this proposal because it would likely serve to increase transactional revenue as Bitcoin will have less volatility and greater appeal to conservative investors.

This will also incentivise vendors to accept Bitcoin because they will accrue fractional amounts without paying a premium and can sell them at a premium.

I think you would want to do the complete opposite! Let 1 satoshi be traded... please look at forex avg volatility of eurusd is less than 100 pips and each pip is $0.0001... the market adjusted the volatility based on the pip increment. Since there is so much volume 100 pip volatility is normal.... in bitcoin land if you had $10 billion traded a day im sure volatility would die down to mor emanageable levels for businesses since 1 satoshi can be traded.

Once exchanges open up trading to satoshis or mbtc volatility will decrease as price increases incentive to do so will increase aswell.

[RyNinDaCleM]

I didn't bother to read this whole thread, but...

The free market will go this direction on it's own, if necessary.
Nothing stops exchanges from limiting orders to a 1.0 BTC minimum. they already have a 0.001 right now! Some (BFX) put limits on the low end, to reduce spam orders while encouraging larger limit orders.
P2P transactions may eventually fetch a premium in quantities less than a full Bitcoin. I doubt it, but let it happen on it's own.

I don't see why any of this would change merchant transactions, as others have said, but whateva

However, I don't see how this would lessen volatility. Daytraders dampen volatility (consolidation). It's the high volume market orders that create the volatility.

[byronbb]

Gold has higher premiums the smaller the size of the bullion due to fabrication costs. Ie it's easier to make 1 10z gold bar than 10 1oz coins.

[btc6000]

...Precious metal markets sort of work this way. Sure you can buy gold by the gram, but you pay a lot more so it's not something you do frequently. Gold is best bought by the Troy Ounce at a minimum...

There's ~31 grams in a Troy oz, so that would equate to 31 Satoshi as the smallest unit of Bitcoin, right? Just to illustrate how ridiculous your suggestion is about only being 'allowed' to buy a whole Bitcoin; by your own analogy, that would equate to the minimum purchase of gold being 1 metric tonne.

Can't see that working out too well, can you?

[bitsmichel]

The solution is simple. Use the gold model. Only allow whole bitcoins to be sold. Precious metal markets sort of work this way.

Its an interesting idea, but I do not think this is a good idea. Bitcoin is deflationary, in the long term the price will go up. For this reason it is a necessity that smaller units can be used.

[cbeast]

...Precious metal markets sort of work this way. Sure you can buy gold by the gram, but you pay a lot more so it's not something you do frequently. Gold is best bought by the Troy Ounce at a minimum...

There's ~31 grams in a Troy oz, so that would equate to 31 Satoshi as the smallest unit of Bitcoin, right? Just to illustrate how ridiculous your suggestion is about only being 'allowed' to buy a whole Bitcoin; by your own analogy, that would equate to the minimum purchase of gold being 1 metric tonne.

Can't see that working out too well, can you?

Wouldn't it be interesting if technology someday allowed gold to be sold by the atom encased in a graphene nano-circuit perhaps? 1 oz = 9.50 x 10^22 atoms. Because gold is deflationary, just like Bitcoin, perhaps it will also go up to 1 gazillion per oz just like some predict with Bitcoin?

[RandomPedestrianN9]

...Precious metal markets sort of work this way. Sure you can buy gold by the gram, but you pay a lot more so it's not something you do frequently. Gold is best bought by the Troy Ounce at a minimum...

There's ~31 grams in a Troy oz, so that would equate to 31 Satoshi as the smallest unit of Bitcoin, right? Just to illustrate how ridiculous your suggestion is about only being 'allowed' to buy a whole Bitcoin; by your own analogy, that would equate to the minimum purchase of gold being 1 metric tonne.

Can't see that working out too well, can you?

Wouldn't it be interesting if technology someday allowed gold to be sold by the atom encased in a graphene nano-circuit perhaps? 1 oz = 9.50 x 10^22 atoms. Because gold is deflationary, just like Bitcoin, perhaps it will also go up to 1 gazillion per oz just like some predict with Bitcoin?

I like your way of thinking, of course it will. BTC will make everyone rich, cure all diseases and bring us world piece. Just like the US is exporting peace everywhere. (and putting their puppet governments there along with military bases and ICBM interceptors, slowly surrounding Russia). best intentions = run away.

[btc6000]

Because gold is deflationary, just like Bitcoin, perhaps it will also go up to 1 gazillion per oz just like some predict with Bitcoin?

1 gazillion, eh? That sounds awesome...let's have a look at what it means:

...These terms are often used as hyperbole or for comic effect, or in loose, unconfined conversation to present an un-guessably large number. Since these are undefined, they have no mathematical validity and no accepted order, since none is necessarily larger or smaller than any of the others.

[zimmah]

Of course I got the idea from the gold market. Why do they sell gold by the gram for much more than the ounce? Are they ridiculous too?

Because it takes time and effort to refine gold, and to package it, measure it and stamp it.and transport it.

If you can split the costs over a gold bar of 12.5 kilo it will barely have any effect on the price. But if you have to add the costs of all that to the price of a single gram, it's going to add up.

Bitcoin costs the same no matter what, because bitcoin is not physical.

[Wilhelm]

Daytraders cause Zeno's Paradox. Before Bitcoin can get to 100 it must first get to 50 and before it gets to 50 it must get to 25 etc. As Bitcoin price goes up, it becomes unaffordable for some to buy a whole Bitcoin. Add to that the market manipulation that causes very high volatility at even the smallest fractional levels. Many people feel the solution is to name fractional amounts so they feel like the integer amounts on the left side of the decimal. It's really a false paradox.

The solution is simple. Use the gold model. Only allow whole bitcoins to be sold. Precious metal markets sort of work this way. Sure you can buy gold by the gram, but you pay a lot more so it's not something you do frequently. Gold is best bought by the Troy Ounce at a minimum. Bitcoin can also be sold in fractions, but there should be a premium to do so. This will reduce the day trading that causes the huge fluctuations that makes it feel like Bitcoin is not increasing in value. Buying a whole Bitcoin may also become an exclusive goal for the rich and attract them faster. This way, fractional amounts will not be worth gambling on the markets.

This is of course only a thought experiment and impossible to implement without strict government regulation anyway. However, it behooves the exchanges to consider this proposal because it would likely serve to increase transactional revenue as Bitcoin will have less volatility and greater appeal to conservative investors.

This will also incentivise vendors to accept Bitcoin because they will accrue fractional amounts without paying a premium and can sell them at a premium.

You think we should kill one of the biggest advantages bitcoin has over gold?

+1

Actually doing what OP suggests makes bitcoin equally worthless as a currency as gold.
If OP wants to solve Zeno's Paradox I would suggest using a different measure like millibits or satoshi, just to mindfuck people.

That said, volatility attracts traders and trading evolves a market and brings it to maturity. As the price goes up and bitcoin adoption increases volatility will be suppressed anyway...