Fixing the price to stop volatility.

[cafucafucafu]

I was having a look at this: https://openbazaar.org/

Great idea. However the first obstacle that came to mind was volatility. No consumer wants to buy BTC only to see the price go down. Many wont sell BTC if they expect the price to go up. If sites like these fixed the price of BTC then will it not make people more willing to use them? E.g. if it was said that all transactions on such sites must be done at $500 per BTC.

[687_2]

if it was said that all transactions on such sites must be done at $500 per BTC.

Who is saying that? God? Markets determine prices of goods and services. Merchants charge as much as they can for their products, consumers pay what they determine is a fair price.

[BitCoinNutJob]

I was having a look at this: https://openbazaar.org/

Great idea. However the first obstacle that came to mind was volatility. No consumer wants to buy BTC only to see the price go down. Many wont sell BTC if they expect the price to go up. If sites like these fixed the price of BTC then will it not make people more willing to use them? E.g. if it was said that all transactions on such sites must be done at $500 per BTC.

Price volatility will eventually calm down, by % swing its already less and less over time.  I dont know how openbazaar could fix a price - there is nobody in charge to do such a thing.  I agree trading of goods could suffer on openbazaar when the price is going hugely up or down.

[franky1]

if the price of bitcoins goes down.

then lets say you want a laptop. $600 and todays date is summer 2014. it will cost you 1btc.

now move forward to october 2014 and yo want to replenish your bitcoin holdings.
you can with $600 buy 2 bitcoins now. meaning technically the laptop only cost you $300 because you have only used 1 bitcoin to buy it.

many people can interpret the price volatility in a multitude of ways, both for or against price movements, which is why i personally dont care which direction it moves on the crappy exchanges. you just have to open your minds to the big picture

[cafucafucafu]

On second thoughts its a bad idea because of arbitrage. Doh

[H.W.Z]

On second thoughts its a bad idea because of arbitrage. Doh

Agree. The sites who offer fixed rate like $600 at the the moment will go to bankruptcy soon. Every people is buying cheap bitcoin with dollar then go to such sites to pay with bitcoin and sell out the goods to earn dollar. And they restart this process again.

[santaClause]

When SR first came out Ross would guarantee the price of bitcoin while it was held in escrow. In other words if a buyer purchased something for 5,000 BTC and bitcoin was trading at $0.10 when the funds were placed in escrow but went down to $0.05 by the time escrow was released, then the seller would receive 10,000 BTC.

I think this usually worked in his favor, but it sometimes did not. I also believe that he charged extra for this guarantee.

This is really not an option anymore because of how many transactions are done in bitcoin. It would certainly not be possible because no one actually "owns/runs" it.

[Sindelar1938]

If you fix the price you take out the store of value angle and the whole dynamic incentive system for the miners. There are no easy solution. ST vol is inevitable but good times are hopefully not too far away (though I don't expect a turnaround in 2014)

[philiveyjr]

If you fix the price you take out the store of value angle and the whole dynamic incentive system for the miners. There are no easy solution. ST vol is inevitable but good times are hopefully not too far away (though I don't expect a turnaround in 2014)

yeah...this year end is about stabilizing the price.!!!

[turvarya]

I was having a look at this: https://openbazaar.org/

Great idea. However the first obstacle that came to mind was volatility. No consumer wants to buy BTC only to see the price go down. Many wont sell BTC if they expect the price to go up. If sites like these fixed the price of BTC then will it not make people more willing to use them? E.g. if it was said that all transactions on such sites must be done at $500 per BTC.

I don't think, you understand how Open Bazar works ...

[Aswan]

I was having a look at this: https://openbazaar.org/

Great idea. However the first obstacle that came to mind was volatility. No consumer wants to buy BTC only to see the price go down. Many wont sell BTC if they expect the price to go up. If sites like these fixed the price of BTC then will it not make people more willing to use them? E.g. if it was said that all transactions on such sites must be done at $500 per BTC.

Then the website wouldn't have any customers because either would the seller have to give things for free or at a huge discount (as with the current price) or the buyer will have to pay more than things are worth (it BTC > $500).

Why wouldn't consumers want to buy BTC? Everyone can secure himself against volatility. Say I buy 1 BTC @ $500. I want to use it for online purchases because I like how BTC works etc. but I do not want to lose a lot of money in case the price goes down a lot. So I go and buy a short contract on bitcoin the moment I buy my 1 BTC.

Say bitcoin now drops to $250. my 1 BTC is worth only half the initial money I paid for it but luckily my short contract made me $250. I didn't lose any money!
Say bitcoin doesn't drop but instead rises to $750 per BTC. The bitcoin I have is worth 50% more than what is was worth when I bought it. However, I lose $250 on the short contract, so I didn't lose but I also didn't gain any money.

That said, volatility is only a problem for people who do not want to secure themselves against huge price changes. They want to profit when the price rises but theres no reward without risk.