The Bitcoin Economy

[SueGiant]

In the near future, if there will be a Bitcoin economy, will it be a stable economy?

http://www.newsbtc.com/2015/03/19/a-bitcoin-economy-will-be-a-stable-economy/

How can we stabilize bitcoin price's volatility?

How can a bitcoin economy become stable if the bitcoin price itself is not stabilizing?

[Cryptowatch.com]

In the near future, if there will be a Bitcoin economy, will it be a stable economy?

http://www.newsbtc.com/2015/03/19/a-bitcoin-economy-will-be-a-stable-economy/

How can we stabilize bitcoin price's volatility?

How can a bitcoin economy become stable if the bitcoin price itself is not stabilizing?

It's just a bit funny you mentioned stableness.

Take a look at this:

The hryvnia lost 34 percent against the US dollar after the head of the central bank signaled it can no longer support the currency with regular interventions and will allow greater fluctuations.

-- http://rt.com/business/229607-ukraine-hryvnia-free-fall/

The rouble has lost more than half its value against the dollar this year, hit by cheaper oil and Western sanctions.

-- http://www.bbc.com/news/business-30492518

The Swiss Market Index (SMI) is in free fall after the Swiss National Bank (SNB) has stopped defending the Swiss Franc. After the unexpected, shock announcement by the SNB, the SMI lost some $100 billion in value.

-- http://www.cosmopolis.ch/english/politics/e0017400/smi_in_free_fall_e01740000.htm

Findings of the Corporate Commercial Bank audit are, speaking mildly, actions incompatible with the law and best banking practices. Missing, and most likely to have been destroyed in the days before conservatorship, is a material credit record of a credit portfolio amounted to 3.5 billion lev out of a 5.4 billion lev total loan portfolio

-- http://www.forbes.com/sites/francescoppola/2014/07/12/the-curious-case-of-the-bulgarian-bank-runs/

This graphic shows why Cyprus could not bail out its banks.
The deposits by Bank of Cyprus and Laiki Bank are too large for the small country with only €19.3 Billion GDP to bail out, especially considering the €15 Billion in debt they already have. Instead they asked for €17 Billion from EU/ECB to finance the broke Government and bankrupt banks.

-- http://demonocracy.info/infographics/eu/cyprus_crisis/cyprus_crisis.html


So the question would be, would bitcoin fare any worse? As we can see, not only bitcoin has volatility. Everybody selecting to use bitcoin are pioneers, and as pioneer-work goes, there's risk and uncertainty associated with it. When something's "safe" - everybody will be using it, no questions asked.

Bitcoin is working well, and is being used in a thriving economy.

Bitcoin number of transactions pr. day is rising, which is a good sign:

-- https://blockchain.info/charts/n-transactions?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

[johnyj]

The volatility with bitcoin is caused by people using unstable fiat money as a standard unit of value. If they use bitcoin as standard, they will see how unstable fiat money is

People have been misled for decades by these so called "mainstream economics" and they don't even know if any part of it is true. (In fact in bitcoin economy, everything seems to be different than mainstream economics predicted: When bitcoin price is higher, people spend more, when price is lower, people hoard more)

[OROBTC]

...

I would doubt that 10% (or even fewer: maybe 5%) have a good understanding of our economy and the precarious nature of our financial problems.  Westerners, and Americans in particular, have a disturbingly high propensity to go into debt.  As do our governments.

We have gotten to the point where a Bitcoin Economy is financial self-defense!  Anyone who can afford to save should have a little in Bitcoin (or more if you are comfortable and knowledgeable).  Save some Bitcoin and spend some Bitcoin.  Just the privacy (not that good but better than NO privacy) alone should be an inducement to wade into a Bitcoin Economy.

And I am not even a programmer!  Yes, you can learn enough about Bitcoin on your own with sufficient diligence.

*   *   *

An easy way to start "spending and saving at the same time" is to buy gold with Bitcoin...   

[Amph]

bitcoin must be use directly as a currency to become truly stable, and set the basic for a stable economy, for this it need adoption and spreading, not people with 200k coins, and others with 0.2 btc

until then will remain volatile

[btc-facebook]

Well bitcoin's security still not perfect so we often see that some exchanger is being hack.
Because that incident , many people still afraid to trust even use bitcoin as the regular payment.

If bitcoin economy want to stable , I think the first step ,need to fix up and strengthen it's security against hacker.
If bitcoin can be trust , it's economy will stable even increase more and more

[Kienbui]

The only ways to pump value to Bitcoin economy are speculating and mining. For transferring money, Bitcoin becoming harder because of blockchain bloat and slow confirmation. Therefore I think Bitcoin economy will going down gradually.

In contrast, recently we see Dash (aka. Digital Cash. Formally called Darkcoin) which has very fast confirmation, anonymous transaction and will solve Blockchain bloat problem with it Masternode technology. Especially Dash has multiple ways to let users pump more value to its ecosystem through Masternodes.

[NUFCrichard]

Well bitcoin's security still not perfect so we often see that some exchanger is being hack.
Because that incident , many people still afraid to trust even use bitcoin as the regular payment.

If bitcoin economy want to stable , I think the first step ,need to fix up and strengthen it's security against hacker.
If bitcoin can be trust , it's economy will stable even increase more and more

That is not bitcoin's security, that is a bitcoin exchanges security. Bitcoin has never been hacked and very rarely double spent as far as I am aware.

Bitcoins economy will hopefully grow, but yes, volatility will make retailers want to sell for fiat when they receive bitcoin. That means that every purchase using bitcoin dumps onto the market reducing the price a little.

When retailers trust bitcoin as a store of value thn they will hold, so the price will naturally rise.

[Denker]

Well bitcoin's security still not perfect so we often see that some exchanger is being hack.
Because that incident , many people still afraid to trust even use bitcoin as the regular payment.

If bitcoin economy want to stable , I think the first step ,need to fix up and strengthen it's security against hacker.
If bitcoin can be trust , it's economy will stable even increase more and more

Bitcoin's security has nothing to do with all these stupid exchanges. Bitcoin itself is damn safe.
The exchanges work as a old fashioned custodial account (centralized) very often in non regulated areas. And the people are too stupid, lazy to learn not to leave their coins at these places.
The Bitcoin protocol as I said is safe.
We need regulated and trustworthy exchanges or decentralized ones. And I'm pretty sure we will this in the future.

[freeyourmind]

bitcoin must be use directly as a currency to become truly stable, and set the basic for a stable economy, for this it need adoption and spreading, not people with 200k coins, and others with 0.2 btc

until then will remain volatile

Yeah, good point, and there needs to be stable demand for the currency through transactions and available to a wider range of the population.  If it's mainly driven by tech-geeks and speculators, then it will likely stay volatile.

[countryfree]

I'm not sure everybody understands it, so I'll write clearly: nothing is stable in economy. Oil, coffee, currencies, everything's always goes up and down.
Like it or not, we've got to live with that.

[1Referee]

I'm not sure everybody understands it, so I'll write clearly: nothing is stable in economy. Oil, coffee, currencies, everything's always goes up and down.
Like it or not, we've got to live with that.

That's true to a certain extent, but I can't see oil, gold, etc lose or gain 50% in just a single day.

Bitcoin going up or down is not a problem. Price fluctuations are healthy and make investors/people willing to invest.

At this point a single whale trader with 10K BTC can make the price drop 10% if not more on a decent exchange.

With a global orderbook a 10K dump would have significantly less impact on the price.

[freeyourmind]

I'm not sure everybody understands it, so I'll write clearly: nothing is stable in economy. Oil, coffee, currencies, everything's always goes up and down.
Like it or not, we've got to live with that.

You're right. Of course there is a spectrum of stability from absolutely unstable and volatile to perfectly stable, but I didn't mean any of those extremes.

I think the USD is a relatively stable currency.  I'm not a fan of fiat and think that it is managed incredibly irresponsibly with long term stimulus and artificially low interest rates.  But any purchase in the States and all Oil transactions must be done in USD which artificially keeps the demand high.  There is no practical alternative.  If the petro dollar was removed, imagine what would happen to USD.  So similarly, imagine if something like coffee had to be purchased in Bitcoin, then the number of transactions would spike, as would demand and price stability.  Right now it is an optional currency but maybe at some point it will be the currency of choice...and maybe not haha

[Meuh6879]

How can a bitcoin economy become stable if the bitcoin price itself is not stabilizing?

because correction is needed (more quickly = good).
real world don't let correct ... that why, it will fail ... at the end.

[Bit_Happy]

In the near future, if there will be a Bitcoin economy, will it be a stable economy?

http://www.newsbtc.com/2015/03/19/a-bitcoin-economy-will-be-a-stable-economy/

How can we stabilize bitcoin price's volatility?

How can a bitcoin economy become stable if the bitcoin price itself is not stabilizing?

Long-term the BTC/Gold price might be much more stable and "useful" than BTC/$$.
If (for example) your 5 BTC are "worth" $700,000 each and a single loaf of bread costs $350,000, then you will be able to buy only ~10 loaves of bread before running out of dough.

[OROBTC]

...

The BTC/Gold price ratio is one I look at nearly every day.  It too has been very volatile, perhaps because BTC is at such an early stage with relatively few people who know much about BTC and even fewer using it.

My favorite site to quickly look at various prices, including the BTC/gold ratio is here:

ounce.me

BTC/Au is now around 4.54:1.  I have seen it at about 2.-point-something and higher than 6.  I bought some gold with BTC when it was about 3.95 recently.

[bitboy11]

Volatility is what attracts most speculators, so why would it become stable?
As far as Bitcoin itself is concerned, its security is very strong.

What needs to be done to help the Bitcoin economy grow and become accepted by the masses is functionality and ease of use like Apple Pay.

The regular guy on the street won't touch Bitcoin as long as it requires him/her to be tech savvy.

[freeyourmind]

Volatility is what attracts most speculators, so why would it become stable?
As far as Bitcoin itself is concerned, its security is very strong.

What needs to be done to help the Bitcoin economy grow and become accepted by the masses is functionality and ease of use like Apple Pay.

The regular guy on the street won't touch Bitcoin as long as it requires him/her to be tech savvy.

That is really what needs to happen.  It just needs to become user friendly, and widely accepted.  I think developing countries will be where it starts to become a functional currency.

[Razick]

The volatility with bitcoin is caused by people using unstable fiat money as a standard unit of value. If they use bitcoin as standard, they will see how unstable fiat money is

People have been misled for decades by these so called "mainstream economics" and they don't even know if any part of it is true. (In fact in bitcoin economy, everything seems to be different than mainstream economics predicted: When bitcoin price is higher, people spend more, when price is lower, people hoard more)

The dollar doesn't buy 80% less than a little over a year ago. I hate to say this, but the evidence does point to some volatility in Bitcoin's value, which is to be expected with such a young and relatively unproven technology.

[johnyj]

The volatility with bitcoin is caused by people using unstable fiat money as a standard unit of value. If they use bitcoin as standard, they will see how unstable fiat money is

People have been misled for decades by these so called "mainstream economics" and they don't even know if any part of it is true. (In fact in bitcoin economy, everything seems to be different than mainstream economics predicted: When bitcoin price is higher, people spend more, when price is lower, people hoard more)

The dollar doesn't buy 80% less than a little over a year ago. I hate to say this, but the evidence does point to some volatility in Bitcoin's value, which is to be expected with such a young and relatively unproven technology.

The dollar's value remains stable because people regard it as a standard unit of value, it is mostly a psychological phenomenon

In fact dollar has been produced 5x more than 2008, but its purchasing power stays relatively stable instead of shrinking by 5x, just because most of the people regard fiat currency as a unit of value: When they see 5x more money comes out of FED, they will not think that now their goods worth 5x more USD, they think that there are 5x more money to make and they can be 5x more rich

It is this psychological barrier maintained the value of USD, so that no matter how much USD FED print or destroy, one dollar's purchasing power remains relatively stable

When people start to use bitcoin as a universal unit of value, things will change, other currency will start to fluctuate and bitcoin's purchasing power will be steadily increase year over year