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It seems like the only way to sell BTC for products/services is to have the BTC reflect how other currencies are doing. I'm not great in economics but can it ever be stable?

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    This smells like speculation to me. Are there fortune tellers among us? – ripper234 Aug 30 '11 at 23:07
  • No, it won't; and by definition: it can't. Hope that was helpful ;) – Joe Pineda Dec 5 '13 at 0:31
  • This question does not have only one correct answer, it is subjective/argumentative: In order to be constructive and informative, give long answers rather than short. Focus on explaining "Why?" and "How?". Back up any opinions with facts and references. Opinions by themselves are noise and will be deleted. – Murch Nov 1 '14 at 12:55
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No currencies are stable unless they have a central bank making it artificially stabile. When that is said, the stability will largely be depending on the size of the economy. I do not, however know exactly how to measure the size of the Bitcoin economy, but I assume it should be measured in terms of the total amount sent between people or companies over a period of time (which would be similar to the measurement of GDP).

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    If we want something like GDP to measure, the blockchain IS an open book :) There's even a ticker for BTC sent in the last 24 hours on bitcoinwatch.com – David Perry Aug 30 '11 at 22:22
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As the public develops more confidence in the currency and as the currency is used in wider volume (people start buying more and more things with the currency and it starts to change hands a lot) it will start to stabilize.

The current instability seems to be driven by speculation. A lot of people are not using bitcoin as a currency right now but just as some investment to gamble on. Hopefully that view of bitcoin will change, soon.

Not sure why you would want to compare BTC to the USD, though... since the USD is not that stable recently, but that is nitpicking and not addressing the spirit of the question.

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The price is a reflection of basic market forces at work: supply and demand. Currently relatively small transactions represent a large portion of the market, so this can naturally lead to some inefficiencies. Nobody can know for sure whether stability will be reached, but it seems likely to me that stability will tend to increase with the number of active users.

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    the instability is not a reflection of supply and demand... it is a reflection of speculation. – Artem Kaznatcheev Aug 30 '11 at 22:05
  • @Artem in the case of bitcoin, wouldn't it be speculation about future demand? – Mocky Sep 1 '11 at 10:38
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    @Mocky I guess it depends how broadly you want to think of demand... but in general speculators speculate on all kind of crazy things. Sometimes the prices of small currencies skyrockets randomly (obviously it means someone demands to buy the currency or a major holder refuses to sell - cutting supply - but it doesn't mean that there are suddenly more places where the currency is used, for instance). – Artem Kaznatcheev Sep 1 '11 at 11:38
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Bitcoin is still very new, it is unlikely that it will sit at one price for a very long period of time. When all of the bitcoins have been mined it is much more likely to sit at a stable price.

  • why would having all the bitcoins minted stabilize the currency? Are you suggesting that the current fluctuation is due to inflation (which is what mining does)? Only if you ascribe the fluctuations to inflation does mining have an effect. It is not inflation that drives the variability in the price right now... – Artem Kaznatcheev Sep 1 '11 at 11:40

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