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Well, what you're describing is merely a difficult to use stand-in for the USD with fees on both ends. Reasons you need stable value in a currency for it to be

by trotsky 15y ago

Well, what you're describing is merely a difficult to use stand-in for the USD with fees on both ends. Reasons you need stable value in a currency for it to be good for commerce: Pricing hell: If you're a merchant you probably need to be changing your prices in BTC several times a day at this point. In such a thin market, what trades do you believe for quoted value? No buyers: People holding a currency that is deflating are unlikely to buy - why spend your money now when it could be worth twice as much in two weeks? Those alpaca socks won't be worth twice as much. Inability to hedge: With no instruments available to hedge BTC trades a merchant's exposure to wild currency swings is almost infinite. Thin markets + no safety in holding BTC means that merchants who feel the need to setlle out of BTC several times a day or after every transaction will 100% be at the mercy of the markets. Last trade was 1.37 LRUSD/BTC - what you based your sale price on? Sorry, our buyers have thinned, if you want to settle 150BTC you're going to have to take an average of 1.10 LRUSD/BTC. I could go on of course. But you'd do yourself better by picking up an econ 101 textbook.

mike_esspe 15y ago
I don't see another way to bootstrap a new currency. BTW currently the whole bitcoin economy is 1/30 the size of e-gold reserves in 2007. So to be at least like e-gold it has to rise 30 times current price. If people hold the currency to get twice next week, than this logic apply to dollars too. Why spend dollars today, if you can convert them to bitcoins and spend twice the amount next week? Either this logic works both for bitcoins and dollars, or don't work at all. You can hedge BTC value on exchange instantly via exchanges API, i think i explained that in the previous post. That is the reason we need a high volume exchanges (currently mtgox have around $10000-$50000 volume per day). Merchants do it automatically, not by hand. I think we'll see a bitcoin billing soon, that will help to do this without programming knowledge. Of course there are a lot of difficulties now, but how will you explain, that amount of traders is rising despite all this difficulties? Compare this page https://en.bitcoin.it/wiki/Trade https://en.bitcoin.it/wiki/Trade from the February and now.

by trotsky 15y ago

mike_esspe 15y ago

I don't see another way to bootstrap a new currency. BTW currently the whole bitcoin economy is 1/30 the size of e-gold reserves in 2007. So to be at least like e-gold it has to rise 30 times current price. If people hold the currency to get twice next week, than this logic apply to dollars too. Why spend dollars today, if you can convert them to bitcoins and spend twice the amount next week? Either this logic works both for bitcoins and dollars, or don't work at all. You can hedge BTC value on exchange instantly via exchanges API, i think i explained that in the previous post. That is the reason we need a high volume exchanges (currently mtgox have around $10000-$50000 volume per day). Merchants do it automatically, not by hand. I think we'll see a bitcoin billing soon, that will help to do this without programming knowledge. Of course there are a lot of difficulties now, but how will you explain, that amount of traders is rising despite all this difficulties? Compare this page https://en.bitcoin.it/wiki/Trade https://en.bitcoin.it/wiki/Trade from the February and now.