It's not excessively volatile. Relative to its market capitalization, its volatility is quite low: http://bitcoin.stackexchange.com/questions/3338/how-does-bit

It's not excessively volatile. Relative to its market capitalization, its volatility is quite low: http://bitcoin.stackexchange.com/questions/3338/how-does-bitcoins-price-volatility-compare-to-commodities-stocks-with-comparabl http://bitcoin.stackexchange.com/questions/3338/how-does-bit... As for being deflationary, that hasn't stopped the rapid growth in the number of transactions per day: http://blockchain.info/charts/n-transactions http://blockchain.info/charts/n-transactions I posted this elsewhere, but it applies here: A gradual rate of deflation didn't stop world markets when they used an international gold standard. Very few people forgo buying something they need because they could get 2% one year later if they hold on to the currency. I think deflation IS economically inefficient, but the negative effect of slight deflation has been exaggerated in the popular economic literature. For a peer-to-peer currency network, a fixed money supply could even be beneficial by creating an incentive for bitcoin holders to invest in the technology. Bitcoin is working, has created the most powerful distributed supercomputer in the world, and is processing an increasing number of instant global transactions every month. It works in practice, as a medium of exchange, and that is a better argument for it working as a currency than theories about how deflation affects economies.