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Market forces will ensure that those who trade are exposed to appropriate risk.

Interesting thoughts. I agree that as a speculative scarce asset bitcoins will always fluctuate in value, but in time the growth phase will be over and it will settle in a place where the value is not driven purely by speculation anymore. How long this will take, that I don't know. I'd say that if Bitcoin is still up and running and useful, this will happen during the next decade. This decade is all about the growth phase, which might reach its peak around 2020.

When the intensive growth phase is over and we reach a sort of semi long term top (if we still have inflating paper monies at the time, we would eventually go over that top too in relation to those paper monies) and make a correction down, which is when the volatility of Bitcoin starts to go down in general. Bitcoin would be more like gold but gold on steroids (as it's actually useful and convenient as a medium of exchange).

Obviously this is all thin ice speculation since we simply don't know if anyone uses Bitcoin in 2020 anymore. But as long as there isn't a clear cryptocurrency replacement for Bitcoin, or a reason for one, I see no reason to assume that people wouldn't use Bitcoin in 2020. What I do know is that cryptocurrencies will be there, and they will play a larger and larger role in world economies, that is pretty much guaranteed.

Later this century we will see gold & silver largely devalued as asteroid mining comes into play (trust me, sooner or later it is coming) which will be the time when cryptocurrencies are actually the only scarce monetary assets in existence, which will put them in a very respected position. That is the final seal that guarantees cryptocurrency domination.

Market forces will ensure that those who trade are exposed to appropriate risk.

If you don't see it, you are blind ... see an optician

ROFLMAO ... thankyou for the confirmation
Nice to see that senior members are fully in favour of milking new entrants for every last drop.
'Oh, it was market forces' ... LOL ... no, it was bullshit manipualtion on NO VOLUME

Sleep well ...

Market forces will ensure that those who trade are exposed to appropriate risk.

If you don't see it, you are blind ... see an optician

If you have paranoid delusions of powerful entities controlling price against market forces, see a therapist.

If you find you have a conscience , listen to it

If you find yourself in an ocean, ride the waves.

Phew, that solves all of my dilemmas .... I'm all in to this manipulated price, RIGHT NOW 

It would be nice to be able to have more trust in the big BTC stakeholders than in governrnents and central banks. At the moment I trust neither ...

Thought provoking thread.  Thanks for sharing chodpaba.  Is there a solution to this volatility "problem", or will it forever be a crutch, of sorts (even if we imagine a perfect world where everyone is using bitcoin for everything)?  

Economic n00b here.  Please be nice.  

Please explain to me what I'm missing:

Most people, myself included, are hoarding coins unwilling to sell, so the supply is really only a small fraction of the coins in existence in the world at current prices. With that said, if the price climbs substantially, the supply of coins that people are willing to sell will grow; I certainly have a couple of coins sitting around waiting for the $200 price point.

So are you claiming that new coins come into the market at a rate of the log of the price, and thus the supply grows much slower rate than the price? Or are you assuming that the supply is relatively fixed because of the controlled release schedule of mining? If it's the latter, I think you're very wrong.