I was having a look at this: https://openbazaar.org/
Great idea. However the first obstacle that came to mind was volatility. No consumer wants to buy BTC only to see the price go down. Many wont sell BTC if they expect the price to go up. If sites like these fixed the price of BTC then will it not make people more willing to use them? E.g. if it was said that all transactions on such sites must be done at $500 per BTC.
Great idea. However the first obstacle that came to mind was volatility. No consumer wants to buy BTC only to see the price go down. Many wont sell BTC if they expect the price to go up. If sites like these fixed the price of BTC then will it not make people more willing to use them? E.g. if it was said that all transactions on such sites must be done at $500 per BTC.
Then the website wouldn't have any customers because either would the seller have to give things for free or at a huge discount (as with the current price) or the buyer will have to pay more than things are worth (it BTC > $500).
Why wouldn't consumers want to buy BTC? Everyone can secure himself against volatility. Say I buy 1 BTC @ $500. I want to use it for online purchases because I like how BTC works etc. but I do not want to lose a lot of money in case the price goes down a lot. So I go and buy a short contract on bitcoin the moment I buy my 1 BTC.
Say bitcoin now drops to $250. my 1 BTC is worth only half the initial money I paid for it but luckily my short contract made me $250. I didn't lose any money!
Say bitcoin doesn't drop but instead rises to $750 per BTC. The bitcoin I have is worth 50% more than what is was worth when I bought it. However, I lose $250 on the short contract, so I didn't lose but I also didn't gain any money.
That said, volatility is only a problem for people who do not want to secure themselves against huge price changes. They want to profit when the price rises but theres no reward without risk.
