JorgeStolfi
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December 11, 2013, 11:54:50 AM

Bitcoin network or bitcoin value? Seems you are interested in bitcoin value.

The bitcoin value is one aspect of the system; which includes also exchanges, regulations, distribution, usage petterns, etc.

It will be volatile by definition as long as adoption increases. Rise is volatility.
Volatility will be reduced as the usage turns to real world trade.

Predictable changes, like a steady inflation or deflation, or seasonal variations. People can adapt to them. Volatility is unpredictable changes in value, and that is one thing that bothers economists: they cannot see how a commodity whose value can change 10% up or down in a day, unpredictably, could be used as a payment method (except for illegal trade where bitcoin is the only option, so profit margins can be high enough to cover such swings).   For them, volatility must be reduced before  it can be used for real trade.

Price will rise, basically with adoption.  My guess 2-5% per year.

That is another stumbling block for economists.  Infation encourages people to spend or invest their currency as soon as possible, thus keeping the economy in motion.  Deflation has the opposite effect, it encourages people to hoard the currency.  If bitcoins increase in value, they will be hoarded, and therfore will be less used in trade, and therefore their usefulness will be limited, and therefore their value will collapse. How will this paradox get resolved?