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Question: Can the price of bitcoin stabilize?
A common complaint about bitcoin is that its price is too volatile; fluctuating too frequently for it to be a practical unit of account.
However, we haven’t had a truly new form of money for many centuries, and it is quite possible that all currencies, unless mandated by governments to be worth a particular amount, were just as volatile as bitcoin in their infancy, until the market determined their value.
Bitcoin is only 6 years old.
That means bitcoin’s volatility could easily be a result of natural market fluctuations, and therefore should be significantly reduced in time as more people use bitcoin.
Let’s compare bitcoin to a more stable currency; the US Dollar, for example.
US dollars are currently used by more than a Billion people with 3 Trillion dollars in circulation.
In contrast, less than a million people use bitcoin so far, with approximately 4 billion dollars worth in circulation.
If the US Dollar were a boat, it would be the largest vessel on the sea.
Waves couldn’t move it up and down, just as market forces don’t usually move the dollar’s value.
Bitcoin, being about a tenth of 1% as large as the us dollar is today, would be like a tiny jet ski.
It moves up and down with every wave, similar to how the market can push its price up and down daily.
That means the larger the bitcoin user base grows, the more stable bitcoins price should be.
The good news is that the number of people using bitcoin has been growing steadily, and so have investments into the bitcoin infrastructure.
All it will take is enough people adopting bitcoin, and the price should stabilize all on its own.