The thing is, it doesn't matter. As far as I know, nobody prices anything in Bitcoins, they price things in USD/AUD/<insert currency> and then <i>convert that amount to Bitcoins for the transaction</i>.<p>You might end up paying 1.00 BTC, or 0.6 BTC, but it still works out to the be same in USD/AUD/<currency> (numbers made up for example)
My guess is that a LOT of the Bitcoin owners today are early adopters that own very little BTC as a novelty and/or with the idea that "Hey, who knows. Maybe my 4 BTC will be worth $1000s in a few years".<p>This makes for a super volatile market. Especially coupled with the new Mining ASIC rigs coming to market, small volume trading etc.<p>I would suspect that it will take a LONG time before we see if/how the 'currency' will actually stabilize.<p>One must remember, less than 5 years ago, BTC were selling for $0.001! Today it topped out at around $50.
Something else people seem to forget is: This is an unregulated electronic currency without a paper trail.<p>Can you say "A market that a group of people wanting to rig value would LOVE!"<p>Nothing (as far as I can tell) stopping a group of large BTC owners to completely run the price on BTC to their advantage. Wouldn't even take that much money to drive prices, and impossible (almost) to detect and do something about.
I'm actually in the process of putting together a report on Bitcoin for a university computer security course.<p>It looks like HN cares a lot about the topic, would anyone care to point me towards some informative sources?<p>I've done most of my research through the official wiki and articles regarding Mt. Gox and hardware development into ASIC
Just looking at Mt. Gox, the volume in each hour of the day is such a small representation of the overall amount of BTC out there, it seems perfectly reasonable you'd see such crazy swings. Most hours it seems there is <= 5,000 volume. If there is no real liquidity when buying or selling any instrument, the price will swing.
I don't understand bitcoin (any links for newbies?). Why can't they just make it equal to the US or a Euro but use the bitcoins for the actual transaction which would still grant you the anonymity you want and not have this bubble behavior?