[jvm]

> When a worthwhile Futures market hits, then BTC will really stabilize.

I agree that a futures market would be a stabilizing force, but other volatile commodities are still highly volatile even with futures markets.

The reason most currencies aren't volatile is that they have a central bank behind them actively manipulating their supply to make sure they are stable relative to some other asset or basket of goods. In the case of the USD, the dollar is roughly pegged to CPI. Unbacked commodities that aren't pegged by a central authority tend to be on a highly volatile random walk, with or without futures markets.

EDIT: Looks like I mistyped, maybe it looked like I was saying the opposite.

[omellet]

Other commodities are volatile for different reasons. Natural gas is volatile because it's literally volatile, so storing and shipping it is expensive. Grains are volatile because of variable growing seasons. Onions are volatile because US Congress banned futures markets for onions. Even so, none of these are nearly as volatile as BTC has been.

[jvm]

Right, my point is just that futures markets will of course reduce BTC volatility, but they're not going to make it nearly as stable as TIPS or something. Parent was saying it was going to "really stabilize."

Speculating, I think an optimistic outcome is that it will end up with volatility similar to an equity index (which themselves effectively have futures markets).

[omellet]

In a perfect world, you're right. But it's inconceivable that there would be a BTC futures market with enough liquidity to make this happen, since a) the BTC supply is relatively small and b) no CFTC-regulated exchange is going to touch BTC as long as it exists its current quasi-legal state.

[pc86]

Do you know why Congress banned onion futures? That seems... random.

[rdouble]

http://en.wikipedia.org/wiki/Onion_Futures_Act

[dragontamer]

Fair point. But if BTC "stabilizes" to a "VIX" of ~15% (where Gold and Oil is right now), that is a hell of a lot better than its current volatility of something like 80%+.

Its all comparative. :-p It will still be more volatile than currencies, but a hell-of-a-lot better than it is right now.