| > A lot of governments intervene in their currency to target an exchange rate (eg: Swiss). Generally to stabilise their currency, not destroy confidence in it -- only kleptocracies would deliberately damage their own currency in that way. > Governments also won't care about losing money when taking strategic action to protect their seignorage and inflation tax racket. Sometimes, even governments find it too expensive to manipulate currencies, e.g. in 1992 the UK government lost £3 billion in an afternoon propping up sterling. (http://en.wikipedia.org/wiki/Black_Wednesday) > Maybe the boom/bust wouldn't matter too much. It depends on how people see bitcoin. Are they trying to save in it? Anyone trying to save in bitcoin is delusional given its infancy and volatility. A better description would be some people are trying to speculate in it. Agreed. > If people use it as a medium of exchange then volatility won't be of as much concern. If you need to make a trade in BTC then obtain the BTC and trade your item quickly. Given there would be spreads to pay on each trade in and out of BTC The sprreads make this costly. My main interest in BTC is in the hope that it could be used as a cheap way of transferring money, particularly in small amounts, which obviously isn't going to be possible if there are big costs in exchanging it. > So say BTC takes off in Russia and Putin decides to smash it Putin can smash BTC in Russia. It would be harder fro him to do so in the rest of the world. > Does he need to think of the American's reaction if he does? If BTC are being heavily used in the USA or other countries, then those countries would be unhappy about Putin's meddling. |