[gnerd]

> The assumption is that bitcoins must be sold immediately to cover operating expenses. If the shopkeeper's back-end expenses were transacted in bitcoins as well, then the exchange rate would be irrelevant. Larger adoption of Bitcoin would make prices sticky. Future volatility is expected to decrease, as the size and depth of the market grows.

> In the meantime, many merchants simply regularly pull the latest market rates from the exchanges and automatically update the prices on their websites. Also you might be able to buy a put option in order to sell at a fixed rate for a given amount of time. This would protect you from drops in price and simplify your operations for that time period.

https://en.bitcoin.it/wiki/Myths#Shopkeepers_can.27t_serious...

[aosmith]

Couldn't agree more. Mass adoption would absolutely stabilize prices. Even without mass adoption merchants can exchange similar to foreign atm transactions.