Nothing stops freedom money from having an issuing mechanism that more or less regulates its value to a constant, and hence can become a much better unit of account
This reminds me of Panama's currency: the Balboa. Like Venezuela, Argentina, Brazil and other Latin American countries they suffered from high inflation. So, they pegged the Balboa 1:1 with the USD. After a while, they figured why print Balboas if they are pegged to the USD. They now use USD and call it Balboa.
I must have been misunderstood. I didn't say "peg to the USD". I did say "regulate to an amount of value" (and I took the amount of value that $1 represents today). A given amount of hash work represents an amount of economic value. If one can have a decent estimation of how much economic value an amount of hash work will represent in the future (say, Moore's law and somewhat extra), we can program in advance the amount of hash work that can make a coin at a given moment in time. If we can fix that more or less to what corresponds to $1 today (say, one fifth of a Big Mac), then people will automatically generate coins if they are worth more than the economic cost of hashing them. There's no "pegging mechanism" to the dollar ; there's a pegging mechanism to economic cost of hashing. This curve can be even slightly deflationary (that is to say, the expected hash cost will increase over time, the difficulty will outpace technological evolution). It doesn't matter much. There's a value regulation mechanism.
How does this compare with the elasticity of the USD? They can print more, but aside from gift cards and similar tokens - which are pegged 1:1 with the USD - you don't have much option. I've had a difficult time getting anywhere to accept my Quetzales, except in Guatemala They seem to like them there.
The FED tries to regulate the VALUE of the USD to follow a more or less established inflation curve.
If suddenly, someone dumps 500 billion dollars on the market, the FED will sell assets and buy up dollars to avoid a serious crash of the dollar value.
You cannot crash the dollar market by dumping it. You cannot corner the dollar market by buying up all dollars: the FED will print you out of business.
Probably, the European central bank is even more an "automatic regulator of value" than the FED is, because the FED also has political goals, while the ECB doesn't, really.
But nobody actually wants "internet money" - except dark markets.
I use it as money. I buy clothes, musical stuff, flowers with it. I also offer a 20% discount if people pay with BTC or LTC because I know PayPal won't take the money out of my account one day because somebody's account was hacked and they would prefer I pay the cost than they do.
Sure. I also use bitcoin occasionally. But I mean, "the general public". The gains you have by using it don't outweigh the volatility risk. Apart from special applications, and apart from some geekiness, honestly, doing a wire order to an exchange, buying coins, withdrawing them, paying on the internet, is more hassle and cost than using my credit card for everything which is "open and legal". And with my credit card, I have some legal protection if I'm scammed.
Putting aside a reserve of bitcoin for future buying (which I did, because of said hassle) and see that it takes a factor of 5 gains, induces me to keep them aside even if that wasn't the purpose. But it could just as well go down.
So this "money" cannot be stored as neutral value keeper. If you store it, you speculate (heavily). Most people speculate on "up", of course, but they speculate. They end up speculating even if that was not the idea.