I'm trying to think of ways to have Bitcoin keep its value, instead of always fluctuating up and down. As far as I know, it rises because lots of people buy coins, and once it hits a certain point, someone decides to sell a large amount, so the price drops a little bit, causing everyone else to sell, dropping the price lots. It falls down, until it hits a low enough value that people wish to "buy back in", and then the price begins to rise again, and the cycle repeats.
My idea is that instead of waiting for the price to rise to sell coins, wait for the price to rise to buy something with coins. Go to coingig, or bitcoinstore, and find an item that you want, and tell yourself "When Bitcoin hits 120$ (or any price), I'm going to buy this item instead of selling to an exchange.".
I think that this would help keep the price stable, as well as distribute the coins more, instead of keeping them all locked up in an exchange.
EDIT:: My knowledge of economics is minimal, so I could be way off.
If you go to a store and use your bitcoins to buy something, the guy who just got them will dump them in the market, so the overall effect on the price is very small.
Yes and no.
The guy at the store very well may dump some of them. He also may save some of them (I have a paper wallet that 5% of all bitcoin gross will be going to) and he very well may spend some of them. Retail is a sh*tty job, that mary jane comes in handy.
Point is that bitcoin will be circulating and the more bitcoin circulates the more legitimate it looks to those who are on the fence.
First time I looked at bitcoin was several years ago, it looked like geek play money, I didn't see how it had any utility whatsoever. Something for the nerds at the Star Trek convention to keep their mind away from the fact that they weren't ever getting laid.
Now it looks to me like it actually has some utility.
As more people give it a second look, having the currency in circulation buying stuff helps it build legitimacy and that brings in buyers and buyers keep the price up.