Quote from: evileric on June 22, 2011, 02:12:58 PM

The volatility problem of BitCoin is a serious one.. until the market calms down to the point where coins have a relatively fixed value or appreciate at a relatively sane rate it is completely impractical to use this as a currency, much better as a medium of exchange

I completely disagree. The volatility problem is solved with derivatives.

Specially options or short term futures.

e.g
A merchant pays $US dollars to suppliers and accepts Bitcoins from customers.

When the merchant orders supplies (and agrees on the price with the supplier), he buys a put (or sells a futures contract) in Bitcoins at the current rate with an expiry date as close to the payment term date as possible.

When payment to the supplier is due, he takes the put (or futures) to delivery which guarantees the selling price.

If the market drops, no problems.
If the market rises, he unloads the put/future.

The only cost is the price of the derivative.