Post
Topic
Board Bitcoin Discussion
Re: Will cryptos be so volatile forever?
by
SolutionBase
on 08/05/2018, 19:12:53 UTC
Price stability will only occur in any crypto as long 1) the volume of trading continues to increase and 2)the number of coin holders continues to increase, while no one person (or persons) holding too much of the total reserve.

I'm simplifying, but volume is important so that there are enough buyers and sellers at all times that no truly outrageous proposal for buying or selling (paying too much or too little) will be executed, since a person knows that they can always find a "reasonable" deal since there are an abundance of buyers and sellers. Low volume markets suffer from a lack of people to turn to if you want to transact: you can be held hostage by unfair offers.

The reason the number of coin holders matter (and the percents that those coin holders have) is that you never want any market to be too dependent on too few people, who can disproportionately control the price. Its why most national currencies are stable - they are distributed enough throughout the "network" that even the super rich don't control enough of the entire pool to radically effect the price.