Quote from: julz on July 24, 2011, 02:22:50 AM

As a counter argument to this.. what would happen if it was *really* easy to convert to and from all existing fiat currencies?

If at a touch of a button on your smartphone you could cheaply convert a portion of your fiat paypacket into BTC for an online purchase, and if merchants could similarly convert out of BTC to their own currency cheaply and quickly .. then the price of a bitcoin becomes irrelevant.

People wouldn't care if one day 1 BTC = $100 and the next it's $10 if they're only obtaining them to perform a purchase.

Even if lots of people are using them this way - what pressure is there for a high price?

Ironically - the more governments try to clamp down on exchanges and make conversion harder.. the higher the price, because everyone then needs to hold some BTC and drive up scarcity.
If conversion is cheap and instantaneous - nobody needs to hold BTC and they'll still work for facilitating trade even if worth relatively little each.

I'd have a tendency to reflect on Gresham's Law:
"Bad money drives out good if their exchange rate is set by law."

All fiat currencies are ultimately made worthless as a result of human nature. Bitcoin by design, avoids such manipulation. Therefore, I believe Bitcoin fits the category of "good money" in Gresham's Law and as a result will always have a much higher value than any central bank issued fiat.

Cheers!

maxkoda