Quote from: sophyphreak on February 11, 2014, 10:52:36 AM

I'm not a programmer, but consider a P2P cryptocurrency with an initial centralized online exchange that the P2P program runs. The ~~program~~ central bank gives more ~~Coins~~fiat money to ~~miners~~commercial banks when the price of the ~~cryptocurrency~~fiat currency is deemed too high and gives fewer coins to miners when the price is too low similarly to how a government might do so. Thus, the program is able to peg the currency value and maintain long term and short term price stability.

There's your problem.

The users of SophyphreakCoin have to trust that the intervention in the issuance rate won't be manipulated by the markets. The miners would be in prime position to do so, seeing as they would be privileged to receive all additions to the money supply. This can happen now, but the rate of issuance cannot be affected by price manipulation (or at all).

I think you're having difficulty reconciling a different model with the one you know well. Yes, the Satoshi model has price instability, but so do other small currencies. And to make matters worse, this is a grass roots project, implemented with highly novel software design. The sheer scale of differences in this system when compared to the incumbent system causes alot of the uncertainty.

The solution, then, is for people to learn about and adopt this model, and for the necessary time to pass as required by the former. Don't forget that there is a real possibility that the incumbent fiat currency system will not be in a stable condition by the time bitcoin volatility is tamed.