Quote from: maxxoccupancy on February 17, 2014, 08:46:45 PM

Do you recall what mechanism Stablecoin uses to address rapid drops? Is there a reserve built in?

As far as the price is concerned, Bitcoin's price is far from stable. Viewed from the worst realistic case, someone who'd bought in at 1200 a few months ago has now lost almost half of their investment. Most people have savings that cannot be exposed to this kind of risk. In the marketplace, you offer as many alternatives as you can, and different people pursue different solutions and products.

I can only address this with sarcasm, stability comes from the market participants, not the inflation algorithm, since the drug supply has been eliminated by the FBI, many investors have are trading without meds, this alone explains the bipolar behavior.

My conclusion reading all the posts (some posts have been removed) was:
Volatility is a necessary feature not a problem,
The price is based on supply and demand, (a fundamental law in free markets)
The higher the market participation, the lower the volatility.
Bitcoin supply diminishes at a predictable rate, and is constrained,
The demand fluctuates as Bitcoin is a new innovation and it is hard for the market to evaluate.
The FED creates stability in price at the expense of the Business cycle.
Bitcoin will become somewhat volatile and self correct and stabilise as it goes through business cycle.

In another thread "Impaler" shose orthodox views regards economics I don't agree with, I think presented the best option to reduce volatility, to paraphrase with license: "maintaining the blockchain is reworded with a Proof of Storage coin, this coin inflates indefinably, Proof of Storage is redeemed for an option to participate in a round of Proof of Work / mining." The result is the two types of coins end up hedging each other, and the supply (or distribution) is monitored by the market, self regulated by the price.

Another solution was to have a coin that has an inflation rate that is vastly different to that of Bitcoin for example coins are generated according to a normal distribution function as opposed to Bitcoin's step function. The result is the supply will not track Bitcoin and the supply and demand models could complement each other. An alternate supply model for an alt coin to hedge Bitcoin volatility is the coins supply could be regulated by the monitoring of the transaction volume on the blockchain.