The bubbles are created due to the link to a fiat currency that is chaotic in nature and unstable. Get bitcoin out of the dollar and the dollar out of bitcoin and we shall see what truly happens.

Saying we need derivatives are needed based on the conversion of bitcoins back into an unstable currency is a fallacy.

The currency is already liquid. Look at all the stuff you can buy. The large price swings are caused by the Payee's fear of bitcoin not the coin itself. It's their immediate conversion into an unstable currency that is creating the problems. Find for ways for people to want to hold bitcoins. This isn't it. You are creating something uncessary. It won't increase liquidity. The coin is already liquid. It's Payee's demand for dollars that create the price swings on the downside and speculation and easy credit on the upside.

I think you are saying let's keep the price stable and people will want to hold them? Is this correct? This is a fallacy. You assume too much. Why would a place like overstock want to hold bitcoins. Explain that to me. Do their suppliers deal in bitcoin. Are there contracts available to the supplier that overstock could offer their suppliers. The answer again is a resounding no. If you want Overstock to hold more bitcoins. Make it possible for them to conduct business in bitcoin. What smart business would want to deal in a system with no possibility of any legal repercussions. It has to do with adoption, lack of legal framework, and development infancy as to why people are directly converting bitcoin back into dollars. That IS the problem.