Re:How do you Design a cryptocurrency like ethereum/BTC to h...
by blakdawg on Thursday June 22, 2017 @10:05PM
(#14616689)
The value swings represent changing ideas in the minds of human beings about the value of the underlying currency.
If you want the value of a currency to be stable, you need to be in a position to economically support the stable price - if lots of people want to sell, the stabilizer must be prepared to buy a lot of the currency at the stable price. If a lot of people want to buy, the stabilizer must be prepared to sell a lot of the currency at the stable price. This is potentially a very, very expensive - and perhaps impossible - undertaking.
If you want the value of a currency to be stable, you need to be in a position to economically support the stable price - if lots of people want to sell, the stabilizer must be prepared to buy a lot of the currency at the stable price. If a lot of people want to buy, the stabilizer must be prepared to sell a lot of the currency at the stable price. This is potentially a very, very expensive - and perhaps impossible - undertaking.
See https://en.wikipedia.org/wiki/Monetary_policy for more.
Ultimately, value isn't something that's designed, it's the overall effect of a lot of individuals' preferences and guesses about the future.