Removing the Volatility From Bitcoin

A common and valid criticism of using Bitcoin as a currency is its volatility. Volatility will decrease over time as liquidity improves, but in the meantime it makes Bitcoin difficult to use as a day to day currency. A service like BitReserve will allow using Bitcoin without the volatility. It will allow you to denominate your Bitcoins in any one of 5 major currencies: USD, EUR, CNY, JPY, GBP. They will do this by holding Bitcoins and those currencies in reserve. It is strictly a Bitcoins in/out service. The service never touches your bank account or the traditional banking system.

Regardless of whether the price of BTC goes up or down, you could still send that fiat value of BTC to anyone. Let's say BTC is at $1,000 USD. You would send BitReserve 1 BTC and denominate it as USD. They would sell your BTC and hold USD in reserve. BTC then drops to $500. You could still get your $1000 USD in BTC because they would buy 2 BTC with their USD reserves and send it to you, minus fees. Similarly, if BTC went up to $2,000, they would send you 0.5 BTC. They are able to do this because they hold both BTC and USD in reserve. However, all trades are settled via BTC. This would allow you to hold your Bitcoins and eliminate all volatility. The only issue is can you trust BitReserve? They intend to address the trust issue by transparency to show that they hold all the reserves they claim by independent audits.

A service like this will allow us to have all the benefits of Bitcoin without the volatility.

http://blogs.wsj.com/moneybeat/2014/05/15/bitbeat-bitreserve-vows-bitcoin-like-costs-no-bitcoin-like-risk/

http://www.coindesk.com/cnet-founder-halsey-minor-launches-low-cost-bitcoin-payments-platform/