> The assumption is that bitcoins must be sold immediately to cover operating expenses. If the shopkeeper's back-end expenses were transacted in bitcoins as well, then the exchange rate would be irrelevant. Larger adoption of Bitcoin would make prices sticky. Future volatility is expected to decrease, as the size and depth of the market grows.

> In the meantime, many merchants simply regularly pull the latest market rates from the exchanges and automatically update the prices on their websites. Also you might be able to buy a put option in order to sell at a fixed rate for a given amount of time. This would protect you from drops in price and simplify your operations for that time period.

https://en.bitcoin.it/wiki/Myths#Shopkeepers_can.27t_serious...

It's not going to be useful as a currency for a while. Nor would it be if its market cap was only $10 billion. For it to be a currency it has to stabilize sufficiently. In that case the boom-bust cycles will have to stop, which means speculation will have to slow down. As soon as BitCoin becomes old news - that's when the rate of appreciation will slow down. But since in the long run, potential growth is the market cap of all the existing currency in the world - meaning, (unlikely) we could potentially get to the point where all currency is replaced by BitCoin - then who knows? We might have to wait until BitCoin units have saturated every corner of the Earth before it becomes rational to spend even a little BitCoin. In which case a satoshi will be worth a dollar and those of us with one or more BitCoins will be multi-millionaires.

If only...

Real time exchangers [sic: merchants] will settle on slightly less than normal exchange rates. This will ultimately help to close spreads and decrease volatility.