Bitcoin is a relatively stable asset and currency as far as I can tell.
Bitcoin's value in relation to the dollar is a product of demand and supply, like any other currency. However, given that supply is "hard coded" in the algorithm, supply is more or less a constant variable. That leaves demand.
Demand is there as long as Bitcoin has transactional value (how many people accept it as a form of payment) and asset value (how attractive it is as a store of value). Bitcoin has price floors as long as it is useful in transactions (for example, as long as online black markets like Silk Road flourish) and as long as Bitcoin "enthusiasts" accept it as an asset.
Barring some way for the government to thwart the TOR + Bitcoin combo for making anonymous online transactions, I would think that any volatility in the BTC-USD exchange rate would come from volatility in the value of the dollar over that of BTC.
Bitcoin's value in relation to the dollar is a product of demand and supply, like any other currency. However, given that supply is "hard coded" in the algorithm, supply is more or less a constant variable. That leaves demand.
Demand is there as long as Bitcoin has transactional value (how many people accept it as a form of payment) and asset value (how attractive it is as a store of value). Bitcoin has price floors as long as it is useful in transactions (for example, as long as online black markets like Silk Road flourish) and as long as Bitcoin "enthusiasts" accept it as an asset.
Barring some way for the government to thwart the TOR + Bitcoin combo for making anonymous online transactions, I would think that any volatility in the BTC-USD exchange rate would come from volatility in the value of the dollar over that of BTC.