Great post. As a stock/options trader, volatility is very important to me...nice to read someone talking about its' implications for cryptocoins.
I would point out, though, as you fiat curreny ("paper money" as you put it) i extremely volatile as well..Almost 24/7, currencies from across the world are trading on the various forex exchanges. While it might easy to pass that off, because most of the times these changes are .001. But because it's currency that people and businesses use everyday, those small changes can most definitely have a large impact on the transactional value of that currency when doing something with your country's currency that involves another country and theirs.
With that said, good post!