Is rampant speculation going to kill Bitcoin's credibility?

QuantPlus

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Quote from: XX55XX on June 23, 2011, 04:46:15 PM

It won't kill the currency itself (since it's P2P software), but will all of this rampant speculation (both on my part and others) kill Bitcoin's credibility as a stable and safe store of value in the long run?

BTC was never a "stable and safe store of value in the long run"...
What are you smoking, dude?

BTC with it's built-in transparently fraudulent "deflationary spiral"...
Was DESIGNED from Day One...
To form Bubbles on rampant speculation...
And eventually go to zero...
After the principals unload their coins.

There are 100s of similar scams in Pink Sheets or Venture Exchanges...
People run boiler rooms and rip people off for a living...
Right in the heart of Wall Street.

Nobody cares about people who get ripped off for being stupid...
It's perfectly legal to convince stupid people to give you their $$$.

Klestin

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Quote from: onesalt on June 23, 2011, 08:52:00 PM

...does not mean someone mentioned bubble.

Herp, derp.

David M

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Quote from: onesalt on June 23, 2011, 09:00:07 PM

And the fact it repeatedly bounces between the two and the difficulty shifts every 2 weeks effect the price so much means it's terrible as a stable currency.

The risk can be tamed with a derivatives market. Futures or options.

I am merchant that will paying AUD$ to suppliers, so I need to buy a put or sell a futures contract to lock in the sell price of my coins.

FlipPro

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Quote from: David M on June 23, 2011, 08:59:05 PM

Speculators are absolutely required to make Bitcoin a success.

Price discovery is hard enough in any market, let alone something as new and different as Bitcoin.

Consider the current market action:

They showed that $US 31 is too expensive and that $US 10 is too cheap.

That is true , as much as we like to hate on the speculators, they do determine the true value of bitcoins in the long run.

onesalt

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And the fact it repeatedly bounces between the two and the difficulty shifts every 2 weeks effect the price so much means it's terrible as a stable currency.

That and the weekend keeps repeatedly causing price crashes.

David M

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Speculators are absolutely required to make Bitcoin a success.

Price discovery is hard enough in any market, let alone something as new and different as Bitcoin.

Consider the current market action:

They showed that $US 31 is too expensive and that $US 10 is too cheap.

onesalt

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Quote from: Klestin on June 23, 2011, 07:32:40 PM

Did I hear bubble?

No you cretin, rampant speculating and its near worthlessness as a currency does not mean someone mentioned bubble.

cunicula

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Quote from: chihlidog on June 23, 2011, 07:22:05 PM

Quote from: cunicula on June 23, 2011, 07:17:04 PM

Quote from: chihlidog on June 23, 2011, 06:50:44 PM

Quote from: onesalt on June 23, 2011, 06:44:27 PM

I hate to break it to you all, but unfortunately, rampant speculation, the hack attacks and massive price drops have already essentially killed bitcoin from the credibility point of view. No large company will willingly use a currency if using it risks their profitability on the scale bitcoin does.

Such a volatile market also has the potential for ENORMOUS gains. People have made quite tidy sums of USD from BTC. THat wont go unnoticed by investors if it continues. Rewards require risk.

How can The ENORMOUS gains be captured by businesses that enter the bitcoin economy? If they can't, then how is this sustainable?

THere are a few answers, however what I think youre asking is how do I expect a business to accept BTC as payment when they dont really know what the relative value will be tomorrow?

It's a chicken and egg question. Until a significant number of businesses accept BTC, speculation will of course drive the market. In that time, the value could go up in the extreme way we've seen in the last month. A business could still profit by accepting BTC as payment, speculating that they will increase in value.

No. What you describe is no different from speculation. You are saying that business can speculate too.
Businesses can only earn more in btc than in USD if they:
a) introduce novel online services that can't be offered at similar costs via USD/EUR/etc/ (silkroad/gambling/ and maybe remittance,webcam)
b) are large enough to influence the BTC price significantly by announcing their decision to accept BTC

But b) won't function efficiently because bitcoin currency generation is set up badly,
see here: http://forum.bitcoin.org/index.php?topic=19130.0

Klestin

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Did I hear bubble?

chihlidog

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Quote from: Electrongolf on June 23, 2011, 07:21:27 PM

Quote from: onesalt on June 23, 2011, 07:08:40 PM

Quote from: chihlidog on June 23, 2011, 06:50:44 PM

Quote from: onesalt on June 23, 2011, 06:44:27 PM

I hate to break it to you all, but unfortunately, rampant speculation, the hack attacks and massive price drops have already essentially killed bitcoin from the credibility point of view. No large company will willingly use a currency if using it risks their profitability on the scale bitcoin does.

Such a volatile market also has the potential for ENORMOUS gains. People have made quite tidy sums of USD from BTC. THat wont go unnoticed by investors if it continues. Rewards require risk.

When you want to accept payment in btc you don't want it to arbitarily drop in value and make you essentially sell at a loss. The only thing the volatile market encourages is more speculating, rather than actual marketplaces.

Price volatility is a huge factor in Bitcoin becoming accepted. I think it's useless to think about wide acceptance until our own community has some sort of economy.

Maybe we don't have the goods and services to support this currency. If this is the case, it will be difficult for this to take off.

The only option might be to create a virtual economy. Something similar to Second Life, where BTC will always have value. In this economy you can buy real estate, build things to sell. It allows everyone to participate in the economy. In the real world this is not the case.

Crazy idea, but I think it could work.

As has been stated in these forums, the best chance an average joe has to get btc going is to deal in them. I have several items for sale on the private market and am accepting BTC as payment for them. Its a risk but the best I can do to support the idea.

chihlidog

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Quote from: cunicula on June 23, 2011, 07:17:04 PM

Quote from: chihlidog on June 23, 2011, 06:50:44 PM

Quote from: onesalt on June 23, 2011, 06:44:27 PM

I hate to break it to you all, but unfortunately, rampant speculation, the hack attacks and massive price drops have already essentially killed bitcoin from the credibility point of view. No large company will willingly use a currency if using it risks their profitability on the scale bitcoin does.

Such a volatile market also has the potential for ENORMOUS gains. People have made quite tidy sums of USD from BTC. THat wont go unnoticed by investors if it continues. Rewards require risk.

How can The ENORMOUS gains be captured by businesses that enter the bitcoin economy? If they can't, then how is this sustainable?

THere are a few answers, however what I think youre asking is how do I expect a business to accept BTC as payment when they dont really know what the relative value will be tomorrow?

It's a chicken and egg question. Until a significant number of businesses accept BTC, speculation will of course drive the market. In that time, the value could go up in the extreme way we've seen in the last month. A business could still profit by accepting BTC as payment, speculating that they will increase in value.

Electrongolf

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What's Your Gig?

Quote from: onesalt on June 23, 2011, 07:08:40 PM

Quote from: chihlidog on June 23, 2011, 06:50:44 PM

Quote from: onesalt on June 23, 2011, 06:44:27 PM

I hate to break it to you all, but unfortunately, rampant speculation, the hack attacks and massive price drops have already essentially killed bitcoin from the credibility point of view. No large company will willingly use a currency if using it risks their profitability on the scale bitcoin does.

Such a volatile market also has the potential for ENORMOUS gains. People have made quite tidy sums of USD from BTC. THat wont go unnoticed by investors if it continues. Rewards require risk.

When you want to accept payment in btc you don't want it to arbitarily drop in value and make you essentially sell at a loss. The only thing the volatile market encourages is more speculating, rather than actual marketplaces.

Price volatility is a huge factor in Bitcoin becoming accepted. I think it's useless to think about wide acceptance until our own community has some sort of economy.

Maybe we don't have the goods and services to support this currency. If this is the case, it will be difficult for this to take off.

The only option might be to create a virtual economy. Something similar to Second Life, where BTC will always have value. In this economy you can buy real estate, build things to sell. It allows everyone to participate in the economy. In the real world this is not the case.

Crazy idea, but I think it could work.

cunicula

legendary

Activity: 1050

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Quote from: chihlidog on June 23, 2011, 06:50:44 PM

Quote from: onesalt on June 23, 2011, 06:44:27 PM

I hate to break it to you all, but unfortunately, rampant speculation, the hack attacks and massive price drops have already essentially killed bitcoin from the credibility point of view. No large company will willingly use a currency if using it risks their profitability on the scale bitcoin does.

Such a volatile market also has the potential for ENORMOUS gains. People have made quite tidy sums of USD from BTC. THat wont go unnoticed by investors if it continues. Rewards require risk.

How can The ENORMOUS gains be captured by businesses that enter the bitcoin economy? If they can't, then how is this sustainable?

chihlidog

newbie

Activity: 28

Merit: 0

Quote from: onesalt on June 23, 2011, 07:08:40 PM

Quote from: chihlidog on June 23, 2011, 06:50:44 PM

Quote from: onesalt on June 23, 2011, 06:44:27 PM

I hate to break it to you all, but unfortunately, rampant speculation, the hack attacks and massive price drops have already essentially killed bitcoin from the credibility point of view. No large company will willingly use a currency if using it risks their profitability on the scale bitcoin does.

Such a volatile market also has the potential for ENORMOUS gains. People have made quite tidy sums of USD from BTC. THat wont go unnoticed by investors if it continues. Rewards require risk.

When you want to accept payment in btc you don't want it to arbitarily drop in value and make you essentially sell at a loss. The only thing the volatile market encourages is more speculating, rather than actual marketplaces.

I wont disagree with that. But if the speculation drives up prices, more people pay attention to bitcoin, then more people are likely to try it, use, it, and create an economy out of it. Win/win/win.

onesalt

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Quote from: chihlidog on June 23, 2011, 06:50:44 PM

Quote from: onesalt on June 23, 2011, 06:44:27 PM

I hate to break it to you all, but unfortunately, rampant speculation, the hack attacks and massive price drops have already essentially killed bitcoin from the credibility point of view. No large company will willingly use a currency if using it risks their profitability on the scale bitcoin does.

Such a volatile market also has the potential for ENORMOUS gains. People have made quite tidy sums of USD from BTC. THat wont go unnoticed by investors if it continues. Rewards require risk.

When you want to accept payment in btc you don't want it to arbitarily drop in value and make you essentially sell at a loss. The only thing the volatile market encourages is more speculating, rather than actual marketplaces.

chihlidog

newbie

Activity: 28

Merit: 0

Quote from: onesalt on June 23, 2011, 06:44:27 PM

I hate to break it to you all, but unfortunately, rampant speculation, the hack attacks and massive price drops have already essentially killed bitcoin from the credibility point of view. No large company will willingly use a currency if using it risks their profitability on the scale bitcoin does.

Such a volatile market also has the potential for ENORMOUS gains. People have made quite tidy sums of USD from BTC. THat wont go unnoticed by investors if it continues. Rewards require risk.

onesalt

hero member

Activity: 756

Merit: 500

I hate to break it to you all, but unfortunately, rampant speculation, the hack attacks and massive price drops have already essentially killed bitcoin from the credibility point of view. No large company will willingly use a currency if using it risks their profitability on the scale bitcoin does.

Hunterbunter

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Speculating on btc/usd is no different to speculating on usd/eur. If you think the USD is tanking, buy some Eur (or AUD or whatever isn't tanking). Buy USD back when you want to cash out.

The underlying economy has the larger part to play in deciding whether a currency is about to crash or not. As long as you can buy useful things with your BTC, the BTC will be fine.

XX55XX

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Well, given how slowly and predictably the Bitcoin supply grows, I suppose that too much liquidity would not be the primary problem. Unlike the Dutch Tulip bubble or more modern bubbles, the supply of the good in question is relatively fixed.

Unfortunately, speculation is not going away for the time being. But it would be interesting to see whether or now how many people are getting into this via mining, or pure speculation (by buying Bitcoins on an exchange). It seems that more people are getting in through mining rather than buying up Bitcoins by themselves.

evolve

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daytrader/superhero

Quote from: XX55XX on June 23, 2011, 06:03:03 PM

Quote from: chad on June 23, 2011, 05:58:43 PM

No, it will enhance and strengthen it.

Yes... by providing exchanges with an ample supply of liquidity. But what if there aren't enough buyers?

then the price/value of BTC will drop until either:

a) someone is willing to buy
or
b) the price drops to the point that it is valueless

Topic: Is rampant speculation going to kill Bitcoin's credibility? (Read 2747 times)