The true believers in bitcoin should be buying up all the bitcoins they can while they're this cheap. There is no asterisk on Bitconica's buy side, and anyway, true believers would use their own cash to reaffirm their convictions.
Can't I believe in bitcoin
and want to profit? So far I haven't, but I'd like to.
If I sell at $7 and buy back at $5; then am I damaging bitcoin in some way?
No, but the problem can be framed in another way.
I think it's dangerous to put ideology into a currency. If everyone uses bitcoin to maximise their own profit, then good will emerge automatically (Adam Smith told us this 200 years ago).
There is a limit to Adam Smith's 'invisible hand': if everyone uses bitcoin to maximise their own profit while screwing everyone else over as hard as they can, eventually the players may tire of the game. In some games the only way to win is not to play the game. Human nature is pretty stubborn and downright stupid however, as evidenced by packed casinos around the world. Maybe the players will never tire of the game.
Wild swings in price may result in many players losing the game, with a few large winners. The large winners need more players in the game otherwise they'll be left with interesting electronic tokens that few want to buy.
If good comes automatically from players maximising their own profit, then I don't see what all the fuss is about with CFDs, Goldman Sachs, flash crashes and holding stocks for seconds before selling them. Good does come automatically, naturally.
Those people bouncing the price around, with presumably large amounts (to us) of cash will one day find that bitcoin has started to take hold on a massive scale and they will lose money on a bounce. Then on the next bounce, and again, and again. I wouldn't be surprised to learn that they are already losing money every bounce.
That's assuming the large players are losing the game, not the small players.
I don't think they're doing any harm to bitcoin long term anyway. Seriously, while the bitcoin economy is still small, it makes very little difference whether the price is $4 or $8. If it becomes mainstream, then the price will need to be in the hundreds of dollars (FOREX does $4 trillion a day); and that will happen all on its own.
Bitcoin is just as useful as a means of transaction at $0.10 as it is at $10. The problem is many people are not using it as a means of transaction: they're using it as a speculative vehicle for extracting profit. New players need to enter the game or old losing players need to stump up more cash or the game ends. Recent price activity is testing the conviction of the true believers.
