Is rampant speculation going to kill Bitcoin's credibility?

[cunicula]

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

[onesalt]

Did I hear bubble?

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

[David M]

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]

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.

[FlipPro]

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.

[David M]

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.

[Klestin]

That's how bubbles work

...does not mean someone mentioned bubble.

Herp, derp.

[QuantPlus]

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 $$$.