Whats wrong with speculation?

[dsp]

The more I read or see about bitcoin. The more I hear about speculation like it is a bad thing. Even if you don't buy bitcoin your still speculating(that its going to fail).

If you look at the initial speculators of bit coin they basically provided the seed capital to get the ball rolling, its still pretty risky and that's a good thing in myview cause if all the risk was hedged out well you'd have boring ass stocks. Where else can you invest in 100 start-ups all at the same time.

Maybe I should put some money into the gold and silver just in-case you know the internet fails so I can have it robbed at gun point by some other idiot gold bug while trying to barter with it during a economic collapse.

"Don't buy bitcoin cause the government will ban it." You cant ban or control data. There will also never be a consensus between governments. If the US bans it the god damn Canadians will make it their national currency.

By time anyone really has any idea where this is going its either going to be trading for $1000 a coin or a $0.01.

[frozen]

Speculators are not the cause of volatility, they provide liquidity and stable(r) prices. The fact that bitcoin has considerable volatility currently is not because of speculation, but because there isn't enough of it.

Good article: http://mises.org/daily/4466

[opticbit]

Everything you decide on is a Gamble.

I also realized that everyone is a beger.  From the guys on wall street (recently on hbo Bretton James (represends Jamie Dimon of Chase) mentions his tin cup at a fund raiser), and politicians, to the girls on the stripper pole, to the person in the cubicle, factory, or park, or to the guy on the street corner with the cardboard sign.  It just depends on how they beg and how much they can get for it.

[BookofNick]

I agree that speculators are demonized uneccesarily. The reason why speculators invest in something is if they believe it has value. Therefore, speculators in bitcoin are a kind of validation of bitcoin's value and a way to help it grow.

The price has been stable for a while, but the wild fluctuations in price we have been seeing up until now is a result of something rare and beautiful in this day and age, something that most people of our generation have never seen: a free market.

[Elwar]

Just like everyone gets upset with oil speculators for the high price of gas.

They would not be complaining if tomorrow a huge oil find was made with 10 billion gallons of oil available and the price dropped. But why would the price drop on such a find when it would take 10 years to get started on tapping that oil? Because speculators see how things will play out in the long run and they invest in those thoughts.

Also, the BitCoin has not been very volatile. It has hovered around $14 for the past few days with only a slight deviation.

From what I can tell, the fact that MtGox has users commission set to 0% means that there are a lot of people buying small amounts and selling those small amounts when there is a minor deviation making a couple of bucks here and there. This is why there has been no major swings. Everyone is fine with taking little bits of coin.

When the 25 days is up, July 26, the trade cost will go up and people will hunker down with their bitcoins again and wait. That is when we will go back to business as usual and the price will slowly rise again as new people put their money in and do the same.

But I am just speculating.

[nakowa]

Speculation itself is not harmful.

No speculation could destroy any healthy economy by itself.

And in reverse, if an economy was destroyed by speculation, that only means the economy had started deteriorating even before speculated.

Most people hate speculation much the same as they hate interests, simply because they believe everything should be earned by labor rather than merely thinking a little while... in effect just as Marx did, a sign of lacking financial common sense.

In financial world, speculating should be treated as a normal and prevalent activity as are spending and saving.

[Meatpile]

Speculators are not the cause of volatility, they provide liquidity and stable(r) prices. The fact that bitcoin has considerable volatility currently is not because of speculation, but because there isn't enough of it.

This may be true in whatever other markets exists currently  that are connected  to REAL WORLD supply and demand and companies... But bitcoin is an entirely new concept. It is NOT connected to anything else right now besides the speculating.

That makes it a gambling game and none of the posts so far have any basis in reality. There is no way you can say the speculator vs speculator trading right now is not the cause of the volatility. there is NOTHING else effecting its price.


IF somehow in the future there is alot of easy to buy things with set bitcoin prices (not fluctuating wildly based on its exchange rate) THEN and only then would you be able to say things like "speculation might not be the only driving factor in its volatility."

[99Percent]

Speculators are not bad at all, they provide information about the currency.  What Bitcoin needs are more market mechanisms like being able to short, have futures, etc. The more market info is out there the more solid the currency.

[Giraffe.BC]

Greed is coloring many Bitcoin supporter's perceptions.  They think "wow, if Bitcoin went up to $200 next week, I'd make a ton of money!  So that's obviously a good thing!"  They're forgetting that Bitcoin was originally intended to be a currency, not a get-rich-quick scheme. 

Speculation is fine for commodities, because it helps the market determine the price.  It's terrible for fledgling currencies.  There's a reason that new currencies have traditionally been backed by something else (gold, other established currency, etc.):  you want people comfortable that the value is based on something other than people's perceptions and you won't get screwed if you hold on to them in exchange for goods and services.  Otherwise, why would anybody use the new currency?  This problem is magnified tenfold for Bitcoin, since it's not backed by any institution and has a much higher barrier to entry for the casual user than little slips of paper with numbers and pictures of dead people on them. 

I suspect Bitcoin will provide some useful lessons for the next cryptocurrency, but that's about it.

[Leon]

Nothing is wrong with it you just have to learn like everyone else.

[kokojie]

nothing wrong with it, speculators provide liquidity

[HideousBeastManGuy]

Value/Worth is what the market decides it is, nothing more, nothing less.

Watch a show like Pawn Stars and see how delusional people are even in the face of compete honesty from the pawn broker's side.

People don't like speculators because they spend too much time watching the news and drinking the Kool-Aid than thinking about things for themselves.  Some say speculators are "Un-American" because they "drive up prices".  First off, it's Un-American to tell someone what they can and can't do with their money when they adhere to ethical and legal guidelines, secondly, speculators don't "drive up the price", they are part of the market and help decide value.

You have to understand that most people think that shorting an equity or commodity is wrong, and they'd rather voice their uneducated opinion loudly instead of quietly educating themselves on the matter.

[kgo]

I think the perception is that the 'speculators' don't have any interest or love for bitcoin at all, and they don't understand any bitcoin fundamentals.  They just see it as a get-rich-quick scheme.  Like beanie-babies, or pogs, or (I can't believe I'm bringing this up) tulips.

If that's the case, as the theory goes, then the speculators don't really add to the core bitcoin value, since they're not treating it like a currency or a commodity, they're treating it as FREE MONEY.   When the party is over they'll start stop-lossing, driving the price down, potentially enough to destroy the entire bitcoin system.

That's where I think the hate comes from.

P.S.  I do not subscribe to this theory.

[99Percent]

Bitcoins are backed by its scarcity due to its difficulty in making them, with cpu power. That is why its resistant to full fledge speculation.

Speculation is fine for commodities, because it helps the market determine the price.  It's terrible for fledgling currencies.  There's a reason that new currencies have traditionally been backed by something else (gold, other established currency, etc.):  you want people comfortable that the value is based on something other than people's perceptions and you won't get screwed if you hold on to them in exchange for goods and services.  Otherwise, why would anybody use the new currency?  This problem is magnified tenfold for Bitcoin, since it's not backed by any institution and has a much higher barrier to entry for the casual user than little slips of paper with numbers and pictures of dead people on them. 

[evoorhees]

Speculators are just people who risk their own money on ventures, as opposed to politicians who risk other peoples' money. Not surprisingly, the latter is constantly demonizing the former.

The world would do well with more speculators, and fewer politicians.

[Jaime Frontero]

I think the perception is that the 'speculators' don't have any interest or love for bitcoin at all, and they don't understand any bitcoin fundamentals.  They just see it as a get-rich-quick scheme.  Like beanie-babies, or pogs, or (I can't believe I'm bringing this up) tulips.

i sold a beanie baby for 900 USD, once.  i had over a thousand in stock and sold them all a month before the whole thing went away to crash-land.

you have to be able to see the difference between a flash-in-the-pan, and the next new thing.  my batting average ain't bad - and i like Bitcoin long-term.