There's nothing wrong with trading Bitcoins

[slush]

Bitcoin speculation brings no profit, its a zero sum game. whatever you win, someone else loses.

It's simply a wrong statement. There are not only speculators on the market, but also merchants and (since Bitcoinica launch) also hedgers. Sometimes people are selling because they want to cash out or buy coins, not only for speculation. When I want to cash out btc->usd *right now* and I accept current market price, it's *not* a loss for me, but it can be a win for a speculator, who sold coins on higher price days before. This is clean win-win situation, which isn't possible without a speculation.

Actually speculation make exchanges much more usable for merchants, because they can sell or buy Bitcoins at any time, no matter if there's another merchant who want the oposite transaction NOW; this makes price much more stable, although many people won't agree with me.

[P4man]

Bitcoin speculation brings no profit, its a zero sum game. whatever you win, someone else loses.

It's simply a wrong statement. There are not only speculators on the market, but also merchants

The amount of actual trade by merchants in the bitcoin economy is completely neglectable compared to the amount of speculation.

If you read my other posts, you would have noticed I fully realize the value of speculation for merchants as long as the trade volume by speculation doesnt completely dwarf the actual economic activity. What we are seeing now in bitcoin is almost exclusively speculation, and the overwhelming majority of that doesnt benefit anyone (other than the speculator that placed the right bets, at the expense of the speculator that made the wrong ones). All of that is no profit to bitcoin, its a net loss because of the excessive volatility it creates .

Any buys or sells by speculators from merchants cashing out or to customers cashing in, those are valuable. Speculator to speculator transactions, which is like 99.9%, are not.

[wareen]

All of that is no profit to bitcoin

Well, at least it enables the (big) exchanges to fight the legal battles - I consider this very important for Bitcoin. None of them could afford to pay decent lawyers if it were not for the speculators.

[P4man]

 if it were not for the speculators.

To be more precise, if it were not for the loss of the speculators. Yeah the casino makes a profit on the roulette too, after all, exchanges and casino's provide a value added service, but not the gamblers.

Dont get me wrong, I dont think you can blame them, or enablers of services that empower them. You cant expect them to go against human nature and seek a profit if you believe in capitalism, so the problem Im afraid is more fundamental: without any possibility of regulating or taxing, I dont see how bitcoin is going to get out of this viscous circle of volatility, but it will be interesting to watch.

I do fear for bitcoin to have a future as a trade facilitating currency, rather than as casino chips,  someone is going to have to come up with a bright idea for bitcoin 2.0.

[DeathAndTaxes]

I do fear for bitcoin to have a future as a trade facilitating currency, rather than as casino chips,  someone is going to have to come up with a bright idea for bitcoin 2.0.

No somebody just needs to come up with a way to provide hedging for merchants.  Obviously this involves some risk and it is risk they can be compensated with.  I would have no problem holding assets in bitcoins if I could be at least partially shielded by volatility.  I have no problem giving up some of the upside potential for downside protection.  I don't need bitcoin to go up 10,000% a year to make money as a miner. 


An ever better system would be one which partners with a pool and allows members to be paid in both bitcoins & cash (to cover electrical costs).  By heding part of the posistion and locking in a cash rate which covers electrical cost miners would have more confidence in keeping some of their assets in bitcoins (and bitcoin economy).

A Bitcoin 2.0 is doomed just like alt-chains are doomed.  Bitcoin achieved massive community interest and is still unknown by 999,999 out of 1 mil people on the planet.  Any version 2.0 would have an even tinier base.  Any alt coin has an even tinier base.  Combine that with the inability to "stop" Bitcoin 1.0 the idea of a reboot is simply fail.  It won't happen.  Ever.

Trying to fight speculation without govt decree is futile.  If someone can do something highly repeatable and gain x% they will.  It is human nature.

[zhoutong]

I do fear for bitcoin to have a future as a trade facilitating currency, rather than as casino chips,  someone is going to have to come up with a bright idea for bitcoin 2.0.

No somebody just needs to come up with a way to provide hedging for merchants.  Obviously this involves some risk and it is risk they can be compensated with.  I would have no problem holding assets in bitcoins if I could be at least partially shielded by volatility.  I have no problem giving up some of the upside potential for downside protection.  I don't need bitcoin to go up 10,000% a year to make money as a miner. 


An ever better system would be one which partners with a pool and allows members to be paid in both bitcoins & cash (to cover electrical costs).  By heding part of the posistion and locking in a cash rate which covers electrical cost miners would have more confidence in keeping some of their assets in bitcoins (and bitcoin economy).

A Bitcoin 2.0 is doomed just like alt-chains are doomed.  Bitcoin achieved massive community interest and is still unknown by 999,999 out of 1 mil people on the planet.  Any version 2.0 would have an even tinier base.  Any alt coin has an even tinier base.  Combine that with the inability to "stop" Bitcoin 1.0 the idea of a reboot is simply fail.  It won't happen.  Ever.

Trying to fight speculation without govt decree is futile.  If someone can do something highly repeatable and gain x% they will.  It is human nature.

This is exactly what I'm doing.

Bitcoinica is a good foundation.

[DeathAndTaxes]

I do fear for bitcoin to have a future as a trade facilitating currency, rather than as casino chips,  someone is going to have to come up with a bright idea for bitcoin 2.0.

No somebody just needs to come up with a way to provide hedging for merchants.  Obviously this involves some risk and it is risk they can be compensated with.  I would have no problem holding assets in bitcoins if I could be at least partially shielded by volatility.  I have no problem giving up some of the upside potential for downside protection.  I don't need bitcoin to go up 10,000% a year to make money as a miner. 


An ever better system would be one which partners with a pool and allows members to be paid in both bitcoins & cash (to cover electrical costs).  By heding part of the posistion and locking in a cash rate which covers electrical cost miners would have more confidence in keeping some of their assets in bitcoins (and bitcoin economy).

A Bitcoin 2.0 is doomed just like alt-chains are doomed.  Bitcoin achieved massive community interest and is still unknown by 999,999 out of 1 mil people on the planet.  Any version 2.0 would have an even tinier base.  Any alt coin has an even tinier base.  Combine that with the inability to "stop" Bitcoin 1.0 the idea of a reboot is simply fail.  It won't happen.  Ever.

Trying to fight speculation without govt decree is futile.  If someone can do something highly repeatable and gain x% they will.  It is human nature.

This is exactly what I'm doing.

Bitcoinica is a good foundation.

Potentially.  I believe easy to use hedging for non-financial experts is the "killer app" for Bitcoin.  Bitcoin makes that task more difficult because the risk of fraud/theft is great but I believe it can be done.

If (and it is a big if) miners can hedge their electrical costs by getting paid in fiat for part of their gross revenue with stable longer term pricing that makes the mining network more secure and increases adoption.

If (and it is a big if) merchants can hedge their holdings in bitcoins then bitcoins can be used more for intra bitcoin transactions which is a virtuous cycle (more merchants paying expenses in bitcoins leads to more merchants accepting bitcoins and paying some expenses in bitcoins, etc).

If (and it is a big if) consumers can hedge their holdings in bitcoins then more will be willing to use them and thus be introduced to the advantages of bitcoins.

I am not saying it is possible or it will happen but it certainly has more potential that a reboot to bitcoin2.0 or some worthless alt-coin.

[P4man]

If you can make that work, it would indeed be a very good thing, as you would separate the currency from the gambling, and put the risk of currency swings where they belong, in the casino.

I just fear it will be too expensive to be practical to hedge against such enormous volatility. If you look at mature commodity markets with more stable prices, with ever increasing speculation, price hedging to actually protect your business form price swings is getting less and less common, because the prices are so high. For a currency that may be different, and perhaps less of an issue, since the absolute value of it is not important, but Im still skeptical.

[RodeoX]

I have nothing against speculation, but wider adoption is surely linked to bitcoin's utility as money. There is only so much growth in speculation.