zenmonk

> At some point, all of the serious speculators will have put all their money into the coin, and they will be looking to cash out.

You are assuming that the price rise is due to short term speculators looking to make a quick buck. I think a lot more people are buying into the philosophy, politics, and revolutionary technology and won't be so quick to sell.

I totally agree that the fluctuations are no good for a currency. People like to say that bitcoin is a currency, but it really could be a lot more than that. Even with wild volatility, it can still work great as an international funds transfer system (assuming the conversions to/from national currencies are smooth enough), and it can still take on Visa, Mastercard and paypal at the online payments game. It also acts as a hedge against bank account confiscation, as a speculative bet against inflationary monetary policy, and as a direct (although more risky) competitor to precious metals. Moderate success in any one of those categories would be huge for bitcoin. Acting as an everyday currency can come later.

See, this logic makes no sense to me, unless you bought way more bitcoin than you could afford. Every bitcoin I sell now (without topping back up, as I would normally do for my spending bitcoins) represents a potentially massive amount of future wealth. The downside is limited to the amount I put in to begin with.

If bitcoin crashes to nearly nothing, I will be sad that such a brilliant experiment has failed. I'll also be bummed that my money is gone, but I won't be destitute and it won't make my life worse off.