You're completely right when it comes to regular currencies, stocks, and so on - speculation is how prices stay accurate. If the price goes too far out of whack, speculators can make large amounts of money off of everyone else.
With cryptocurrencies, however, there isn't enough "legitimate activity" (i.e. people actually conducting business with Bitcoin) to allow a stable price to emerge. This makes them vulnerable to manipulation because there is no function for the form to follow. At least with regular currencies, speculation has to follow reality. With cryptocurrencies, reality follows speculation!
This leads to a negative feedback loop; people are reluctant to use cryptocurrencies for business because the price is unstable, and the price is unstable because not enough people are using them for business.
>If the price goes too far out of whack, speculators can make large amounts of money off of everyone else.
That's a wholly circular argument, and a counterfactual one.
If speculation influences prices then it's in the interest of speculators to create pricing mechanisms that are perpetually "out of whack" so they can profit from them.
There is no such thing as an accurate commodity or currency price, and there never can be. There's only market sentiment, and that's largely based on optimism or pessimism about the future - which is unknown.
Markets are just entrail reading, with very expensive and complicated entrails.
DOA was more like a meta-entrail system with an extra layer or two of obfuscation. But it was no more stable than any other market, and fell prey to exactly the same problem - manipulation of mechanisms creating a dishonest illusion of objectivity for profit.
you clearly have absolutely no clue what you are talking about - a catastrophic dearth of experience in financial markets, nor any idea of the theory of speculation. I don't know where to start but this laughable statement is as good as any:
"If speculation influences prices then it's in the interest of speculators to create pricing mechanisms that are perpetually "out of whack" so they can profit from them"
How exactly will they influence said prices without trading? Which costs money? HOw would they move a price (cost money) then move it back (cost money) without constantly losing money? You need other people to take you out of your speculative position, and those other people must be (net-net) non-speculators, and sufficient in number (which was @omegaham's point). Separately, any market which is purposefully "perpetually out of whack" is not even a market, and will quickly tend to zero participants.
"Markets are just entrail reading"
Another eye-roller so vacant that I don't know how to respond.
I wish people like you wouldn't jump in with such certainty about subjects in which you are eminently and so evidently without the foggiest of any idea, but willing to get your word in anyway.
With cryptocurrencies, however, there isn't enough "legitimate activity" (i.e. people actually conducting business with Bitcoin) to allow a stable price to emerge. This makes them vulnerable to manipulation because there is no function for the form to follow. At least with regular currencies, speculation has to follow reality. With cryptocurrencies, reality follows speculation!
This leads to a negative feedback loop; people are reluctant to use cryptocurrencies for business because the price is unstable, and the price is unstable because not enough people are using them for business.