Bitcoin Forum

Bitcoins are based on nothing. It takes cpu or gpu time but you are are still creating money out of nothing.  The dollar could have been based off if you jog 1 mile around a track, but in the end the dollar would still be based off nothing. The dollar is valuable only because it is fiat, demanded to be used by the U.S. government. 21 million of these bitcoins are going to be created out of nothing.

You can use public key private key encryption to create a digital coin similar to bitcoins. But, who cares you all you have is wasted hard disk space.

Money will only work if vendors of goods are willing to accept it. Now some of the vendors are selling junk, socks, or trading computer time you have some vendors. But the reality is the bitcoin is still based on nothing. It is not backed by anything nor demanded to be used by government. Thus, if the vendors tire of it, it will crash. I predict the bitcoin will fail and be worth $0.01 in 10 years. Now, if a critical mass of vendors exist creating a market as old vendors drop out and new vendors come online to replace them it could work.

If the 21,000,000 bitcoin was based off say 100 pennies minted before 1981, you could say there will always be a vendor of last resort, you could convert your bitcoin for pennies. That is my suggestion to the bitcoin folks.

If I was running bitcoin I would set-up a 1% tax on transactions. Where would this money go? It would be use to add more metals to back up the currency. Thus over time each of the 21,000,000 bitcoin might be backed by 100 pennies, 1 ounce of silver. Where did the 1 ounce of silver come from, the 1% transaction tax over years.   Then maybe you could buy an island with it an create your own country -tax free government free.  I wonder it is is possible to buy land somewhere and create your own country.

The current bitcoin can be fixed by just demanding the $0.01 transaction costs go to buy wealth to back up the currency.

I think there should be a separate subforum for these kind of posts :D

Nobody is "running bitcoin". There is no central authority.

Many forums have "newbie" sections. It would be a good idea for us so we can quickly move posts like this to that area.

It sounds like perhaps it belongs in this one (http://bitcointalk.org/index.php?board=17.0).

Just one question for you steelhouse--what or who backed the money cowry (http://en.wikipedia.org/wiki/Shell_money)?  There is plenty of precedent for currencies with no other use than as currencies.  All that is required is that they be limited in supply, fungible, and easy to transport.  As a purpose-built currency, BitCoin beats out cotton-linen pictures or little printed squares of plastic any day.  That's all it needs to succeed.

Shell money was fiat money. "In northern Australia, different shells were used by different tribes, one tribe's shell often being quite worthless in the eyes of another tribe."  Fiat money is money that has value only because of government regulation or law.

Funny!

Imagine how old this kind of stuff gets to those of us who have been here a long time.

I'll try again, since you stopped responding to the old thread, and started a new one.



What gives gold value? What gives silver value? What gives copper value? What gives anything value? People give it value. Period. If I see that bitcoin has properties that I can use, I value it. As long as there is a community that shares that opinion with me, it will have value.

What is your goal in trying to convince others that bitcoin has no value?

How would "more metals" back up a currency? Do you mean it would give value to a currency or make a currency more desirable? If yes, what gives value to those metals or makes them desirable? Or do you mean that limited availability of such metals would/could limit the amount of the available currency?

Stuff is valuable because it is either useful (like hammers) or we think it is pretty (like Picasso paintings); the more rare, useful, and/or desirable something is, the more valuable it tends to be.

We know how rare bitcoins are.  It remains to be seen how useful they are.  I think they're pretty useful as both a convenient way of paying for things and as a long-term store of value, but it will take time to convince most people that they're useful for those things.

The money cowry was used in Africa under no particular jurisdiction in a purely p2p fashion.  If bitcoin proves as comparatively useful as the money cowry did in its day, it too won't need a backing or a fiat.

The concern is valid, but with backing you need auditability and with that you loose anonymity and security.
There has been a well working 100% anonymous currency backed by 100% gold - now it's controlled by the government.

You can actually do that right now, with no changes to Bitcoin:
Just mine or buy a new block and claim to buy back every coin from that block for $1. If people believe that you'll honor your promise, these coins will trade at a premium whenever the market rate for normal Bitcoins is below $1.
You've just created Bimetallism inside the existing Bitcoin protocol!

I am not here to be a troll.  Has there ever been a currency that was not commodity based or fiat?  Shells were fiat based.  You have to admit, coins decreed as valuable, with nothing behind them seem to be what they are intrinsically nothing.

My goal is to see why bitcoin does not go to zero.  Gold silver copper are all actually all fiat currencies, the government gave it value and demanded its use.  Bill Still even said gold is a fiat currency.

The melt value of a penny before 1982 is 2.7 cents and a value of a nickle in the US is about 7 cents.  That is the market rate of those metals.  The value is the worldwide demand for those metals to build stuff.  What is to prevent someone making a clone of bitcoin and calling it bbitcoin.  If each bitcoin was backed by 100 pennies, it would have a $2.70 value on the world exchange.  Thus owning the bitcoin you know you would get the pennies.

Ah, I see the problem. You misunderstand the word fiat.


Shells, gold, and Bitcoin are not fiat because they are not declared valuable by a government. What would happen to the U.S. dollar if it wasn't backed by the "full faith and credit" (as if that is worth something) of the U.S. government? It would become worthless. What would happen to gold if the U.S. government stopped accepting it as payment? I bet practically nothing.

edit... Another


Bitcoin would fall into this category, commodity money, regardless of the fact that it is a designed commodity money.

Absolutely nothing at all.

Being here a long time and seeing the same questions over is not an answer.  Mob rule is not reality they still burned witches in Salem.  I realize it all depends on merchants, if merchants leave bitcoin is done and there is no intrinsic value thus you have nothing.  So technically if the number of total merchants is rising so can bitcoin.

The answers that you seek are written in the forum's archives, as well as several different wiki's, at least one FAQ, and the technical white paper.  I'm more than happy to point you in the right direction if you are confused, and answer questions that arise from reading those documents.  However, neither myself nor anyone else who can answer those questions have the time to repeat ourselves for each newbie who misunderstands how the system works.  If you really wish to know and/or have this debate, then at least attempt to educate yourself on the details before you come to the table.

First-mover advantage.

You can go on youtube and watch "The Money Masters" and "The Secret of Oz".  If you ask Bill Still if gold based money is fiat he will say yes.  It only has value by government regulation or law.  Gold is just a yellow metal.  Bitcoin is not fiat, in fact it may be the only non fiat currency other than commodities.  You can take an ounce of silver go to Austrailia and get money for it.  Due to the demand for silver alone.  

Shells were declared valuable by the tribe - the government - fiat.

I would really appreciate if you send me to the best source.

Time to get used to it.  There are ~8 billion people in this world who haven't heard of bitcoin yet.  And bitcoin's exponential growth rate is just beginning.  Some will embrace it without question.  Some will reject it outright.  But most people (myself included) will be curious, and start asking questions about it, and will point out what they think are fundamental flaws, and will post what they think are necessary modifications to improve the protocol.  We will learn to be patient and helpful, and alleviate their concerns by calmly explaining how the network and market are incentivized.  But yes...be prepared for the much anticipated hordes of steelhouses that will come.

BTW, we I suggest we augment the simple machine forum's source code to allow for the [facepalm] and [/facepalm] text modifiers...  :)

Fallacy: argument from authority. Whoever this Bill Still guy is, he is wrong. Gold has value as money despite governments, not because of them.


You just contradicted yourself. Silver = gold = Bitcoin = commodity money.


Again, you misunderstand the normal meaning of the word fiat. You can't just redefine it to mean whatever you want and argue you are correct. Unless there was a state (an entity with a monopoly on the use of violence in a specific geographic area) that declared shells to have value, and backed those shells with its full faith and credit, then they were not a fiat currency, they were a commodity.

http://en.wikipedia.org/wiki/Subjective_theory_of_value (http://en.wikipedia.org/wiki/Subjective_theory_of_value)

silver = commodity
gold = commodity
wood = commodity
bitcoin = nada
Federal reserve notes = nada

Oh my god, you're right, Bitcoins have no value at all! That TV I just bought with them is worthless!!!

To be serious, Bitcoins are a commodity money.



There is no reason I can think of that a commodity money must be a physical object. Bitcoins otherwise fit the description.

Lets get down to basics.

Anyone can assign value to anything.

If someone else also assigns value to the same thing, they can trade it for whatever else they assign value to.

It's simply a matter of scale as to how far this can go.

You do not need to add force (state) to the equation to make it true.

You do not need additional people (merchants) to assign value to the item to make it true.

Two people can create a system of money out of anything they desire. They are both happy and their system doesn't need to be fixed!

Sheesh...

Knowledge is Power. (K=P)
Time is Money. (T=M)
Power is Work over Time. (P=W/T)

Basic algebra tells us:
K = W/T
K = W/M
or Knowledge equals Work over Money.

Therefore:

The More You Know, the More Work You Do, and
The More You Know, the Less Money You Make.

(sorry, this doesn't relate to the current discussion, but while we're using equal signs to equate complex subjective ideas, I thought I would share this joke for a laugh.) :)

I AM THE SMARTEST MAN ALIVE  :D :D :D

There already are several alternate currencies built using Bitcoin's code, each using a separate blockchain. So alternate bitcoin-type currencies are not hypothetical, they already exist.

For example in the bitcoin IRC channels I have a sample IRC bot that supports a number of these alternate currencies.

The way the bot currently works is each currency has an account with each of the other currencies. For example the Brits have a Botcoin account and a Canadian Digital Notes account and a General Retirement Fund shares account and so on.

This has the effect of each currency having balances of various other currencies it can use to "buy itself back" aka to redeem its coins.

If for example someone (such as the Canucks for example) had bought some Britcoins using Canadian Digital Notes then Britcoins would have a balance of 100 Canadian Digital Notes available to be used as "backing" for Britcoins, that is, available to be used for the purpose of buying Britcoins by spending Canadian Digital Notes, much as the Canucks already did to cause the Brits to have that 100 CDN on hand.

The bot keeps these backing balances separate. That is, it will not spend any more than the Brits actually have of each other currency/commodity on buying back Britcoins.

This is looking to be an interesting market, because of course once someone has managed to buy those (for example) CDN from the Brits in return for Britcoins, then that is it, the Brits have no more CDN left with which to "back" aka "redeem" Britcoins.

In other words the bot does not lump all CDN together, it tracks separate balances per each other currency, so CDN it obtained by selling Britcoins will only be used to buy Britcoins, not to buy for example Martian BotCoins. Martian Botcoins would have their own distinct CDN balance, consisting of CDN that had been used to buy Martian BotCoins, and only those CDN would be used to buy Martian BotCoins.

That simple mechanism makes the bot in effect act on behalf of each currency as an administrator of a "backing facility" providing "backing" individually for each currency.

These currencies seem especially well suited to situations in which moving of hard goods is awkward, such as when remote operators operate robotic/waldo facilities in remote galaxies so far away that only consciousness/telepresence/data can reasonably be shipped.

Instead of trying to ship you a hundred thousand tonnes of deuterium from, say, a galaxy in the http://galaxies.mygamesonline.org/ group of galaxies to, for example (though maybe forbidden by Zorg's terms?) a galaxy in the Zorg Empires group of galaxies, I could sell deuterium in one group of galaxies for digital coins then use those digital coins to buy deuterium in your local galaxy to ship to you, thereby saving shipping costs and thus maybe provide you with deuterium cheaper than if I shipped it from a galaxy far far away...

-MarkM-

Actually I agree with Bill on this. A lot of gold bugs fail to realize in the midst of their anti-government/anti-centralist rants, that 'backed by gold' means government decree "This note is worth so-and-so many of an .oz".

Saying that a currency has no intrinsic value and is just created out of thin air is like accusing a clock of making time out of nothing. The value comes from the economy, the dollar lost over 90 percent of its value in the last hundred years because the economy has grown in value by that much in the last hundred years. Are central bankers trying to optimize their advantage at the expense of everyone else? Probably, but they are a monopoly and can expect to behave like a monopoly.

I like bitcoin because it breaks out from the monopoly, not because I am against communities choosing to value something as a means of exchange, be it shells or little pictures of dead presidents. Besides, an economy should be able to grow regardless of who happens to own what shiny metal.

Gold-buggery can fuck off, so can monopoly-moneterism, the democratization of money is what I beleive in, and that's what I see bitcoin as. If the economy needs bitcoin to be worth a widget, good, that's what the economy and all the people in it need. No middle-men, no authorities, no money monopolies. If one day bitcoin is used to pay for hospitals and schools and roads by the communities chosen government made honest by improved democratic information and the rolling back of power monopoly... then I'm all for that.

Gold-fetish sociopaths that despise society can love bitcoin too, I don't care, so can nazi's, fraudsters, drug-dealers and socks sellers.

in the short term, bitcoins success will be pegged to the stock mkt.  if it goes down, as i suspect it soon will, then the value of bitcoins will follow it down.  bitcoin is an inflationary phenomenon.

I disagree. Care to argue why you think this is the case?

These discussions seem to boil down to whether there is intrinsic value or not. It's very hard to argue that the concept of intrinsic value has an instance in the human world. Also it's very hard to define philosophically. What is it that you value, for a reason that is in itself not a value?

And there is this, in my opinion, false statement that gold, and "things like gold" have intrinsic value. What's backing that statement? I think the thought comes from the apparent contrast between gold and bitcoin. But bitcoin is a currency (and Bitcoin is a protocol) and gold is a chemical element. Currency of gold on the other hand is not too distinct to bitcoin. Bitcoin is too high tech, but I'm sure we can devise a scenario where Bitcoin has value and gold doesn't.

if you look closely at the MtGox All Time chart, you'll see its value leaps correlate very well to QE2 and the subsequent stock mkt ramp.  this whole drive to develop a new currency, Bitcoin, is by ppl like you and me who are trying to get away from Ben and his devaluation of the dollar.  the stock mkt is a mood indicator reflective of this sentiment (at least for now) of the dollar down, assets up mentality.  if this indicator reverses (i think we are there) and we get deflation with a subsequent rise in the dollar, you will see Bitcoin values crash as ppl scramble for dollars.  you're already seeing today in the drop in Bitcoin as stocks are down.

as a holder of PM bullion, i'll argue that PM's have history behind them as well as a physicality.  ppl like to touch and feel there money.  also the hobo on the street can trade it as well as USD.  these are the advantages of the current system.  having said all that, i do see potential in Bitcoin but it has a long uphill battle to fight.  Steelhouse is right, ultimately you need large merchants who will accept it.  all this talk here about how bitcoin is already a currency is way too premature.  i've looked at many of the transactions and they are way too small in value and volume to be conclusive.  in fact, there is an attempt by the geek community to "prop" transactions and commerce to legitimize the bitcoin concept.  not saying it to criticize, but it is what it is.  its just way too early to tell.

I'm sure everyone would accept that Bitcoin is an experiment. It's not about accepting Bitcoin's conclusive victory over gold, but addressing the notions about "backing". Also, stellhouse seemed to say that we need new merchants to fill in for the old ones that stopped accepting bitcoin because it's not backed by anything. If you say that we need services that accept Bitcoin payments, you're preaching to the choir, but I fail to understand the reasoning of steelhouse.

Edited for the obvious typos.

In that scenario, I'd prefer to own bottled water and tins of creamed corn.

We're also only about 5-10 years away from the possibility of a fully p2p internet based on long-range wireless mesh networks.  In fact, within 25 I'd bet the internet will be essentially armageddon-proof.

If we don't have a world-wide mesh network and bucket sized fusion reactors, I don't think it can be helped. Better to keep some silver beside your paper money and/or bitcoins. You could invest in guns and bullets, though. Or food and water. All of these are investments you make based on your predictions about the future. Investing in Bitcoin is not a good idea if you are preparing for Armageddon.

personally, i'm preparing for very hard times here in the US.  i don't think we avoid the austerity that the Europeans and Middle Easterners are facing right now.  our debt is just too big and the banks just won't let us off the hook.  my bet is that Ben reverses the liquidity spigot right here right now to wrong foot every inflationist on the planet (which is just about everybody).  in that case, bitcoin values plunge.  but that doesn't mean its a doomed concept.  ppl are just plain sick and tired of the Fed yoyoing the economy with their hairbrained policies regarding the cost of money.  bitcoins promise is that it gets rid of money manipulators like Ben.

Investing in any currency is a bad idea if you think Armageddon is near.  Even gold has near zero utility under such chaos, but at least silver still has antibacterial properties that makes it worthwhile to keep some of it around.  Before the modern era of safe city supplied water, most people had cisterns.  Americans would take a 50 cent silver piece and drop it into the cistern.  Powdered silver was used on wounds during the Civil War, and up until WWII, field surgical devices were often plated in silver to reduce the need of disinfecting of the devices between surgeries in a combat situation.

No currency is useful without a functioning market, and that requires a civilization.  Bulletts are a good idea, though, even if you don't own a gun.  22lr, 38special and 9mm are the best choices.

So would every other currency as compared to the US $, so long as a functioning federal government exists and people continue to expect that to persist.  This isn't an issue unique to Bitcoin.

Especially if you can throw them, really fast.

Funny!

I ment that they are a good bartering item, and those three calibers are the most commonly used in the United States.  22lr is the king by a wide margin.  And if the future ever looks anything like Zombieland, finding a handgun in one of the two latter calibers should be relatively easy.  At least in the land of 'Life, Liberty and you can have my gun when you pull it from my cold dead hands'.  Places other than the US are probably going to have more difficulty, but those places don't let civilians buy bullets to begin with.

"So would every other currency as compared to the US $, so long as a functioning federal government exists and people continue to expect that to persist.  This isn't an issue unique to Bitcoin."

you're right about that not being an issue unique to Bitcoin but as you said everything would tank while the USD does a moonshot.  this is how i foresee Ben saving the Fed and their franchise of the USD as a reserve currency.

I doubt it; since the FedReserve is functionally owned by the membership banks while also being beholden to the federal government due to it's charter monopoly.  If BB ever openly screws either side, the game is up.

Personally, I keep a significant portion of my savings in things other than US $ denominated assets, but admittedly not a majority.  I have silver rounds (no gold, can't use gold, can use silver for it's antimicrobial properties), more guns & bullets than everyone in my family could use at the same time, a well stocked pantry, tools and the means to make other tools, (makerspaces are an awesome resource) and a relatively small value in bitcoins.  I actually buy stuff in bitcoins, but save in material objects.

creighto:  you're very much like me in what you've stocked.  however, i believe in stock mkt cycles and we've way over reflated the last 2 yrs and its time for Ben to let alittle deflation in.  you're starting to see it today i stocks.  anything but USD cash is very risky right now.

What action exactly do you think the Federal Reserve is going to take?

Existing currencies would of course be useless, but I think some form of currency would likely emerge even with only a handful of people. It's a pretty useful technology. To be fair, digital currencies have a disadvantage there (say, to gold), with the usual post-apocalyptic scenarios. However, this may actually change in the future, as eMansipater said. Maybe we will discover a low-energy way to communicate in large distances before this Armageddon. Millions of such solar powered handheld devices will be lying around... Then Bitcoin could be the best option.

Search the forum for the term, "Dash7"

Perhaps, but deflation requires a more deliberate act on the part of the Fed to invoke than inflation, because it's harder to mop up the water than to pour it out of the bucket.

the Fed is clearly indicating a stoppage of QE and they've performed a couple of reverse repos in the mkt (selling assets which pulls liquidity).  i think their goal is to keep the markets off balance.  with everyone betting on inflation, they will do the opposite b/c the economy is in better shape and they can afford to.  forget this one world currency theory; the Fed will NEVER give up their franchise of the USD hegemony.  what do u think all the bankers wealth is denominated in?  USD!  are they just going to let Ben destroy that?  plus inflating the debt away only saves the American ppl, whom they don't give a hoot about.  they want to force us all to default with another secondary deflationary wave and then take the underlying assets away and OWN America.  besides, if u don't buy the conspiracy theory, i can make an argument that its time for a reversal from an overbought standpoint as well as an uberbullish sentiment standpoint.

i'm watching the stock mkt in real time right now.  i would caution everyone to look out.  i think we may be topping.  huge reversals in MANY stocks. Silver Wheaton making a big reversal. time to raise cash.

IMHO, the best investment right now is shorting stocks.

I think that has more to do with the change in the political climate than any far reaching stragedy.  BB probably drank himself stupid after learning that Ron Paul would be the new chairman of the house financial oversight board.

That doesn't mean that QE3 wouldn't happen in a heartbeat if the political winds changed.


This statement assumes that the FedReserve wouldn't functionally be in control of said one-world currency.  Tell me, what countries dominate the UN?


I'm not willing to contradict your conclusions, as I think that you might be right in the end; I'm just not quite as certain as you seem to be.

of course i'm not certain but one cannot fault the logic.  i understand the inflation logic too but deflation makes more sense to me right now.

You are correct that I cannot fault the logic.

This makes no sense. If you're talking about foreclosure, then they already rightfully own those assets, but they cannot make a profit or brake even during a default. All assets not bought on credit will appreciate in value and cannot be bought more easily than before.

Ultimately it's about the government deficit. Higher deficit = more inflation necessary.
The only alternatives are government default or bailout. Europe currently does a combination of both, but the bailout part will hit its limits if bigger countries like Spain or Italy need help. In the case of the US, it's practically impossible.


To the points raised about fiat and intrinsic value:
It's not hard to define. The intrinsic value is the (subjective) commodity value outside of being a medium for exchange. It's not necessary for this to be especially high, like in the case of gold. It just sets a lower limit for marketability.
If trading is done mainly electronically or with 100% backed paper, etc., golds advantages are reduced and it could be that another commodity will win out.

stocks, gold, silver, real estate are good to buy.

Especially Lehman, HIH, Onetel, Enron.

"nonsense it is best to be in 100% stocks at all times."

hows that worked out over the last 10 yrs?  2 crashes of over 55% in the last decade.  did you hold on during both plunges?

I think I figured out the missing link in bitcoin.  IMHO, bitcoin can be cornered and might already be.  This is the method Bill Still said was used to steal 1/2 the homes west of the Mississippi in the 1800s.  Support a high currency then crash it, take loans with it.  Might even be used today in this housing market.

Say you privately back bitcoin at $1 per coin - all 21,000,000 of them.  Suppose one you wake-up and the price is $1.25 you can sell 10000 and make $2500.  One day the price will drop to $0.80 and the manipulator will buy til the price reaches $1.  The manipulator might cause wide fluctuations in the price of bitcoin to create chaos to gain the most.

I think you should find a backer of this currency to publicly back it with a stable currency/commodity like aluminum and announce what the backing rate is.  You can also use part of the transaction fees to create the worlds first appreciating currency.

not to mention CFC, DSL, WM, Wachovia, Bear Stearns, Merrill, Indy Mac, MBIA, Ambac, and how many others?  Financials still in the toilet along with housing for how many years?  Wait til the next plunge and we may be there right now on the precipice.  the only reason for the recent 2 yr ramp is b/c of Ben and the liquidity pump and how sustainable is that?

AAPL AZO NVR ... You buy companies with real earnings.  Gold and silver good too.

i'm beginning to wonder if the MtGox price is being manipulated as well.  if i setup 2 different accts funded with USD and decide to bid up the price of pizza back and forth with each transactions $0.10 higher than the last, in a thin mkt like we have i could become the HFT of MtGox.

assuming you're a perfect stock picker and avoided the calamities of the previous teflon stocks like the investment banks.

No one serious cares what the last price was they care about what offers are available now. Some joker playing with himself doesn't affect the top bid and bottom ask.

HFT are forced to take out the bottom ask if you jump in the middle of their manipulation but a determined HFT can move the price up esp. in a thin mkt despite ppl dumping shares to them on the way up.  Many folks believe they have been a major force in the last 2 yr ramp.

Are you implying that HFT is a problem?
Every trader who can turn a profit makes the market more efficient. Of course they push the price up and down, but the new price will better reflect reality, i.e. current and future supply and demand.

You can clearly see this in an illiquid market like Bitcoin: every large order creates huge market movements.
If these were anticipated by speculators, volatility would be reduced.

I recall reading(and I Wish I had the link) somewhere that HFT has issues; market makers are paided for each trade that they put through, and that they have designed strategies where, they will buy the ask and sell straight to the bid. They can do this because they have faster access to the exchange than less privileged players in the market.  So in that scenerio it may appear the make a profit simply for intercepting the trade..... Do that multiple times a day.....

There were two other strategies that were used, and in no way helped price the stock, merely took away from other participants in the market.

This discussion is now about how to "fix" Bitcoin.

Which necessitates a discussion about what exactly is broken and needs fixing.

I still have not seen a convincing argument that Bitcoin is biased toward early adopters in negative way.

edit... Nor does Bitcoin require "backing" by any metal, in my opinion.

I am unable to inflate the bitcoin supply for fun and profit. it's obviously broken :P

There might be a good reason for someone to control the currency.  BTC has a built in transaction cost mechanism also all the USD/BTC exchanges seem to have a fee involved.  It is in their best interest for these guys to maintain a peg to bitcoin in USD.  Something to think about.  Thus they profit on all transactions.  If I was megawealthy.  I would try to peg bitcoin to a certain amount maybe 1/100th ounce of silver, then run an exchange service.  Just callme JP Morgan or Rothschild.

None but if the pegger ever decides to close shop and walk away the economy will collapse and the loans will collapse.  Watch the 2 Bill Still videos I recommended.

There is no pegger.  Please read the bitcoin faq.

$5,875,000 may sound nice and be "exponential"...
But it's a "small, disappointing Christmas bonus" on Wall Street.

The big mistake I see is the $40-50 "lottery" payout methodology...
Which is aimed at Bot Nets and Western geeks.

Consider, if a man could generate $0.25-0.50/day STEADY...
And in Eurasia a big loaf of bread costs about $0.10...
And if 10,000,000 people had $10 in BitCoins...
All of the sudden you are looking at $100,000,000...
And then it only starts to grow.

Get every Third World bazaar to use BitCoins...
And it becomes an existential threat to all Governments.

That is the general idea.

The viral, exponential growth is Bottom Up... not Top Down...
Like YouTube, not Hollywood...
What happens with BitCoin in Russia >>> more important than USA...
Another tool for tipping fat bloggers is not revolutionary.

You guys know this...
But electricity is cheapest by far in the Americas...
I'm still trying to discover/understand features tailored for Third World.

Bitcoin is not tailored for anyone, but nor does it discriminate for anyone either.  That alone means that Bitcoin is a more favorable monetary system for third world nations than anything that the UN or the US has presented them with thus far.  Your claim about electricity is false, as there are forum members who have reported very low power costs in Russia, Iceland and elsewhere.

electricity has very little to do with bitcoin in the long run, if not now.  from talking to a few early participants it has already become almost impossible to generate bitcoins with the average persons home computer from a probabilistic standpoint.  therefore, the average person will have to buy bitcoins in the future.  how does the person w/o a computer or smartphone do this?  especially if one is unfortunate enough to be homeless?  i could see an evolution to paper bitcoins.  this would be a 2 edged sword however.  while it would put money into the hands of the non tech community, it would also lead to a decrease in the bitcoin money supply.  this is a problem as things would become even less expensive as the bitcoin value soars.  bitcoin ppl would love it but everyone else would hate it.  whats interesting is, the more one thinks about starting a new currency, the more one becomes to sympathize (just a bit) with the existing money manipulators.

Don't you need computer/internet access to make use of Bitcoin? I'd say that rules out a lot of people, especially in third-world countries.

In 2009:   Source (http://pubs.aeaweb.org/doi/pdf/10.1257/jep.24.3.207)
All mobile phones will be internet-enabled in 10 years, and I think it is pretty safe to assume that most people on the planet will have some access.  It won't surprise me if bitcoin first goes mainstream in an up-and-coming third-world country or region.

Thanks Gavin, that's both interesting and surprising.

I wonder what kind of handsets those 65% of Africans have at the moment?

I'm sure the smartphones will trickle through eventually as you suggest.

Yup, the whole world will basically come online within the next two decades.

Answer: pooled mining.

Pool mining. Something to add to every client?

Unless you are actively generating, then an end user only needs occasional access to the internet.  Or to be precise, occasional access to another client with greater access to other clients.  An end user doesn't need live access to the Internet to spend his already confirmed coins.  At present, only the receiver needs live access to the Bitcoin network in any given trade, so long as the two parties' devices have some digital method of communicating otherwise, (i.e. Dash7, Near-field or ad-hoc wifi) and only if he has need for independent confirmation that a valid transaction has just occurred.  IRL, the vast majority of cash in person transactions do not need this level of certainty to happen as it is today.  There is no reason that, in a Bitcoin future, an established shop in Africa couldn't accept a transaction produced by a walk-in customer's smartphone based only upon checking it against his local copy of the blockchain to make certain that said customer owned said coins the last time he updated his blockchain.  The double spend attack is technically difficult on many levels, so unless it were to start to become a common form of fraud in the distant trading posts, a blockchain a day out of date is unlikely to be a problem for the purchase of a coke and a candy bar.  In a future where only 3% of the population uses Bitcoin once or more a week (which would be a dramatic success) a continuous digital broadcast of the blockchain, via sat downlink or shortwave data undercarrier methods (i.e. http://en.wikipedia.org/wiki/Digital_Radio_Mondiale) is downright likely in places where Internet access is rare or insufficient, and not out of the question even in North America.  Imagine if XM radio were to commit one channel to a continuous feed of the blockchain.

Even that level of Bitcoin infrastructure might not be necessary if Dash7 radios were to become as common as wifi radios on smartphones, because of the nature of Dash7, an aware Bitcoin client could (and therefore would) mesh with most of the other Dash7 devices within a max kilometer radius, trading blocks and transactions in an open and dynamic network.  A network dynamic enough that nodes move around a cityscape throughout the course of a day, constantly trading said packets whenever more recent data is discovered.  I don't know if you're a radio geek like myself, but to a radio geek, the opprotunistic mesh network that has an average node range of over half a klick, and the potential for wide and deep node penetration, is a surreal concept.  If only 2% of cell phone users in NYC had Dash7 phones, and kept them on all day, there would literally be no place within the city that was beyond the reach of a signal; excepting (maybe) the sewer system and a closed bank vault.  One would literally have to be standing in a faraday cage to not be able to see at least one other Dash7 node with an average radius of half a click, and there is great likelyhood that a well made Dash7 node would do far better than half a klick.  Network saturation is a different issue, of course; since Dash7 is limited to about 200kbps sustained transfer rate.