Since this conversation has drifted a way from needling jabs (however briefly) I'll elaborate on some of my concepts and strategies.

If Bitcoin 'goes' (and as I've said a million times, I consider that to be a huge 'if') and if one is just interested in increasing one's net worth, it won't really matter whether one has 200 BTC, 2000 BTC, 20,000 BTC or 200,000 BTC.  One will be stupidly 'rich' in any case.  So I personally don't see any point in being overly heavy in BTC to achieve the goal of getting 'rich'.  YMMV.

(I think that) When one gets to a certain plane, the amount of USD or gold or Bitcoin one controls means little in relation to 'wealth'.  'Wealth', in my opinion, means having the ability to control and shape events on a grand scale.  Gates, Buffet, Bernanke, and Obama are all very 'wealthy' men...they just came to their wealth through different paths, and the wealth that they enjoy is variably transient in that it will subside for the latter two more readily than it will for the former two by virtue of the differences in the backing stores that these parties maintain.

The reason to obtain many thousands of Bitcoin would be to be able to control and shape events in the Bitcoin economy in case that Bitcoin takes off (without needing to be able to write code that people like.)  Having that ability is worth only so much to me in terms of opportunity cost.  Again (and to all readers) 'YMMV'.

My first PM purchase was silver and it was shortly before we went into Iraq.  The inevitability of the war had gotten me studying economics and that opened my eyes to PM's which I  had never had any interest in prior.  By pure shit-house luck it happened on a day when it took a little blip down to what I think was something like $4.20.

Of course I've bought much higher than that as well.  I'm underwater on my recent purchase I believe.  But my recent purchases tend to be smaller...a $1000-face bag is fairly dear compared to the good old days.  Wake me up when I can get another one for $3500 if you would be so kind.

“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” - Mark Twain

Gold is a common enough part of the holdings of larger financial institutions, hedge funds, etc these days that when there is a significant need for liquidity, it goes on the block.  It would not surprise me to see a transient decline in the price of gold (particularly paper gold) in the event of a need for liquidity, and we've seen this phenomenon from time to time in recent years.  They've never bothered me much.  There seem to be enough buyers these days that the price recovers surprisingly quickly.

The purchase yesterday was actually on my behalf from someone who owed me money and happened to be near a dealer in WA, but not terribly far out of line with what I'm accustom to paying to my dealer when I buy in CA.  It was only a few OZ so I did not get any volume discount.

Seems like even though dealers hedge, the spread gets significantly higher when there is volatility.  I suppose their costs to hedge go up.  I am totally happy to pay a premium to buy face-to-face from a dealer with a long history of being in business.  I've never resorted to buying on-line.  An unpleasantly high percentage of other things I buy on-line are never delivered correctly or as advertised and it's not worth the hassle for me when it comes to buying PM's.

I did so yesterday.  I got it for $1650 per Krugerrand.

If we ever have a situation where having lots of firearms or 'prepper' stuff is desirable, I'll get all I need for either a few silver coins or a fraction of a BTC.  Either is fine with me.

If we don't see such a situation, an arsenal of guns is an expensive waste of time and target for thieves and the old canned food will taste like shit. 

Thankfully my brain doesn't undergo stimulation from guns for whatever reason...I end up being able to deploy the resources elsewhere.  Unfortunately I'm not even interested enough to properly maintain those which I have.

Another Score:  5/10/12  (kitco down, gold est from INO.)

          year ago    now       delta mult
BTC     3.82         4.90       + 1.28
Gold    1510         1593      + 1.05

--------------------------
ref (for future updates):
http://bitcoincharts.com/charts/mtgoxUSD#czsg2011-05-08zeg2011-05-08ztgSzm1g10zm2g25zv  (change date)
http://www.kitco.com/charts/livegold.html  (hist cgi at bottom)
mult=now/year_ago


Another Score:  5/9/12

          year ago    now       delta mult
BTC     3.75         5.03       + 1.34
Gold    1510         1590      + 1.05


Another Score:  5/8/12

          year ago    now       delta mult
BTC     3.64         5.03       + 1.38
Gold    1497         1605      + 1.07

Everybody (who thinks at all) has their own estimates on the probability of various events.  And they can formulate their own plans for how to deal with the various different eventualities that may or may not pop up.  The only thing I know for sure about my own is that they are not perfectly correct and a lot of them are probably not even partially correct.

I do suspect that you are underestimating what the population would be willing to put up with when a large faction of the population relies on the government for their means of existence, and when the more unpleasant of the penalties are applied to a smallish percentage of 'evil-does'.  I suspect that individuals and groups who are not sufficiently servile would be able to be painted as a threat to the majority.

It may have seemed this way to you because you did not read or comprehend some of the earlier content.  Like I said, a relatively small fraction of my nest-egg is 'stored' in this manner.  This is both because the chances of my needing to use it in this manner are remote, and also because as I've made fairly clear, I see a number of potential failure modes of Bitcoin.

It might be worth remembering that at least in the US, any law enforcement official can probe the rectum of any citizen, and in practice just about whenever they feel so inclined.  Also, there are body scanners popping up like mushrooms, and not just at the borders any more.

Although I try to temper my paranoia, I think that there are usually there are reasons for such events.  The stripe search thing in particular was politically costly to codify, and although there was some clear suggestions of pork in the full body scanner growth, there would probably be easier ways to dole out taxpayer money to friends.

As I've said before, if some of these tools end up being used to enforce economic and other conditions on the citizens of the US, 98% of people will have one main question:  "How on earth did we not see this coming since it was so obvious that the framework was being put in place?"

I'm not sayin anything, but...

If one encrypts their wallets, they can be put in a public place.  If one embeds the encrypted wallets in a commonly downloaded asset (known as stenography) then the download would be difficult to trace to a single subject of interest.

The data which would need to be accessible in order to decrypt the wallet.dat(s) would be relatively short depending on how strong a passphrase one wished to use.  Short enough to be transmitted by a number of fairly primitive technologies, or memorized by someone with a good memory.

Although I do not 'advocate' Bitcoin...at least not for very many people...I do personally use it as a 'store of value'.  I prefer gold in this role and use gold as my primary vehicle for storing value, but Bitcoin has some features that are simply not practical with gold, at least not at my scale.  Chief among these is that I could wash up on a random foreign shore with nothing but the shirt on my back and have a pretty good potential to be able to access whatever value I have 'stored' in Bitcoin.

Bitcoin is vastly more complex than gold and thus has more failure modes.  It's also, in it's (brief) history, more volatile.  This is why I treat BTC as a 'store of value' for corner case long-shot needs and as a relatively small fraction of my savings.

The very same BTC I use as a 'store of value' is simultaneously used as a highly speculative gamble.  I see no reason why almost any asset or item needs to be pigeon-holed into one category, or why the function needs to be set in stone as conditions evolve.  Gold is relatively static in it's role which is one of the reasons it is particularly appealing.

Yawn.  I've been hearing effectively the same thing for a decade.  (A decade of watching it grow several-fold as everyone knows...ya, ya, I know; this time it'll be different...the cycles...blah, blah, blah.)

edit: snipped the part I meant to respond to...


I suspect that valuations will have relatively little to do with adoption.  High valuations may (and have) attracted attention and spur some amount of interest, but only a tiny amount in the scheme of things since the number of people who have even heard of it, much less use or understand it is minuscule.

What I believe could drive real adoption of Bitcoin would be a failure of the alternatives.  Right now I know a fair amount about Bitcoin and like much of what I know about it.  I also dis-like a lot of aspects of our fiat-based systems.  That said, I happily go about using USD, Paypal, Visa, etc.  They work fine.  If/when they stop working fine I'll (hopefully) be switching over to actually using Bitcoin.

In my last post, I agreed with evoorhees's 'we fucking one' philosophy in general, but I do take some exceptions with certain of your suggestions as quoted.

Firstly, I think it likely that a shift to Bitcoin would coincide with a loss of confidence in other currencies (and conversely, that Bitcoin will continue as a fringe spec of dust on the shop floor of the global economy absent such a thing.)  Such a loss of confidence could happen fairly rapidly and fairly soon (though hopefully it won't.)  What it is unlikely to do is to wait for technology to develop to the point of supporting a much more resource intensive Bitcoin network.

Secondly it is clear that technology marches forward, but the latest advances are typically available to select entities for a long period of time (and often indefinitely.  Think about satellite.  Sure, we enjoy PPV porn on demand, but we do so at the pleasure of large corporate and government agencies.  Ping me when a terrorist network (which the Bitcoin community is one legal decision away from) launches it's own communications satellite and uses effectively for more than a few hours.

I'll go ahead and agree with that as well.  But I don't see any reason not to try to stretch the life of Bitcoin-I out as long as practicable, however, especially if it just takes a certain amount of planning and is considered in determining development priorities.

When Bitcoin-I's race is run, I imagine that what will form is a deliberately feather-weight foundation upon which as many 'bitcoin-1 like' shards as are needed can exist.  Each 'shard' would contribute some small portion of it's resources toward securing this foundation solution.  In doing so all would help support one another.

Trading value between the 'shards' when needed should be fairly straightforward and reasonably easy on the users.

In this way I would hope that a scalable peer-to-peer based economy can exist and require nothing more than the most primitive of network resources thus making it that much more difficult to attack.

I outlined some ideas along these lines a while ago before losing interest.  If anyone is interested, they are here:  http://bakcoin.org

From another recent thread I did a quicky estimate that if half of the worlds population did 2 tx/day, that's about 70,000 tx/sec.  I'd say to account for peaks (but ignoring DOS potential) one should have 250,000 tx/sec capacity.

I calculated our recent tx record as around .25 tx/sec.  About one millionth of the above scenario.  So, absent significant optimization development, a very simplistic back-of-the-envelope (and in many cases, wrong) calc about the resources needed to meet the aforementioned target is to multiply the current need by a million. 

A suggested solution was that most transactions would happen in bank-like entities offloading the block chain work.  That's fine, but it is NOT Bitcoin, and not unlike a lot of the solutions that I use and distrust today.

A pretty much universal suggestion is to rely on resources which are accessible currently mainly to large entities (network bandwidth, 'supernode' clustering, etc.)  Moore's law is also commonly suggested.  I, seemingly alone, have limited confidence that such resources would remain widely available to support the Bitcoin network if there were a strong incentive for TPTB to wish them not to be.

Lastly, various people (including myself) would hope that the infrastructure required to operate a (large) Bitcoin network would be at least tolerated and protected by enough governments around the world to keep the system going.  My concern here is that 'hope' is not a very reliable strategy and I could see many scenarios where this would not likely happen.

If there is a rapid loss of confidence in various world currencies, I could see the demands on Bitcoin growing quite rapidly.  The bip16/bip17 struggles indicate to me that the rather significant development work needed to optimize along the various theorized paths would not be especially rapid and/or reliable.

I suggest to the development team putting some thought into how to discourage users rather than how encourage them.  I sense that to this point the focus has been on the latter.  Similarly, it might be worthwhile to focus some efforts on how to make it more likely that various kinds of failures are likely transient and not be misconstrued as terminal failures of the whole concept of Bitcoin itself (unless, of course, they are.)

Another Score:  5/9/12

          year ago    now       delta mult
BTC     3.75         5.03       + 1.34
Gold    1510         1590      + 1.05


--------------------------
ref (for future updates):
http://bitcoincharts.com/charts/mtgoxUSD#czsg2011-05-08zeg2011-05-08ztgSzm1g10zm2g25zv  (change date)
http://www.kitco.com/charts/livegold.html  (hist cgi at bottom)
mult=now/year_ago

I suspect that we'll run out of the energy and capital needed to do undersea mining before we run out of suitable surface reserves.  But I've not studied the abundance and quality of sub-sea deposits.

The most tenable thing seems to me to be nanotechnology to snatch elements of interest out of the environment.  And to build molecules of interest if they are the target.

Next most tenable thing would be to use the effectively unlimited energy supply of nuclear fusion to transmutate elements to the desired ones.

Lastly would be to undertake to try to locate and exploit reserves in outer space.

So, there are some possible modes of significant inflation in a PM based economy.  The all strike me as some distance out, but I keep my eyes open.  The possible failure modes of Bitcoin strike me as a much more significant and immediate concern.

I mentioned it because your comments seemed to recognize the potential value of merged-mining and 'sharding'.  Both are elements of the 'bakcoin' concepts that I was musing about.

 - snip - different post to consider scalability at some later point in time.

This has always been a simple issue for me.  The price is whatever I can obtain a 1-oz KR for from my dealer.

I'm not sure what metric I'm going to use if the dealer's supply runs out (if I want to be a seller.)  I could imagine worse problems to have...assuming an absence of legal issues which may pop up around ownership and exchange of PMs.

Another Score:  5/8/12

          year ago    now       delta mult
BTC     3.64         5.03       + 1.38
Gold    1497         1605      + 1.07


--------------------------
ref (for future updates):
http://bitcoincharts.com/charts/mtgoxUSD#czsg2011-05-08zeg2011-05-08ztgSzm1g10zm2g25zv  (change date)
http://www.kitco.com/charts/livegold.html  (hist cgi at bottom)
mult=now/year_ago