There is a fundamental difference between a central bank issuing new currency and a p2p network asking for the issuance of new currency. One relies on those in power to determine what's best; the other is based on demand. But sure, they are the same thing. Inflation is the debilllll and so on.

Proponents of bitcoin have trouble grasping the fact that "evil empire" won't care about the lucrativity. Bitcoin is powered by fiat and probably always will be, there is almost no way to separate the two unless electric companies start taking bitcoins as payment. If someone wants to mess with bitcoin purely to mess with it, the resources required are far from insurmountable. Crashing bitcoin would be the endgame, not a side effect.

This isn't much of a theory, it's more of a fact. Bitcoin was designed to make early adopters as much fiat money as possible without regard to the functioning of the currency. There will be alternatives soon enough though.

Gold is historically a decent 'store of value'? Did you miss that a few decades ago, gold was the medium of exchange? It was printed on paper though, so perhaps that is confusing you.

As long as bitcoins are difficult to acquire and people demand them, bitcoins will have value. Giving out less to each person who mines as more people mine, and on top of that halving the amount given out every few years is unnecessary to retain value; it is necessary only to increase value. As fiat currency inflates, bitcoins would equally require more fiat to buy since they currently require fiat to produce. That would make it a safe hedge against inflation. Not so great an investment, but certainly a nice medium of exchange which is what bitcoin is advertised as. As it is now, it really is only an investment backed on the idea that it could be a medium of exchange. But that falls apart when people realize that the coins they mine serve to make every coin before it more valuable.

You can't eat your cake and have it too.

And what does survival of the fittest have to do with anything?

Fine. Do you agree then that the primary role of a currency is to be a medium of exchange?

If that is the case, why are there only 10s of trades per block when there are 50,000+ people mining for bitcoins?
Are most of those trades just trades from mtgox and tradehill?

Is Bitcoin safe as a currency when almost a negligible amount is actually used as a medium of exchange, and the rest used to speculate?

There is no end in sight for the investment aspect. Why would anyone ever spend?

We're supposed to imagine that in a year or two when the reward drops to 25BTC, half of the miners have to quit or that there will be 50,000 transactions per 10 minutes (at .0005)? [or twice as easy to over take the network]

If bitcoin can't act as a medium of exchange, it is going to fail.

I wasn't 100% clear, but I meant it takes about 7Mhash/s to get a block every 10 minutes, which was basically what happened. See the block chain.

Highly doubt what? The proof is in the pudding. Processing power has not dramatically changed in the last couple of years. My triple core 3.1GHz hashes about 1.5MH/s and it is almost a year old.

Yeah 12mh/s equaling 0.12mh/s is definitely a bit fuzzy.

Really? I thought they were a medium of exchange. Just because they are used as an investment does not make them "inherently" one.

Business minds disagree with you.

http://www.businessinsider.com/why-currency-can-never-be-an-investment-2010-9

I did some calculations while the network hash was 10.62Thash/s according to bitcoincharts.com. Please note this is now showing as 11.86 in less than a week.

Assumptions: 200Mh/s for an average GPU; 200W of electricity for an average GPU, 100W for a CPU; $0.15/kWh

55,700 miners based on those numbers.
An average miner makes 8 cents an hour at a $15/1BTC exchange rate.
11.14MW to make 300 BTC (1 hour's worth); $1,670 in electricity, or $5.57 per 1 BTC.
First 1.6 million BTC were mined at a difficulty of 1, which requires about 7Mhash/s. This means there were no more than 5-10 people mining (perhaps less) for the first 32,000 blocks.
These people used CPU mining which uses less electricity.

100W*10 people = 1 kWh to create 300 BTC, or $0.0005 per BTC. Going just by the cost of electricity, the cost to make these 1.6 million BTC is 1/11,140th what it would take today.

Between that original 1.6 million and today’s amount of BitCoins [approx. 6.6 million], it is hard to even guess how much electricity cost was used to make a BitCoin on average. But as the next million and a half BTC and more were still mined relatively easily, please allow me make a gross guestimate of a $2/BTC average electricity cost after the first 1.6 million coins. Using this number, we can get an average value per BTC. ((1.6M*0.0005)+(5M*2))/6.6M = $1.52. Today’s rate of $5.57 minus the average rate of $1.52 equals a $4.05 difference in cost to produce. That means for every BTC mined today, $4.05 or 73% of its electric value is equalized across every coin made before it. But as time passes and if the network grows, BitCoins become more scarce and require more work to mine, so those getting in at $5.57 are still, apparently, getting a deal.

A coin that is mined at a cost of $5.57 can be turned around and sold for $17, a 305% return. An original 1.6 million coin can be sold for a 3,400,000% return. Assuming continued network growth and controlled scarcity (less bitcoins given out to more people as time passes; no large sell-offs), these returns will continue to grow. But assuming there are no large sell offs is a huge assumption since it has already happened with 25k coins, and it caused a 65% drop in the value on mtgox.

So you used some conjugation of "invest" at least 10 times in your post. Why can't bitcoin be a currency, not an investment? (Aside from programming design, of course.)

Is it because it wouldn't have caught on? There is so much praise for how bitcoin will revolutionize the world, but this could only be accomplished by promising wealth off of the fiat of others?

Do you need to have an old version of a PS3 without the update that removed linux?

It's a shame it only does 20mh/s, one would think with the fancy cell processor it might do better.

Just some numbers... with the current transaction fee of 0.0005, there would need to be 50,000 paying transactions every 10 minutes on average to equal the same amount of coins mined now--when the award halves at block 210k.