Paper gold and Bitcoin started separating early in the year. I still think it's likely that Bitcoin is a reasonable proxy for physical gold market valuation. Western outflow combined with similar magnitude eastern and central bank demand would create a similarly stagnant price period.

And gold is effectively cash...

There have been several inflection points in the process of monetary mismanagement since the link between the dollar and gold began to separate, each progressively accelerating the overall rate of change. Increasing by a factor of ten in a decade seems to be a lot closer to 2 more years remaining than 20, much less 2,000.

If there were any realistic way to show the rate of systemic acceleration, it would be a different story. Sadly, there is no salvation for the existing system; there is only escape/transition.

Review my comment regarding backdrafts.

An explosive chemical reaction is typically preceded by a growth phase in which oxidation spreads through the fuel mass. Then the primed material ignites/reacts.

The financial world has been soaking up petrol for the past five years and now resembles napalm more than anything else.

Derivatives burn. Gold does not.

Good thing Bitcoin doesn't either

Where's the supply coming from to drive the price down? That's right - there isn't any, we're merely seeing paper games.

Mining operation shutting down.

And I'll just leave this here.

All well and good until the funds held in the system cannot be accessed. What would happen if all of your email providers locked you out and wouldn't let you get your messages?

This is why physical. Illusions of fear have no bearing on the underlying reality. Hopefully Bitcoin and Bitmessage remain readily accessible.

As molecular pointed out, China may have blown a gasket - likely triggered by the HKMex failure. What is on the table is ostracism. The US, along with a few other western nations, seems to be in imminent danger of being marginalized in international trade and experiencing high velocity influx of hot money flows. In other words: explosive inflation.

Things seem copacetic before the backdraft hits.


This is the situation the Fed caused, and is now attempting to manage. The appropriate action will no longer work due to the sheer magnitude of the problem; it must run its course.

Famous last words?

Very reasonable. In conjunction with sunnankar's suggestions, SD could see a potent revival. All that's needed is action.

Is the BFL ASIC having the same issues the FPGAs did with p2pool?

Mining sector consolidation imminent.

You ain't seen nuthin' yet

In the current environment they are more insurance than investment. Prices have been elevated for the past six months, rivaling highs made during the 2008 crisis.

To a lesser degree, the same goes for pearls and other gemstones; they are generally lighter and less detectable than metals - only likely to raise suspicion upon thorough search and recognition (if an official is instructed to mainly look for gold, it may be less probable that he will notice gemstones). Real estate is also a form of wealth protection, but it's hardly liquid.

Mobile wealth is in very high demand because of the amount of uncertainty over geopolitical stances. The line determining who is wealthy had been lowering rapidly, threatening to strip life savings away, especially for those choosing to live in western nations.

Any and all forms of protection will be sought. Sadly, awareness of Bitcoin is not enough - most people don't understand and discount it as an option in favor of gold, silver, art, gemstones, etc.

I also doubt we'll spend longer than a few months below triple-digits.

ASIC miners will recoup initial investment, and saturation of the mining market with the hardware will decrease profit margins. This will raise the price floor over time.

The legal attacks on exchanges is likely causing hesitance of inflows. As the issue is resolved through various methods, flows will resume and exceed current highs. Numerous other advancements, such as non-smartphone functionality, are spreading and will continue opening markets.

Growing awareness and acceptance of Bitcoin for payment, even as a token gesture, is providing a highly porous gateway system for usage. Right now, few businesses have sufficient data to make decisive decisions, but as volume increases, those accepting coin will be well positioned. Existing outfits doing well with Bitcoin should largely see stay progress.

Persistent financial instability and high net worth entrants are contributing to the relative stability. The former thanks to official efforts at masking vulnerabilities, the later with increasingly savvy accumulation and trading practices. Traditional system instabilities will rise again soon, with the accumulation occurring at each plateau ratcheting up the Bitcoin network's value.

As gold becomes increasingly scarce at scale, other assets will be acquired by the wealthy. France just prohibited shipping of precious metals and cash; diamonds are finding use as transport medium because they can pass metal detectors. It's only a matter of time before these and other physically liquid forms of wealth dry up or incur restrictive measures that prevent reliable movement.

All of the above point to higher eventual valuation for easily transportable, liquid assets - especially Bitcoin. I am still divided as to whether gold and other monetarily liquid analogs will experience a sudden revaluation first, or Bitcoin will see a slingshot effect of sorts as all other forms of wealth storage become saturated and suppressed while it expands to solidify as a global reserve pool.

I consider regulatory concerns at this point to be transitory and mostly ineffective. Of greater import is network processing strength and distribution of controlling interests. Also note that it may be hard to get back into the Bitcoin system once you've exited to fiat, particularly in regard to protection of ownership identity; weigh the value of trading for profit versus the potential of being hunted by bankrupt but still powerful institutions.

We can dream

The person behind that business supposedly ran a fraudulent Kickstarter campaign. Whether it's true or not, I don't know.

ASICMINER is working on an updated line using more advanced feature processes. At least one other effort is making progress with ~60nm chips also.

Bait & switch. Also, misdirection.

Great how Bitcoin came up naturally as a relevant topic.

Townsend described a global fiat currency as a Hail Mary play, so I think he looks at that as a doomed effort to be quickly replaced by social structures built upon modern technologies.

Agreed for the most part. The K16 would be reasonable for a limited expansion, all else being relatively equal. 100Gh/s capacity would cost ~40-50 BTC total.

Ordering new BFL units would result in lengthy delays before receipt. Others are overpriced and based on current designs. In order to be competitive rather than struggling to keep up, it would be wise to hold some funds for the next generation of hardware - being first to order <32nm devices could provide a major lead.

In addition, with the amount of current-gen hardware due to enter service, difficulty will increase; as will price. Coin holdings offset device depreciation.

Other than that, BFL is shipping.

So does anyone have tabs on next-gen devices? No Cryonics pie in the sky dreams.

Seconded. Some powerful points, not the last of which is establishment of a fiat global currency. Like gold, fiat isn't going to simply disappear overnight.

The natural resources acquisitions have been moving along for almost a decade now. That whole decoupling trend from a while back hasn't stopped.

It's a global game of Chinese checkers.

It may be best to wait until another generation is announced, as a smaller feature size (<32nm?) would provide a relatively significant improvement. That advancement will be the primary way of remaining ahead of the game in the coming months, and it can only be taken advantage of with an available pool of wealth. Stretch too thin and Nasty won't have maneuvering room.

If there weren't BFL orders already in place, acquiring ASICMINER hardware would be a good move. However, BFL is delivering now. With the amount of equipment due, it will take a little while to pay itself off in BTC terms (mere days in dollar denomination).

I think a more prudent plan is to allocate 10-20% of current liquid funds to purchases from each manufacturer, weighted based on past delivery performance, hardware capability, and business relationship. There may also be some value in holding a small percentage of funds in alternate chains.

One question - will Nasty be using p2pool? If so, how will merged mining be handled? This appears to be a better choice than relying mainly upon normal pools.

Yup. I doubt it'll be long before the paper bag holders are fleeced yet again, only in the opposite direction this time.