And not all of the economy is in dollars.  Due to velocity of money, you don't need 21 trillion dollars floating around to do that.

We got plenty of digits for a LONG time.

It looks like the association has gotten tighter over the years.  It does have a separate name compared to the others due to that origin, but it appears you are correct it's under closer control.

It's presented by the same group.  It has some association, but it's completely separate.  It's like how the Paralympics has a loose affiliation with the Olympics, occur in the same city, but are different awards.

According to a lot of people on the forum, being spiteful is good.  I think early adopters should sell me Bitcoins at $1/each since otherwise would be anti-social.

Oh noes, someone else makes money!

Krugman's "Nobel" prize isn't even a real Nobel prize.  The Economics prize has NOTHING to do with the organization that awards the other Nobel prizes.  It's awarded by the Central Bank of Sweden.

However, most accounts say that Krugman is actually decent at his specialty area that he won the prize in, but he's just a political hack who either does not understand some of the most basic concepts, or intentionally distorts them for his own benefit.

KRUGTARD!

Loans can be made on time deposits.  The bank offers me a 1 year CD.  Then they can give someone a 1 year loan.  I cannot use my deposit for that time period, and the person being loaned the money cannot as well.  The bank tries to make a profit by charging a higher interest rate on the loans than deposits.  Sometimes they screw up and lose money on individual deals.  But mostly they set it up to be safe enough not to.

The biggest challenge in giving a loan with BTC is the difficulty in establishing you aren't going to scam the bank and having a way for the bank to come after you if you screw them.  Reputation could be used to try to make sure you have a good track record.  However, to account for all the losses from people not paying you back, the interest rate would likely be fairly high.  This means only the most profitable investments can be made with loans (this is a good thing).  You likely won't see loans made for consumer goods.  Loans with collateral could work, but you need a way to enforce that.

Not sure if this has been mentioned, but a millcoin makes the most sense to me.  1 mill = 1/10th of a cent.

mBitcoin is also another good one.

If you are getting value out of the computer, it's probably a worthy investment.  If you already have a computer and just need to upgrade graphics cards, you do fairly well as well.

Renting a rig was the worst choice from the rates I saw.  You are only profitable for about half of the time you rent it for the shortest term I saw.  A mining rig I saw I could buy came close to buying the coins, but I anticipated even with my pessimistic difficulty increases was not enough.

Mining difficulty could get a ton harder just with gamers getting involved who already have the equipment and just need to pay electric bills.  Electricity is such an insignificant cost.

If you are from the US, even if you renounce citizenship, you might still be required to pay taxes if you leave the country for a few years.  It's pretty absurd.

A bit more.  Not only do you have the lack of demand from buyers in the US, it would decrease the usefulness of the currency by some factor as well.

It might be said that each new user increases the value of Bitcoin by greater than 1/n up to a certain point.

Are you looking at the actual order books or the last trade?

Now it works.  Weird.

Right, and when it soars, the hoarding eventually comes to an end since someone has enough money to actually buy something substantial.  But that essentially grows the supply by a huge amount, which drives the price right back down.  What happens then is where it gets interesting.  Either everyone else gets scared by the drop and jumps in, driving it down more, or buyers take advantage of the dip and buy it back.  So we either stabilize or go on these crazy oscillations.

I'd love to hear your reasoning on how banning it would make it more popular.

Also, if you cut out all ways to buy bitcoins using the banking system, you have an absolute huge effect on the economy.

The idea is to somewhat make it so demand is matched up almost perfectly with supply.  As more people want in, more coins are available to mine and that smooths things out.  Initially, not many coins are mined, but not many people want them, so it's not a big deal.  Then after a while, there aren't as many new users, so the economy should be more self-sufficient, so the demand to enter and exit is not as strong.

Of course, modelling that wrong could lead to just as many problems.  Should the mining period last 40 years?  Or 400?  It's all fairly arbitrary.  Widespread adoption of Bitcoin is definitely in the decade more than year range.  You could try to do it off of real-time data based on hash rate (the higher the hash rate, the more of a reward you get for finding a block), but at a certain point cut off.  You'd have to have very good estimates on the hash rate curve over time to do this effectively.  Obviously Satoshi's implementation is the cleanest and most predictable, so that has some advantages over such a system I am proposing.

I do predict we have some really ugly swings, much uglier than anything we've ever seen over the next few years.  Coins remain fairly scarce as people are convinced they will keep going up.  Once they are no longer convinced or want to cash in on their wealth, without sufficient demand, could see an ugly drop.  This could be followed by massive buying which would trigged the "bubble" again, followed by another crash.  As the actual Bitcoin economy grows and becomes more self-sufficient, the speculation bubble makes up less of the price.  Once things are based on fundamentals rather than speculation, we'll be fine.  Speculation isn't a bad thing, in that it gets us there faster.  But it's going to be a wild ride.  I could see as much as a 80% drop in value over a week at some points, or maybe even a 500% rise in value in a week.  When?  I wish I knew.

The problem is you have a very few number of people controlling a huge amount of wealth.  Due to decrease in incremental value (I'd rather have 100% chance at $1M than 1% chance of $100M), you have a lot of people ending up having to gamble an absolute fortune.  The distribution I'd like to see is more like a bell curve, with the total number of coins generated being based on the tan-1 function (shifted up by pi/2, and to the right by some arbitrary amount) with a linear start to it to get things going.

.

It might be a good exercise to try to figure out what % of users will be involved over the lifetime of a currency if it were successful.

For example:

Initially: .000001%
1 Year: .00001%
10 years: 1%
100 years: 100%

and fill in the places in between.  Then have mining somewhat mimic that.  The benefit in this is the number of coins closely resembles (total coins / number of users), which will keep a fairly stable value.  The downside to it is there is not as much an incentive for early adopters since they don't have as much potential to get huge gains.  I'm not sure that's a bad thing, but perhaps shift it a little bit to favor early adopters, but not by as much as the current system.  It surely seems intentional, as only a very few number of people were likely involved initially, and they could get a huge number of coins.  This was almost a reward for writing the system (not that it's a bad thing).


That's the key.  Figuring out where Bitcoin actually is superior, or could very easily become superior to currency.  Using bitcoins to buy groceries at a brick and mortar store is not something likely to be superior for quite some time.  Using bitcoins in internet grey markets (such as to gamble on the internet) is a fantastic idea where it's far superior.  Transfers between different countries is far superior to Western Union/Moneygram, etc... if the infrastructure is there.  Use Bitcoin where it is clearly superior, or break down barriers where it isn't.

A currency gaining that purchasing power that quickly stops becoming a currency, though.  If you can predict something will rise, no one will sell it (or only very few will).  This drives the price up even higher, which is a positive feedback loop.  The loop breaks when those with the asset want to cash in on the gains finally are content with the rise.  You have a slightly unnatural amount of hoarding because a lot of people are holding on just hoping it will go up, rather than using it as a currency.  If there is a lack of trust that it will continue going up, you'll see a bunch of people dump to try to get in at the peak, or at least protect their investment before it drops.  That creates another positive feedback loop where everyone wants to sell and no one wants to buy.  Without stability, either no one wants to spend (it will go up a ton in the future!) or no one wants to accept it (it's going down in value, why do I want this?).  So it's value as a currency diminishes quite a bit.

BTC has extremely thin markets which is making the prices rise and fall.  Even though there are > 6 million BTCs in existence, a lot are held by true believers.  They won't sell until it hits $1000 or some crazy amount.  They got them for free or cheap, so there is no loss mentality (someone who starts gambling with $5, goes up to $1000, then loses it all will think he only lost $5).  So the supply is quite small.  The hoarded coins represent a huge threat to stability.  If they get sold off in a controlled manner, the price doesn't fluctuate too much.  If there is ever a panic, there is such a huge supply of them, it would be equivalent to hyper-inflation.

While not terribly exciting (but still way more volatile) as an investment, as a currency it's a big problem.  Having a more gradual rise in value would make it much more useful as a currency than speculation.  I feel that this is the biggest flaw in the BTC system, although it might have been intentional - such a huge number of coins were initially distributed to such a few number of people.  The mining curve where half are mined in the first 4 years seems very flawed to me and very much drives the problem we see with wild fluctuations.  It would be better to have distributed them more gradually over a longer period of time (perhaps start out small, ramp up, then slow down after a while), much similar to the expected user-base of the currency.  It's hard to predict what that might be, but it's certainly not the pattern we have now where 1/4 were released before even .0001% of the population even has heard of the currency.

It's a problem we can live with, but the result is that we have a speculators market and not a currency.  Eventually it should stabilize near some equilibriums when the value either goes up high enough or crashes completely.

No monopoly of force does not mean no legitimate uses of force ever.  Using force to help protect someone from someone else (or doing it yourself) is perfectly valid.