Fiat indeed requires almost zero energy to create, but that's the reason it should worth nothing

Actually the cost for fiat money's transaction network is huge, but I don't think that will be close to all the face value of fiat money that were created

This is actually a very good question, who is paying all those ATMs' cost? Money printer himself?

This could be the ultimate reason that bitcoin will not totally replace fiat money, if it reaches several trillions in market value, it means equal amount of dollars worth of electricity will be put into bitcoin mining, this will generate lots of heat, a very big environment problem

It seems that we need some miner which does not generate huge amount of heat

I think mining will mostly become distributed because of electricity and heat concerns, ASICminer's operation can not scale just because of these

A future with multiple mining companies each have their nuclear power plant in antarctica... how to prevent bitcoin from causing global warming??  

As soon as the profit is too obvious (like January's Avalon launch and the price rally afterwards), people who have no idea about bitcoin would rush into the mining game

Usually these speculators will leave bitcoin once they found the mining is also highly risky, actually the risk of mining equipment investment has become so huge that it is simply better to purchase coins directly. I read somewhere that there was a chinese established a mining farm with many GPU rigs in 2011 summer, and he sold everything when price crashed that autumn

This time it will be different, given past history of 2011 crash and 2013 rally, these miners will keep mining at whatever the cost, and waiting for a future rally to bring their investment back

This is positive, the cheapest way to get coin will be purchasing, just like gold investment, most of the people will not try to establish a mining company to mine gold, and mining companies' profit is really thin

When it comes to spending, you can just take out a fiat loan and spend, and sell a little bit coin each month for repay of the loan, thus not affect the exchange rate too much

Short term volatility caused by speculation can be regarded as noise

Not really sure about this reasoning, gold for example has almost quit the circulation and no one accept payment in gold coins/bars, it still gained quite a lot in exchange rate because of the fiat money inflation

For bitcoin, supply is fixed, and the demand for bitcoin could be just driven by two simple facts:
1. The exchange rate always rise quickly, at least 4x per year
2. You can always exchange it back to your local currency

These two conditions are enough to keep the exchange rate rise at least 4x per year, so it is a self-sustainable loop once started. And during this loop, there will be more and more business accept payment of bitcoin, just because these two facts

Before, any kind of fast rise in price of anything will eventually crash, because the supply will increase to cope with a fast appreciation of price, even the gold is no exception, if price rise fast enough, there will be many gold mines start to operate to expand production. But bitcoin's supply is fixed, this is the fundamental difference

In another thread there was such a discussion: You can't purchase anything in US with euro, but it does not render euro worthless. All you need to know is that someone on this planet accept this currency as payment, then it should have some value. In fact, you might know nothing about euro, it might just collapse quickly because of those problems in southern europe, but as long as you can exchange it to USD, it has value...

In this sense, bitcoin is no difference than any foreign currency of a country that you have never been to. Just knowing that some people on this planet accept payment for this currency is enough, it is not necessary to use it to purchase anything around you, all you need is an exchange

And, just like USD still keep its value without gold backing it, as long as you can exchange a foreign currency to your local currency with a good rate, even no one in the world accepting payment with that foreign currency, you don't care

The only concern might be: If the people accepting that currency getting less, its exchange rate will drop. But the forex exchange rate is mostly affected by central bank's monetary policy, their rate decision and even market intervention. Comparing with their influence, the real economy's affect on exchange rate is very small

We all saw that when one country greatly increased money supply, the other country would immediately increase their money supply about the same scale, otherwise their currency would rise sharply in exchange and heavily hit their export

For those foreign currency traders, bitcoin is a foreign currency which has a superior property: Downside risk is always limited due to limited supply, in worst case you end up buying all the coins at $100 with a capital around 1 billion USD. But the upside potential is unlimited. This great property will surely attract lots of currency traders, it's almost a no risk strategy to always go long and double down until they bought all the coins, if that will ever happen

I think the philosophy of bitcoin is decentralization, by doing this it can work cross the globe and be politically neutral. An exchange or gateway will have to follow the regulations of local government, which might not be interested for another country which have a different political situation

I don't care about FinCEN regulation because I'm not living in US, and I believe that many other countries will have different view on bitcoin than US. China could be a very big mover behind bitcoin in the future because all the mining equipment production will eventually be outsourced to there, and the chinese political system is totally different

We need thousands of localbitcoins-like website to connect local buyers and sellers, when there are more and more people have coins, local trading will be practical

Market usually price in what will happen in 6 months, the price rally in April basically priced in the difficulty change through October. That's most of the smart money's prediction ability, and that's basically what happened: Difficulty rose by 20 times, price rose from 10 to 200.

Of course, a better prediction should be based on number of participants and how much each of them are willing to invest in bitcoin, but difficulty is a good indicator of supply and demand change (more hash power competing for same amount of coins). The fast increase in difficulty just showed how many people are willing to invest in bitcoin, it is difficult to imagine if someone are totally not interested in bitcoin would like to buy a ASIC mining device

Based on latest data, we are seeing more and more ASIC manufacturers establishing, especially that mysterious phoenixasic.com, if they indeed decided to throw 200 million USD for the project, I'm sure there must be some other insider movement we don't know

Bitcoin's market value is still very small, considering those 30 trillion dollars in tax heaven off-shore accounts, even a tiny bit of those stash will push the exchange rate up several magnitude. If you are a super rich guy and your life are so boring since you already had everything you want, what will be the new fun for your life besides gambling? Bitcoin of course  

Just like internet, bitcoin never existed in human history, and almost everything in bitcoin is against traditional wisdom, people will always be surprised but highly attracted, the more they study it, the more interesting aspect they will discover, and it will almost certainly make people to reconsider the idea of money, which they have been ignoring most of their life

Yes, in order to protect the income of my ASICs,　I will step into exchanges and purchase a lot of bitcoins

Anyway, ripple's gateway concept is much less flexible than a dealer in localbitcoins.com, those gateways will become the regulation and confiscation target

When it comes to interfacing with existing banking system, the best way is decentralize to every private person. Currently you can not do large size transaction on localbitcoins.com, but this exactly proved that bitcoin's popularity is still very low, that is the real transaction volume, not made up by some market maker in exchange

I don't know what should I input since they use month as a period count, each difficulty period is about 12 days, one month have 2.5 period, but you never change the difficulty between the adjustment. Anyway, the reward is cut by half after 3 times 20% difficulty increase, and for 5 times such increase( 2 months), reward will be cut by 67%. In four month, reward will be 1/10 of the first period, anything after that can be ignored

P.S. I just tested, that page has an error for the first month income, it does not reduce the income for the second and third period in the first month, so the first month income is all based on the first period difficulty, from second month it is about 20% increase per period (monthly increase of 43%)

At 20% difficulty increase, your ASIC deivce will earn 5x its income of the first difficulty period (total income in those 12 days) during its life time. A jupiter will make 16 coins in the first period if it is delivered in the beginning of October, and 80 coins during its life span, that's the cost when you purchased it

The storm is coming 

Ripple is a good concept, if they don't have that XRP thing, it will be more successful, XRP against the basic philosophy of bitcoin

Actually the risk management part should be the responsibility of end user, e.g. always divide large capital transaction into small pieces. So in principle just an escrow service and an exchange rate is enough for anybody to trade it locally, a credit system of each user is even better, you don't really need a physical exchange, information is all you need

When you do transaction in existing banking system electronically, localbitcoins.com has advantage, banks won't be able to tell which transaction is bitcoin related, but they will easily spot which transaction was sent to a bitcoin exchange

So you think people trust fiat money because they can use it to buy food/rent/gas? How about Euro then, you can't use it to buy these things in US either

I still think that people's consensus about fiat money's value will change sooner or later. It is just a consensus, not a real cost or backed by some valueables, it can change over night

Before, government can create a lot of jobs and send money to those worker's hand as salary, the fiat money circulated well. But now they are no longer able to provide more jobs and more salaries, people will seek their own means of income, then bitcoin income have many benefits, they only need fiat when they need to pay tax

I understand OP's point of view, adding smallest unit of count gives a feeling that the total amount of the smallest money unit is increased, but as others pointed out, OP mixed base unit with a fraction of base unit. Anyway, OP's thread is very interesting

If you are designing a currency system to cope with an expanding economy, you have two choices: Either fix the value of base unit and add more and more base unit (today's fiat money system); or fix the total amount of base unit, and add more and more value for each base unit

If people are used to a floated currency value, either way will work, but the beneficiaries of these two systems are different: In the first system it is the new money creator and those who get money from money creator, in the second system it is anyone who save money

*. Adding more decimal places does not equal to creating more money out of thin air, it still takes same amount of electricity and mining hardware/software to mine each coin, just the smallest unit will have lower cost (and lower value too). "Money out of thin air" only applies to fiat money today, since they have nearly zero cost

*. There is no such thing as "printing more money and handing out "stimulus checks" to every citizen", where is this impression coming from?? All the printed fiat money belongs to FED, they never handing out a dime to any citizen, it is the government who borrows money from FED and hands out checks to every citizen, and government accumulated huge debt because of this

*. If decimal places are not enough, people will just use some off-chain transaction services for small amount of transactions, and those off-chain services will have the same effect as adding more decimal places

Just read the latest Avalon update, it also showed how a terrible mess the mining industry is now, someone might kidnap their relatives to get chips delivered  

This spring's rally is caused by reward halving and an anticipation of 20x increase in difficulty when ASIC devices are mass deployed, but now difficulty has almost reached 20x without any sign of stop, the projection of future exchange rate will change accordingly

I suppose that those who bought large amount of mining equipments are long term investors, they have certain amount of risk fiat money that they would like to throw into bitcoin,  mining equipment is one of the investment option. They don't want to cash out quickly, since anyway those risk money will be converted into bitcoin and stay there for a couple of years. And if their financial situation improved (Which is likely after huge amount of QE3 money), they might invest more

But the risk is that they didn't know how large BFL's order queue is, and how many underground ASIC factories are opening up in china. That will eventually make each devices' daily coin return less than 0.1 coin

Once for a while, GPU mining rig also mined at a loss at the end of 2011, but that never lasted long, since people turned off mining rigs and purchased coin directly, which supported the exchange rate

The next natural step is that people will start to use mbtc as a unit of count, the day that you can acquire a single bitcoin without huge amount of capital will soon be gone