Based on latest difficulty and a 20% difficulty change projection, all the ASIC mining rigs will generate 500% of its current difficulty income during its lifespan

This means, if you have a 25Gh device, and start to hash at the beginning of this difficulty, you will make 4 coins total at current difficulty, and 20 coins during its lifespan, so any purchase price higher than 20 coins will never ROI in bitcoin. If the device arrived after one month, it will only generate 10 coins during its lifespan

Take knc's 200GH device for example, costs about 40 bitcoins. If it start to mine after one month, first period will be 16 coins, 80 coins during its life span. After another month (which is shceduled delivery time), first period will be 8 coins, 40 coins during its life span.

This is also true for those buying mining equipments with fiat money, if you spend fiat money to buy those 40 coins, you already had them without all those hassles about managing mining equipments


The positive thing is, soon the mining channel of investment in bitcoin almost fully closed, investment capital will flow back into exchanges

(But it is also possible that most of the investment capitals were trapped in mining devices thus no money can be used to purchase bitcoin now. In such a case we will see lackluster price development and skyrocketing difficulty)

Based on latest difficulty and a 20% difficulty change projection, all the ASIC mining rigs will generate 500% of its current difficulty income during its lifespan

This means, if you have a 25Gh device, and start to hash at the beginning of this difficulty, you will make 4 coins total at current difficulty, and 20 coins during its lifespan, so any purchase price higher than 20 coins will never ROI in bitcoin. If the device arrived after one month, it will only generate 10 coins during its lifespan

Take knc's 200GH device for example, costs about 40 bitcoins. If it start to mine after one month, first period will be 16 coins, 80 coins during its life span. After another month (which is shceduled delivery time), first period will be 8 coins, 40 coins during its life span.

This proved again, anyone who use bitcoin to purchase mining equipment will seldom ROI

The positive thing is, now the mining channel of investment in bitcoin basically fully closed, more capital will flow back into exchanges

IMO, localbitcoins.com would be much more helpful. In fact it is the most isolated solution between bitcoin and banking system, but still provide the exchange functionality between bitcoin and local currency

Some people need to receive money in the country, and some people need to send money out of the country, these people could meet at localbitcoins.com and receivers hand their bitcoins to senders and receive local currency, actually this will even break the international transaction limitation in certain countries

I don't think that liquidity is a problem with gold/silver. It's same as bitcoin, you can always use a fraction of gold/silver to present its previous value

People usually want to regard official money as an unit of count and that unit itself should be constant in value from convenience point of view. In that case the only way to increase money supply under a gold standard is to dig out more gold, like California gold rush

But to utilize people's impression about fiat money's constant value and create lots of fiat money for the banking class without causing inflation, that is another thing. If everyone can own the FED through buying their shares, then any extra profit they made from printing money will go into everyone's pocket, that will be a much better system

Lol... you know that FED is creating 48 Billion dollar per month. Based on this reasoning, the FED must be paying 144 Billion dollar to mint factory, and the mint factory is paying 96 Billion dollar to its suppliers, 2x amount of QE3 money went to printing money. Wait, since there are only 48 Billion dollars added to economy each month, where are those 96 Billion dollar come from  

The lehman is the victim of the current financial system since they could not get money from FED in crisis.

I guess anyone from Lehman will fully understand the current system is in the hand of a few money printers, they have the motivation to go for another system

On the other hand, all the central bank beneficiaries will continue as before like nothing happened

I used to believe this kind of talk in school, but now I have worked in 2 multinational enterprises over 10 years, I can say that the business ethics has been very low due to today's financial system. It is how you can grab more money decide your position, not your performance/achievements. To get more money you must have good contact with governments/banks and do many unethical things to satisfy those sponsors. And since these things require no special skills but just a low level of ethic to do, finally only villains occupy the higher management position

Totally upside down, it is the fiat money requires zero effort to create, you need electricity/hardware/software to mine bitcoin. Fiat money's value is a very complex plot, in theory it should worth nothing, but it does worth something, why? no one knows, because they have no other choice when they were born into such a system

Only in a fiat money system you can use printed money to destroy things, more money will just make bitcoin stronger since it is by design against any common wisdom in today's financial system

It has nothing to do with technology, 3600 coins per day fixed. It means that you better buy coins instead of mining if there are too many people in the mining camp

Today, you spend $1000 to buy 10 coins. With mining, at 20% difficulty increase for each period, you get maximum 5X income of your first preriod income, for a BFL 25G you get 4 coins for current difficulty period. If you start to run it from current difficulty, you get 20 coins maximum, but if you start to run it in September, you will get maximum 10 coins, any time after that will be less than 10 coins total

Return for each difficulty period at 25Gh/s
4
3.2
2.56

2.05
1.64
1.31

1.05
0.84
0.67

0.54
0.43
0.34

0.27
.
.
.

If more people are switching from mining to purchasing, that will lift the price for some degree, which will also help improve the USD investment return, but for those who invest with bitcoin, it will almost never ROI

"Andrew Laurus ‏@frankieterrier 11h

received today communication from #joelewis lawyers Alston & Bird LLP Atlanta / re:Phoenix fund will postpone comment until matter settled."

I guess that phoenix fund does exist, and some kind of project is on going anyway

"Andrew Laurus ‏@frankieterrier 11h

received today communication from #joelewis lawyers Alston & Bird LLP Atlanta / re:Phoenix fund will postpone comment until matter settled."

I guess that swiss based phoenix fund is true, so some kind of project is on going anyway

I think MTGOX is doing some kind of financial innovation: Forever delay the fiat withdraw, which force people to either establish other exchanges (more exchanges = better bitcoin eco system) or spend them directly

Same as government forcing people to use fiat money, we could also force people to use bitcoin

You will have off-chain service for daily small transactions, and even better you can mortgage your coins and get fiat loan to spend. This day will not be too far away once bitcoin can be traded on large forex exchanges, then some investment bank will package bitcoins and make various financial products, just like they did with housing, no one can stop it from happening

It's simple like this:

If the money supply is fixed, if somebody work more and created more products, he would still be able to sell at roughly the same price for some time -- "Cantillon effect", so his income increased, while people will realize later that same money chase more goods, thus they will reduce their purchase price next time, but they have already paid some extra money to that guy that worked more first. Such a system always reward the people that work more. Although there is a general trend of deflation, those who work more will benefit from his work,the earlier he sell this products, the more money he can make

If the money is created by central banks, then central banks get all the newly created money and they will become the biggest buyer of everything: Government bonds, bank assets, etc... then governments and commercial banks will start to make money and then some other business will start to make money, etc... Such a system always reward the central bank with all the newly created money and their closest supplier will be the first one to enjoy the new order from central bank

First system encourage honest work, second system encourage people climbing the social ladder towards central bank, thus we will see more politicians and bankers in the society

Economics can not answer the question whether specific means would result in specific effects, especially long term wise, those are all best guesses, just sounds right, never really worked, otherwise there will never be any crisis. Economy is not science, it is politics and psychology

So, instead of finding a scientific answer for most efficient means, we'd better start with eliminating corruption at the first place, since corruption usually cause the biggest inefficiency in the system

BTW, efficiency is no longer a big concern in today's society, but justice is always a concern

Thanks Adrian-x, I found out the story of Cantillon to be closely related to John Law, and it is even more exciting  

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While details regarding Richard Cantillon's life are scarce, it is thought that he was born sometime during the 1680s in County Kerry, Ireland. He was son to land-owner Richard Cantillon of Ballyheigue. Sometime in the middle of the first decade of the 18th century Cantillon moved to France, where he attained French citizenship. By 1711, Cantillon found himself in the employment of British Paymaster General James Brydges, in Spain, where he organised payments to British prisoners of war during the War of Spanish Succession. Cantillon remained in Spain until 1714, cultivating a number of business and political connections, before returning to Paris. Cantillon then became involved in the banking industry working for a cousin, who at that time was lead-correspondent of the Parisian branch of a family bank. Two years later, thanks in large part to financial backing by James Brydges, Cantillon bought his cousin out and attained ownership of the bank. Given the financial and political connections Cantillon was able to attain both through his family and through James Brydges, Cantillon proved a fairly successful banker, specializing in money transfers between Paris and London.

At this time, Cantillon became involved with British mercantilist John Law through the Mississippi Company. Based on the monetary theory proposed by William Potter in his 1650 tract The Key of Wealth, John Law posited that increases in the money supply would lead to the employment of unused land and labor, leading to higher productivity. In 1716, the French government granted him both permission to found the Banque Générale and virtual monopoly over the right to develop French territories in North America, named the Mississippi Company. In return, Law promised the French government to finance their debt at low rates of interest. Law began a financial speculative bubble by selling shares of the Mississippi Company, using the Banque Générale's virtual monopoly on the issue of bank notes to finance his investors.

Richard Cantillon amassed a great fortune from his speculation, buying Mississippi Company shares early and selling them at inflated prices. Cantillon's financial success and growing influence caused friction in his relationship with John Law, and sometime thereafter Law threatened to imprison Cantillon if the latter did not leave France within twenty-four hours. Cantillon replied: "I shall not go away; but I will make your system succeed." To that end, in 1718 Law, Cantillon, and wealthy speculator Joseph Gage formed a private company centered on financing further speculation in North American real estate.

In 1719, Cantillon left Paris for Amsterdam, returning briefly in early 1720. Lending in Paris, Cantillon had outlying debt repaid to him in London and Amsterdam. With the collapse of the "Mississippi bubble", Cantillon was able to collect on debt accruing high rates of interest. Most of his debtors had suffered financial damage in the bubble collapse and blamed Cantillon—until his death, Cantillon was involved in countless lawsuits filed by his debtors, leading to a number of murder plots and criminal accusations.

On 16 February 1722, Cantillon married Mary Mahony, daughter of Count Daniel O'Mahony—a wealthy merchant and former Irish general—spending much of the remainder of the 1720s traveling throughout Europe with his wife. Cantillon and Mary had two children, a son who died at an early age and a daughter, Henrietta, who would go on to marry William Howard Earl of Stafford in 1743. Although he frequently returned to Paris between 1729 and 1733, his permanent residence was in London. In May 1734, his residence in London was burned to the ground, and it is generally assumed that Cantillon died in the fire. While the fire's causes are unclear, the most widely accepted theory is that Cantillon was murdered. One of Cantillon's biographers, Antoine Murphy, has advanced the alternative theory that Cantillon staged his own death to escape the harassment of his debtors, appearing in Suriname under the name Chevalier de Louvigny.

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Why such kind of story is much more believable than today's economic books? Because things are much easy to understand and they all showed many kinds of human nature lively

Today's economic books are full of charts and formulas, ignoring the most important fact (human) behind all the economy events (gaming theory getting a bit close to human factors, but still far away from how to limit central bank's power)

Even the best theory does not work if the central bank is operated by human, if human have that amount of power in controlling the whole society through creating money out of nothing, there will be heavy corruption in favor of their own good, they would promote any kind of theory that benefit them, at least you can not find a valid reason to rule out that possibility

John Law's scheme failed because people do not trust his fiat money, they still want gold and silver coin, even those coins contains less and less gold/silver. This is very natural reaction for any kind of human. But today all the people in the society trust fiat money by default, since they were born into such a system, it took some generations to change people's behavior

The difficulty rally has not really started yet, you will see the real rally in a few months. Most of the miners will eventually upgrade their gaming GPUs to ASIC devices. Some of them did it long time ago when BFL announced their plan last year, that's all those mini-rigs that coming online now. But I think most of the miners start to purchase ASICs from BFL since Avalon delivered their first rig and the bitcoin price skyrocketed, the order number at BFL is now estimated to be at least 30000

Be patient, it's not going to happen in one day, but here are some high-end offer: http://www.bitpremier.com/

Why do you want to cash out to fiat money instead of directly spend them? If you don't want to spend them why exchange to fiat currency which lose its value over time (can be printed out of nothing)?

If you are anticipating that the price will fall after reach $1000, then it is another topic. This spring, some one forecasted that 20,30,50,70,100,200 to be the top of bitcoin exchange price and they failed most of the time, no one can call the top