I think it was 40% backed by gold under a gold standard, so it did have a risk of bank run, but that is very low risk, from a FRB point of view (The commercial banks usually have a 10% FRB without a bank run)

Anyway, even in gold FRB, each dollar is backed by some gold, that practice has proved to be working most of the time. But in today's system, it is backed by nothing, 0% FRB, how could this keep the value of new money? Purely by people's consensus and they have no alternative medium of trading (I want to get rid of these useless paper but what other money can I use to do my trading with?)

The ultimate thing that back the gold's value is still its high degree of payment acceptance: Gold is accepted everywhere on the planet, especially the governors in other nations. Even one nation went down, you could still move to other part of the planet with your gold and live a good life there. So it is actually backed by a gold culture formed in thousands of years

Similarly, if a bitcoin culture established widely around the globe, then it will reach the same status as gold, as the gold for internet

BFL mass shipping now, network hashrate over 200TH, multiple mini-rigs appeared in BTC guild

This is a bit conspiracy, I don't think there is someone purposedly manipulate there. Central banks just benefited from an opportunity that most of the people have no knowledge about money creation. It is difficult to imagine that if everyone are aware of this trick and against it, it could bypass the vote

To understand the fiat money creation is not an easy thing, none of my friends/colleagues with university degree in economics could understand it correctly, what they know are unimportant technical details like FRB and money multiplier, m0, m1 definition etc...

---------------------------------
Chip basic specifications:
Process: TSMC 40G
Performance single-chip Hash: 2G ~ 2.5G

Chip business model:
1, selling mining machine
2, selling chips

ASIC Team:
The team in September 2012 initiated a TSMC 110nm of BTC ASIC chip, the chip mass production success in early 2013
The 110nm ASIC chip is the industry's first mass production of the BTC ASIC chip, the chip ASIC mining machine has done a lot of shipping.
At present, the actual chip shipments of the industry's first home, the force generated by the chip count is the industry's first (and the recent 2 ~ 3 months will also return rising rapidly).

Team Features:
Technical and pragmatic, the chip is not greedy, not the pursuit of gimmicks
The chip can guarantee the delivery time and delivery quantity

BTW: We are not to judge others ASIC team, each team has its own technology roadmap and business models, and nothing more.
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http://bbs.btcman.com/forum.php?mod=viewthread&tid=4621&extra=page%3D1

From chinese forum, translated by google and modified bit

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BTC chip RTL design is not complicated, it is SHA256 algorithm. This is also the reason many ASIC chip vendors want to squeeze in the market: technical threshold is low, easy to get impulse.

But what factors make an ASIC vendors adhere to the end of process? Personally I think there are a number of factors:

1, Choice of the Foundry. BTC chip finally rely on advanced technology, yield stability, capacity, fast response and good service Foundry. Intel and Samsung are the first to be excluded, in the remaining Foundries TSMC is the boss

2, the chip design is better, in particular better physical design. The basic idea is the full-custom, handmade Layout, little by little, slowly optimization, are living a little bit of effort embroidery. So those who want to come fishing for fast-food ASIC vendors, there is no way out. BTC chips maker do psychologically prepared to do a protracted war, and is ready to put ten million $ in Foundry

3, the best in the Foundry has a direct account, not through a third party chip design services company operations. General ASIC design services company can not understand BTC chip operating model, not necessarily be able to understand well executed. Understood and performed well, half a year gone

4, ASIC manufacturers of mining machine manufacturers, good service, fast response. And customer win is a lasting business

5, the mining machine is only a relatively simple electronic products, and ultimately China (especially in Shenzhen) is bound to become a global mining machine production base. China's ASIC vendors in the language, geography, etc. have a distinct advantage. Europe, the United States, ASIC vendors may one generation products are some brief technical advantage, but that advantage will not last more than six months, will soon be the strength of the Chinese manufacturers to catch up with and surpass
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Author claims to be the ASIC chips design team for Avalon, is there a split inside? 

From certain perspective, mining gold is a waste of resource, but it is some kind of work and it always has some cost related to each ounce of gold mined. Using gold as currency actually ensured some kind of fairness. If you totally remove that cost and create money out of nothing, then there will be a question:

Why everyone else has to work to get money while selected a few could just get money without work?

If you believe that the world should be ruled by selected a few super elites, then you will accept this unfairness, but if you believe that no one on this planet were borned to rule the others, then you might consider using honest money

The fiat economy did grow quicker, but that has little to do with creating money out of nothing (counterfeiting), more comes from the technology improvement. In fact, it can grow much faster with honest money

True, a growing economy need more money for transaction, but if you are lacking of money for expanding the economy, you should put more effort to mine the gold in order to increase the money supply, that is the honest way to do it, and that will also create a lot of job at mean time

But now, the money creation, a big industry that can provide many jobs disappeared, replaced by a couple of high officials with their printers

Anyway, the strange thing is that people still accept those money created out of nothing, seems they don't care about their real value as long as they could exchange consumable goods. Regarding money, people's behavior is very unconsious, there are a lot more to research in this area

The point is, gold has value, in a gold standard, in order to expand the money supply, banks must first get gold by providing valuable asset/service in exchange, so it is fair trading

But without the back of gold, banks create money out of nothing, so in principle the new money worth nothing. But in reality they still use these worthless paper to buy valuable things, it means banks unfairly benefited from the people's consensus of money's old value

A common argument is that the resources are wasted in producing gold, but that's exactly why gold has value. If something you can create as much as you want without any effort, then it should have no value

Fiat money still hold their value because people have no other choice, if they have alternative payment medium, then the fiat value will drop quickly because in principle they worth nothing

Another reason is that people get fiat money as a form of income: salary, insurance, sales, social security, pension etc... it is connected to the whole government controlled system, and it has been inflated into every corner due to endless supply

This is a good example of how people don't understand today's monetary system. They think if everyone work hard and never default, everyone will be rich and no debt    This is true in a gold backed monetary system, but not in today's debt based monetary system

Since all the money is debt based, in the whole EURO area, if some country is getting a surplus, then there must be some other country in debt, and the whole EURO area must be in net debt, unless they could gain some surplus through trading with some other countries outside EU, which just kick the debt to some other parts of the world

The central bank create the fiat money and lend them out, those money will finance different project to create job/product/service and improve the economy

But as central banks in bitcoin economy(miner), they create the money but sell them in exchange for some other foreign currencies, because currently the bitcoin's value is too low

FED print 2.8 Billion new USD each day but bitcoin generate only 3600 new coins, how could this amount of coin drive any significant economy activity?

Of course not everything on the planet, just like no chinese airline accept USD payment, you have to exchange to CNY first

Base fiat money is debt in today's system, before 1971 it is backed by gold, now it is only backed by debt

When central bank create base money, they buy government bonds, so that government get money to spend. Government must payback the interest and principal of those bonds, so government is debt laiden when they get the money

Since all the newly created money is entering the society through this way, every dollar is backed by corresponding amount of national debt

So, if you can buy anything with bitcoin you will give up the fiat? Look at bitmit.net and see what you can buy there

I don't think the option of consumption is the deciding factor, in fact many merchants accept bitcoin, but people still don't use them, maybe they are afraid that one day government will invervene and shut it down (although technically it is not possible)

After upgraded to this firmware, all my fans running at 720 RPM and the temperature just keep going up until it reaches 50 degree then all the fans will blow at full speed, is there any way to adjust this behavior to be more gradual? I tried --avalon-auto and --avalon-fan 20-100, seems not working

"those not backed by the full faith and credit of an issuing government" 

Fiat is backed by a consensus which is mostly ensured by the government's law enforcement. But bitcoin is a totally virtual thing in internet, it is also a consensus, but only backed by mathematics. It is an abstraction layer above the physical world, which currently is out of reach of most of the people's imagination, it takes time for people to reach a consensus about its value

This is only temperary due to the introduction of ASIC devices, soon ASIC devices will be everywhere and there will be no economics of scale (you pay more electricity to get more coins), just like early days of GPU mining, the most profitable ones are those have free electricity, those large mining farms typically have huge cost

It's not about now, it is about a long term perspective. The debt based money creation might excel in 50 years, but in the long run it is destined to collapse by the weight of itself

Cost of production depends on the number of participants. The cost is 10x when there are 36000 people mining coins, comparing to when there are only 3600 people mining bitcoins