Well, "stable" when compared to last last 12 months of price fluctuations! 

Good point.  The price is fundamentally a supply and demand issue.

While the supply side is pretty well defined, the mystery right now, is where is the demand coming from?  Who wants a Bitcoin and why?  I suppose for me, it the promise of future utility, and the belief that the future demand will be higher than the current demand.

But that thinking also underlies every economic bubble as well.

So, for the moment, it's a fun speculative game - but I wouldn't tie up a significant number of my own assets in it just yet (though I am spending the majority of my time trying to build a business around making Bitcoin more useful to more people).

Thanks for the thoughts!

- Mike

"mining cost always follows price"

What's the argument for this statement?  I don't understand it as a forgone conclusion.  There could, for example, be a large number of miners that are insensitive to price fluctuations (e.g., they get their electricity for "free", or they are happy to pay for the waste heat through mining rather than an electric heater).

If that's the case, then someone who wants to accumulate Bitcoin, will look at the marginal cost of mining as an input to their decision to either invest in mining or buy outright at an exchange.  This would tend to increase the demand for bitcoin at exchanges as the cost of mining goes up.

What's wrong with my argument?

Mike Koss
Coinlab.com

As most people know, the rate of production of Bitcoin mining drops in half sometime in January of 2013 (it goes to 150 BTC per hour, from the current 300 BTC per hour).

So, what will happen the the exchange value of a Bitcoin then?  Over the last 6 weeks, Bitcoin prices have been remarkably stable (at least compared to the previous crazy volatility exhibited over the last year); fluctuating in the narrow range between $2.00 and $3.00.  I find it interesting that this value is very close to the energy cost of mining (at $0.05 per kwh) - of course depending on how efficient your mining rig is.

So, in 2013, the cost of mining will double.  I could see one of two scenarios coming to fruition:

• The price of bitcoin would rise to meet the cost of mining (i.e., about $5/BTC)
• Enough miners drop out of mining, to reduce the difficulty to cost again about $2.50/BTC.

This will play out if the primary driving the the $/BTC rate is on the supply side; i.e., people are hoarding Bitcoin as speculators.  I think that's certainly in play today.  Buyers need to either buy Bitcoin on the open market, or mine for them.  So they switch between these two options, keeping the price at around $2.50 today.

The other alternative is that the price of BTC would switch to the demand side.  For this to occur, we'd have to have many more opportunities for using Bitcoin in real commerce, driving up the demand for Bitcoin as an instrument of exchange.  As it stands today, very few people NEED to use Bitcoin for anything.  I think that will have to change eventually or the speculative fad could crash the value of BTC as people lose interest in it.

I'm up to 2:14 online and 6 posts - but it would be nice to be able to post in the Development and Technical Section.  I'm a co-founder of a BitCoin startup, CoinLab.com, and I'd like to participate in discussion about ways of improving the client and other BitCoin services.

Thanks,
Mike Koss
CoinLab.com
Seattle, WA

It does seem that the standard client has way too many dependencies in general.  Unfortunately, building a GUI that is really cross platform seems not to be an easily solved problem.  I find all of boost, qt, gtk, etc. to be quite daunting and error prone to configure and build (I mostly run on Mac's and Ubuntu).

Are people interested developing a more minimal server client (ideally, for me, all in Python)?  What projects already exist with goals like that?

For the client UI, it seems to me that an embedded web server whose client is built in HTML/JavaScript would be preferable to all the complex GUI Frameworks that are being used today.

It seems that Electrum client will not run on Mac OS/X (PyGtk does not seem to be supported on Mac).  Anyone know how I can get a Mac version running?

Mike Koss
CoinLab.com

Thanks for the links!  I especially like electrum - I'll dig into the code there and try it out.

Mike Koss
CoinLab.com

That sounds close - it eliminates to possibility of losing a wallet.dat file.  But it would also be nice if private keys are NEVER written to disk, and so are much less vulnerable to theft.

I bought by first BitCoins from a friend (when the price was $16/BTC!).  But I've since been dollar-cost-averaging by buying either on MtGox, or Bitcoinica (using leverage!).  So I've got my average cost per BTC down to $3.50 or so...still underwater, but I'm generally "bullish" on the valuation about $2.50.

Mike Koss
CoinLab.com
Seattle, WA

I feel nervous about preserving private keys in any of the wallet solutions I've seen.  In all cases, even if the keys in the wallet are encrypted, there is a non-zero chance the wallet.dat file (or equivalent) will be lost, making the deposits in the wallet irrevocably lost.

So, why not generate all the public/private keys in a wallet based on a user-provided seed?  It's certainly possible to deterministically regenerate an arbitrary number of public/private key pairs, given only a random seed as a starting point (e.g., a string like "service-name/user-name/passphrase").

If the wallet need never be stored because it can always be regenerated, then you just have to ensure that you don't loose the seed value (i.e., your password).

I'd love to hear if someone has already implemented something like this.  I'd be willing to work on including it as an option in the BitCoin client as well.

Thanks,
Mike Koss
Coinlab.com
Seattle, WA

Well, I guess I better get started posting.

Wouldn't it be nice if we could have a forum that would allow posters to put of a bond (in BitCoin, of course), that would be forfeit if they were caught violating the rules of the forum?

Just a thought...

Mike Koss
Coinlab.com