Nice! 

Interesting, by this definition the central bank always violated Section 9(a)(2)[1] of the Securities Exchange Act of 1934, they have been artificially maintaining the price of MBS and (indirectly) support those MBS related securites for years

Maybe it was central bank who invented those acts and itself is not regulated under the same act

Nice work!

Optimization means higher gate density, but then you have higher power supply and cooling requirement, components easier to fail. I would prefer many low temp low power devices instead of a single high power high temp device

BFL's 65 nm chip is 4GH per chip, kncminer claim a 23nm chip with 7.3GH per chip, double the efficiency, reasonable and still quite high energy density

Both professional services and special tools for specific use

Loving money is not evil in itself, but I think everyone could agree that pretenting that you don't love money can lead to some serious problems for sure - to let those bankers who loves money rule the world 

QE3's 2.8 billion new USD per day vs 3600 new bitcoin per day, $778K per coin, at 1% acceptance, $7.8K per coin

People tends to forget how much new USD were created daily, out of nothing

Exactly, the value of money to its root, is wide acceptance and trust. For fiat money, these are ensured by the government and central bank, for bitcoin it is ensured by mathematics and network

 
Superman and Federal Reserve Chairman Ben Bernanke are both mild-mannered. They are both calm, even in the face of global disasters. They are both sometimes said to be from other planets.

Superman wears an “S” on his chest. Where he comes from, it’s a symbol of hope. Bernanke prefers the “$”. Where he comes from, there is no problem that this symbol cannot solve.
.
.
.
 In truth, Superman is just a cartoon, and so is the idea of a free market. Bernanke’s charge, in fact, is to promote maximum employment and stable prices — -which means constant market intervention. And if the entire economy blows, he’s supposed to become the buyer of last resort, which is exactly what he’s done, and why he’s a hero.

But here’s where the whole Superman thing breaks down...  

http://www.marketwatch.com/story/the-man-of-steel-and-ben-bernanke-2013-06-12?link=mw_home_kiosk

You can also view it like that, then that's the reason bitcoin is not a pyramid scheme, since the interest for money never dies

A pyramid scheme will collapse when the available money runs out. That's the reason housing collapsed when FED start to tighten the money supply in 2007

But for money, it is very different. Have you ever heard about a pyramid scheme of money? No, because money itself is the unit of counting and its value is perceived as a standard. Even in a very deflative environment like great depression in 1930s, the value of money never rose by more than 40%

This is an interesting view, if more people join the mining operation, their profit margin will shrink and create a downward pressure on the price. But this is under the assumption that they have no fiat money to cover their cost, actually many people are converting their fiat into bitcoin in this process

IMO, price is always a leading indicator for fundamentals, the reason price increased so fast at the beginning of this year is because of reward halving and difficulty rise caused by ASIC devices. Just after Avalon batch 1 delivered, the price erupted. Many investors start to quit mining and buy coin directly (Because there is no way to get a ASIC device in a reasonable time frame)

Currently most of the investment money is going into ASIC device order, there are less support for the exchange price, but soon after the number of ASIC devices reaches 36000, average per device return will drop to 0.1 coin per day, at that stage investors will have no other choice but buy coins

Just use that 3600 coins per day devided by the total hash power, a rough estimation is that network will reach 1000TH by september, then 3.6 coin per day for 1TH hash power, 1.26 coin per day for a Jupiter, 2 months ROI on bitcoin, still better than GPU era

Yes, they have to exponentially increase the amount of money supply to pay back the interest for their bond issued earlier, and all those added money supply are backed by a even larger new debt. This means that economy must grow exponentially to keep up with the money supply increase, and the debt just get bigger and bigger

People have already overdrawn their income for the next decade due to housing, they must start another round of consumption (which should be much larger than housing) to keep the current system alive

If it is significant, then you probably need to add several 0 after the current exchange price



Debt based money issuering require exponential growth in consumption, which is not sustainable. With bitcoin, people can select a constant growth or flexible growth

Check this:


The information is now double every 2-3 years to expand human's whole knowledge base, so does the speed of generating a history. It took bitcoin 4 years to reach today's status, that is almost equal to gold's thousand years, information wise

There are also culture reasons behind bitcoin's rise, mostly due to a sentiment change after financial crisis and bank bail out. People now have more knowledge about banking and money, and they start to seek for other alternatives after they understanded what banking really means. They need a trustworthy saving medium that can not be inflated by central banks. Although gold suits the purpose, but this is a networked society, an electronic form of value storage is better

And, new IT generations with totally different mindset and computer skills, they generally welcome a special type of payment method that is fashion and cool. I found out that it's much easier to teach my little sister to use bitcoin instead of my father

So, the consensus is: The supply is fixed and demand is rising forever, means value will rise forever

This consensus is not unbreakable, the only variable is the demand. If one day, everyone could get as much loan as they want without worrying about returning those loans in the future, then the demand for bitcoin as a medium of saving will be very limited. You really won't care weather VISA will charge you 3% fee, as long as you could get a 10% bigger loan from their credit card every year and never need to payback interest

But I don't think that is likely to happen. In fact, many people has already borrowed quite much for their house and they will stuck in the pay back process for nearly a decade, combined with more automation and less job, their future outlook is getting worse

Another thing, with less and less investment return and longer and longer life expectancy, those almost-broke-pension funds are desperately searching for investment opportunities, bitcoin will become one of their target

There are also culture and history factors in the acceptance of one medium as a currency. Platinum never replaced gold as a medium of exchange, although it has more superier properties than gold

Exactly. The money supply and price level do not have direct relationship due to the existance of credit money and the change in money velocity, a sentiment change in economy environment will have a huge impact on people's spending/saving pattern, thus create lots of volatilities in money supply. Since the value of the currency is mostly accepted as a constant by consensus (unit of counting), the money supply becomes a variable, but this is not how a market should work, it is price manipulation at groud level, and distributed the wealth to those close to the money printer

No one teach the knowledge about money in school, no books tell either, most of the people have zero knowledge about money and how it works

Some common misconceptions:
1. Saving now is for spending in future
The truth: One could save a billion but still do not spend them even when he die, it never hurt to have more savings, as long as his living standard is enough high

2. More money supply will cause inflation
Truth: FED printed 400% more money but there are no inflation, since the value of USD is a consensus, not affected by supply and demand (at least in +-1 magnitude of supply)

3. Money is not wealth
Truth: Money is wealth, if you can exchange money for any wealth, then it is the ultimate form of wealth

Because the demand for saving is endless and bitcoin is the most credible form of wealth with limited supply, in principle its exchange price will rise forever to hold forever increasing saving


This is just one of many possibilities

The acceptance of gold as a common medium of transaction is a slow and time-consuming natural selection process by different people at different location, finally the consensus is reached (because of many unique properties of gold) and gold was selected by the powerful entities to make mint

Just like gold, the acceptance of bitcoin as a medium of transaction is also reached through a consensus, but it took much less time due to the internet, and that consensus is much more advanced than the consensus of gold, due to people's IT and finance knowledge have much more improved over time

Actually the reason that gold standard was abandonded is because people's consensus of the value of fiat money has stablized and even the gold is removed from backing those fiat, the value of fiat still kept intact

The value of a currency is decided by a consensus, so if people have reached a consensus that one satoshi worth one dollar, then it just worth that much. How to reach that consensus? Not through market force, but through study and thinking

Just like gold, bitcoin is a culture, the most advanced and influence culture so far in human history