It's kind of a risky assumption to make, but given that price is based on supply and demand, a cut in supply will increase the price.  But you're right - the difficulty, and the fact that miners can stop mining whenever they feel it is no longer worthwhile, keeps the price from rising solely due to the cost of mining.
Such as?

I want to see someone with $100M guarantee to buy Bitcoins at $4.50/each forever.  I wonder what sort of confidence would be given if such a guarantee was in place?

What do you mean by "fee stabilization"?  Do you mean finding the right minimum fee to ensure a certain minimum level of security, then trying to get all of the major pools to agree to use it?

If we need $125/block (50 BTC * $2.50/BTC) to keep the same level of hashing power that we currently have if there were no block rewards, then we'd need 50 BTC in fees per block on average.  If we currently have an average of 25 transactions per block, then each transaction would require a 2 BTC fee.  And if that's the case, it essentially kills the currency's usefulness, which kills the value, which kills the miners.

So, we must eventually accept a lower level of hashing power relative to currency value.  Even at 1/10th the hashing power, we'd need 0.1 BTC per transaction to keep 800 GH/s online at $2.50/BTC.  Or, essentially, $0.50/transaction.

But, back to 8 TH/s.  We'd need $5.00/transaction to continue hashing 8 TH/s per $50M of total BTC worth with only 25 transactions per block.  With 500 transactions per block, we could drop that to $0.25/transaction.  I think most people would be willing to pay $0.25/transaction on most transactions.  But, this is assuming a requirement of linear growth in hashing power compared with total BTC worth.  If we said that hashing power didn't have to grow as quickly as the total BTC worth, then the fee per transaction could be dropped even further with a price increase.  And I think it's safe to make that statement, since the cost to stage an attack grows non-linearly with each increase in hashing power (larger datacenter needed, more MWatts needed, etc, and those aren't linear costs).

As it is now, if block rewards were replaced entirely by transaction fees, then transaction fees would have to be $5.00/transaction in order to maintain the same level of hashing power as we had when hashing power stabilized at $2.50/BTC.  To have fees lower than $5.00/transaction, we'd need to do one or more of the following:
- Accept a drop in hashing power
- Increase the price per BTC (by a good lot)
- Increase the number of transactions per block

Problem is, not much tracking can be done without cooperation of some of the major exchanges and retailers, and none of them will participate or it would alienate a large part of the Bitcoin crowd from their customer base (too many people here who are absolutely paranoid about their privacy).

But, I'll still cheer on any efforts in that area!

$5.26 or $5.05?  Eh, close enough.  Around $5.00 we'll say then.

Well, let's just hope it doesn't come to that!  I'm holding though, I do believe we have more rally to come.  Just hoping that there isn't a large dip before we come to that!

I don't really know much about trading on margin, just thought I'd try it out with 5 BTC.  It's not a huge deal if I lose those 5 BTC, but am curious what $/BTC point would have to be reached in order for me to be forced to liquidate?

I think this is a non-issue until we reach a point in time where the block reward is less than what we deem required to secure the network at an acceptable level.  Which means, acceptable network security should be determined.

Is the Bitcoin network "secure" enough for everyone at 8 TH/s?  Is it overly secure or under secured?

We pretty much bottomed out at about 8 TH/s when the price of BTC was hovering around $2.50.  So, one can extrapolate that in order to maintain that same level of hashing power when we reach 25 BTC block rewards, the price needs to double.  If the price is at $2.50 when block rewards hit 25 BTC, then we will likely drop to 5 TH/s, give or take (some more efficient miners may stay in the game to an even lower price point, so it wouldn't be directly halved).  So, is 5 TH/s acceptable to secure a $50M mini-economy?

Basically, a bottom-line "security" level needs to be determined.  It might be a linear or non-linear equation, given that computing power will increase year after year, thus it would be easier and easier for a potential attacker to obtain terahashes of power to stage an attack.  It might also be based on price, given that an attacker would have more incentive to stage an attack if the coins were more valuable.  But until we know how much computing power is actually necessary to secure the currency given a certain price and certain availability of computing power, we can't really determine how much transaction fees *should* be.

The good thing is, we have plenty of time to figure this out, because the network is vastly oversecured already (and with the recent price increase, will be further secured in the coming months).

I suppose someone needs to think hard from a criminal perspective, about how a potential hijack of the blockchain would be profitable.  Obviously, the price per BTC would tank directly after such an attack, so whatever was done would have to be done quickly, be untraceable, and be worth more than the cost of setting up such an attack.

It's a self-fulfilling prophecy if enough people use them as indicators...

And here I thought this was going to be yet another thread about Bitcoins...

Yeah, the EU is screwing things up.  Though, the screwups really started many years ago, it's just that the consequences weren't realized until now.

1 BTC!

Sure.  Just send a Satoshi each to millions of private keys, then start printing the private keys, and eventually you'll have enough printouts to swim in.

Yeah, I suppose that's true.  If the MyBitcoin story was true, and some people didn't claim their coins, and the MyBitcoin owner decided to just give up on tracing them down, then they could still have some coins left in old addresses that they are now moving.

I understand!

If hackers withdrew 50% of the coins, and the other 50% were given back to the victims, then there should be 0% left in ANY MyBitcoin addresses.  The fact that the coins still exist in the original MyBitcoin addresses proves that the MyBitcoin story is completely false.  Also, the fact that this is the first time the coins have moved from MyBitcoin means that whoever owned MyBitcoin is the one who moved them, which makes it all the more curious where those coins went.

Ah, got it!

So, CES is live now... your booth is up and running?  Any sales?  Any interest?  Any reporters?  Any pictures to share?

I didn't, but was probably close!  Went long at 6.89...

You all need to remember that these sorts of things are already priced in.  The upcoming episode and CES conference probably played a major role in the recent rally and sustained price.  The price after these events all depends on whether the episode and conference exceed or fall short of expectations on how impactful they will be to the Bitcoin world.

Dude, sounds good to me!

Question though:  Can you not generate offline transactions directly on the machine where the private keys reside?

I think the level of lending achievable on a personal basis vs the level of lending achievable by a bank are two completely different things though.  A bank could probably fairly easily leverage itself to lend 5x or 10x as much money as it actually has in deposits.  I can't see very many people doing the same thing on a "friend level" basis.

Regardless, I got a bit sidetracked.  I do agree that fractional reserve banking itself isn't the enemy.

Agreed.

Well, and there you just ruined it. 

Sorry for thread hijack, I'll stop the irrelevant posts now.