This made me smile.  It appears to describe a good few of those who have ASIC pre-orders.

There appear to me to be a number of flawed assumptions in Heathrow's argument.

Anyone else slightly suspicious of the numbers of someone too keen to see everything in terms of 99% v. 1%?

The first '99%' to address is '99% of folks'.  Are we talking 99% of people who mine now?  I am given to understand (though I don't have links to hand) that the vast majority of 'hobbyist' miners mine such small numbers as to make little difference to the mining distribution in terms of securing the Bitcoin from attack and the amount they make is probably peanuts by now also.  So to whom is it a tragedy that they will have a choice to upgrade to a BFL 'jalapeno' or equivalent or stop mining?

I think we will all be in agreement assuming ASIC mining is the soon-to-be future, there will be no value in mining BTC by any other means but how one gets from that to the assumption one needs an 'ASIC farm' to make money I don't know?

I'm failing to see where this 'fiat rich reaping the profit' claim is based on.  Is it because some of the ASIC machines are priced in tens of thousands whilst video cards are priced in hundreds?  Buying a large number of GPU cards (which incidentally in contrast to ASICS would have commanded a substantial purchase discount) also costs tens of thousands.  I don't see how ASIC changes that picture in the way implied.

With prices per hashing capacity virtually the same for the hobbyist (e.g. BFL Jalapeno buyer) and 'farmer' spending tens of thousands there are virtually no economies of scale to speak of which would drive the hobbyist out.  It will take the same duration for the hobbyist and the farmer receiving their kit at the same time to recover their investment (other than for some variation in running costs).

The next percentage referred to is '1% of population'.  It's unclear to me whether this refers to the currently mining population, to bitcoin user population or world population.  Let's hazard a guess at Bitcoin user population?

There is evidence of wider adoption of Bitcoin by some orders of magnitude from say a couple of years ago when maybe 70% of Bitcoiners were mining as against say 20% today.  But 70% of 1000 is 700 whilst 20% of 10,000 is 2000.  Which of the two makes for a stronger network - and that's without even considering the increase in difficulty thereby the decrease in likelihood of successful attack?  All those figures are probably way off but the principle stands.  Other than for securing the network why does the percentage matter if the primary purpose of Bitcoin is not to make money for miners but to serve the needs of its users?

This ^

I would be intrigued to hear an argument as to how it is expected that ASIC (or any) mining will be anything other than marginally profitable in the long term, especially seeing as you don't need to be a geek anymore, rather just to buy something to plug into your PC and let it run.

Give me something substantive and I'm ready to listen and to change my mind accordingly - otherwise it just sounds like a rant.

As for what keeps me in Bitcoin for the Long Haul - it's simply because it is awesome.  The decentralised thing, the privacy thing, the known-from-day-one inflation thing, the virtually infinate divisibility thing, the ability to transfer irrespective of distance or boundaries thing etc. etc.  What's not to like?!

At the risk of being railroaded for daring to criticise you have you never heard the phrase 'We took the service down for some hours'?  I guess you announced it appropriately to your IRC customers and followers and therefore fulfilled your obligation.  But I am subscribed to at least three SD threads here and heard nothing other than the fun and games that was had with re-routing the DDOS attack.  I am not saying you are obliged to share such information but knowing there are many SD investors through passthrus here that do not do the IRC thing and seeing as you were here appropriately correcting those erroneously thinking MPEx had been hacked - and whilst you were at it having a go at them and calling all and sundry idiots as is your wont; you could at least have mentioned the 12 hour deliberate outage thing before waiting until it was squeezed out of you.

To get back to the original topic this was something discussed yesterday with my fellow geo-libertarians at the LibDem spring conference in Brighton...*

There are some rich folk who will, just by buying and holding Bitcoin, become richer.  However, they are likely to be only the tech-savvy rich who are prepared to spend the time studying Bitcoin and only those who are prepared to risk some of their wealth are likely to do so.

I doubt very much that a significant proportion of early adopters (even if we include today's adopters) are in the wealthiest 5% though this may change soon.  And Bitcoin would not be where it is today in terms of distribution were it not for the early adopters who did spend/invest/give away a load of their coin.  I am getting the impression from discussions on these boards (and having an idea of the source of the Bitcoin I am buying locally) that some early-amassed wealth is gradually being fed into the active Bitcoin economy.

Some of those I was talking to yesterday would ideally like to see the seignorage of a currency going to the 'commons' in the same way that land tax would.  However my argument was that this could only occur if it was a government controlled currency people were coerced to use.  With Bitcoin the cat is out of the bag.  If there are currencies that work well and don't require the government then why get governments involved at all?  Even though Hayek, Keynes and Marx all missed the significance of land in their theses I think Hayek was right on this competitive currencies.

In the narrowest sense we could say the 'seignorage' of Bitcoin is the miner's profit but personally I think they have earned it and does not belong to the 'commons'.  But the main task of distribution lies with those who own and use Bitcoin so in a way we could say the consequent increase in value to early adopters is also 'seignorage'.  I tend to think Bitcoin would not be catching on as it is were it not for that.  People might think it was a good idea but leave it until another day until others have tried it were it not for the likelihood that it will cost more tomorrow.  And if enough people did that it would have died.  I also think people would be much less likely to rave on about it to their friends and family (of course primarily extolling its virtues etc.) were they not also enjoying watching the value of their own holding relative to fiat increasing month by month.

I don't think the way the early adopters including me with my five-month involvement 'deserve' for having bought when we did and for talking about it with others and being involved, the wealth we're likely to be holding in a few short years.  Yet I think it was a necessary part of the design.  Without it widespread Bitcoin adoption would not happen I think**.  In a way the increase in value is to Bitcoin what porn was for the internet!  In the mid 90s I was tutting those who slowed the internet down with images (like people are criticising SD 'spamming' today).  I thought it was a serious tool for the future of mankind for serious discussions to dispel myth and accelerate the discovery and distribution of knowledge.  But if porn hadn't come along I really can't see the internet would have taken off as it did in the ten years that followed.  I believe that is why it ended up in most people's households.  There may have been all kinds of noble and practical reasons people gave themselves and others for getting on board but it may never have happened without that little secret excuse to do it today rather than tomorrow!  Likewise with the increase in value of Bitcoin

As for Bitcoin solving all problems I don't think so***  - there's the land problem for one - but it takes us a darn sight closer


*Yes, I know, sounds bizarre doesn't it - but it was good

**maybe we should thank the likes of the freicoin folks for doing a control for this experiment.  It will be interesting to see.

*** but then neither does anything else on its own.  But there may be a family of solutions...

A land tax solution does depend on a paradigm shift in that people have to accept title to land never meant absolute outright ownership in the first place.  In the UK technically all lands belong to the crown and I believe even in the republic of USA there is something similar.  The state claiming a rent on the increase in value that came about as a consequence of the efforts of others does not then seem so outrageous - especially if everyone has the option if they don't want to pay tax - to move their assets into anything else they fancy and not have to pay tax on it.  Those who believe their land is absolutely theirs including those who would amass and use an armoury to defend it will never be persuaded of the benefits of LVT.  I don't know how to address that.

Taxing only at change of ownership is not a long term solution - especially in the UK where land is handed down generation to generation amassing wealth for as long as everybody else in the community keeps working to increase the demand on land and the land owners between them only let tiny bits of it go at a time.  Inheritance tax only hits the middle class because the upper landowner class use trusts to pass title down the family without paying inheritance tax.  There are schemes talked about that would deal with the 'low-income little-old-lady in a big house in a high-demand area' scenario whereby the tax could be deferred until death or sale but this would be the exception not the rule.

Of course the consequence of people no longer holding land as an asset frees up land for those who want to use it more productively whilst at the same time freeing up the assets which, unless they just want to put it into pms or bitcoin, is more likely to be invested productively - and with the added incentive of not having to pay corporation tax or income tax, and with not having to deduct and administer employee income tax, and without having to administer and charge sales tax, makes for an immensely more productive and healthy economy.

All it requires is one 'tiny' shift in our perception on the ownership of land!

I have seen arguments by Georgists that works by some kind of permanent auctioning in that at any time someone using a piece of land may be outbid and needs to up-sticks and go elsewhere.  I will admit I have not studied it enough to understand so I can not comment.  And even though I am no expert on these matters for LVT as proposed by the Liberals in the UK I can see the auctioning concept being problematic because it is the previous land owner who is selling the property.  For a price to be agreed between buyer and seller the fact of and approximate LVT annual payment needs to be known and factored in. 

Apologies for coming back with more after having closed the discussion but...

The principle illustrated by my talk of 'increased value as a consequence of others' efforts' is only a means of illustrating the injustice of the absence of letting the landowner reap the rewards.  It is not a practical means of determining the amount of the tax payable.  That, as I understand it is done not by evaluating who is affected in which way by everybody's actions which as you point out is ridiculous.  It is done by ascertaining the value of the land as distinct from any structures or lack thereof on it.  With the statistical and technological advances since Lloyd George was advocating this at the turn of the 20th Century (influenced by George) it is possible to reasonably quickly, accurately and inexpensively to split the the market value of a property, differentiating between the value of the structure and that of the land beneath it.  It is the value of the land that gets taxed - hence Land Value Tax!

I just wanted to thank you for chipping in yucca   Out of leftfield but we're talking proper paradigm shifts here that have the potential to leave these older imperfect proposed solutions in the dust just as Bitcoin is doing for banking!

If that's how you see what I'm doing then it would appear this exchange is over between us.

I'll thank you for prompting me to think these things through again.  As I have not been afraid to share there are aspects of the position I hold that I'm not entirely comfortable with so being challenged as I have been here is a good thing.  But it appears you and I have got to the end of the line on this one.  L8r

If that's how you insist on seeing it nothing I can say will change your mind.  You didn't even put it as a question but as a statement.  I happen to think as I said earlier that we have a lot more in common than we disagree on.  If you will stand beside me for most of this 'fight' towards shared values I believe the odds are we'll be able to work out the differences when most of the goals have been attained.  But you're also free to see me as a gun-touting scoundrel who would help myself to anything that is yours if that's your preference 

Thank you for pulling me up on this.  As I wrote it it didn't feel quite right.  You are correct in that if we consider market prices as determined by voluntary transactions to be the determinant of price then anything else does by definition 'distort' it.

And of course the terminology you use to say 'coercion provokes an unbalanced distortion' makes that look like a terrible thing - as it is I believe when applied to productive and consumptive activities.  Although I can see the 'end-of-chain' argument making VAT in a way maybe the one that affects productive activities least it is still hindering the beneficial cycle of commerce.

Taxing land simply doesn't.  To the contrary.

Ah, OK I had forgotten ancaps tend to go one further than the neo-cons and mush all the various elements that make up the means of production and call it all capital!  Of course then you can take rules that normally apply to capital and apply them also to what others might call land or labour.  Classic economics finds it useful to recognise essential differences between the elements that make up the means of production.  Smith talks in terms of ' labour, land, and capital' and the Wikipedia 'Factors of production' also refer to the three as being distinct.

If we don't mush up the terms into one we can say the land of the farmer is, along with his capital and his labour, his means of production.  The three certainly have many attributes in common but one of the beauties of not mushing them together is that it also gives us the freedom to see what is different about each.

But it is only by bundling land under capital that you can then further classify it as a 'good' which it isn't if we're recognising the fundamental differences that caused it to be considered separate from capital in the first place.  Labour isn't a 'good' neither is land - only things in the Capital classification are 'goods'.

My subjective evaluation is not that 'land is more useful than other goods' but that it is not a 'good' and that its distinct attributes means it can be treated differently to 'goods'.

People's actions and their subjective evaluations will determine how much someone is prepared to pay for a property.  If there is a tax to be paid this will eradicate any increase in future value arising from its location so the amount someone is prepared to pay will be less - there will no longer be a virtually guaranteed appreciation in value due to demand in that location.  Call it a distortion if you like but it means the considerations in evaluating the property are now limited to its productive capacity and/or desirable features.  From my perspective it has taken out the 'distortion' in price caused by speculation.

Land is of limited supply.  The degree by which its value increases (other than by direct improvement by the owner) is determined by demand which is determined by its location - and the difference in price between various locations is a consequence of all economic activity and amenities in those locations.  Everybody who makes a positive contribution to commerce and amenities in one location has contributed to the increase in value of the land.  If it so happened that the proportion of contribution matched the proportion of the land owned then it would be easy and fair.  But it isn't.  Landowners in the absence of a land tax reap the benefit of the work of others - and by looking at it through the eyes of current economic paradigms actually believe they have 'earned' the increase in value.  In the meantime the next generation and newcomers have less and less of a chance of finding somewhere to live they can afford - whether to rent or to buy - because as illustrated by my Bitcoin comparison earlier, hoarding land with virtually no risk of it going down in value (providing others keep up the good work) keeps swathes of land under-utilised.

I like having this asked me because it is not one I can answer as cleanly and as certainly as I would like to so it makes me think!  I think if we had a clean slate, say a bundle of us found ourselves on a previously uninhabited piece of land, I would not feel I had the right to be part of the establishing an organisation that would prevent others from doing anything other than abusing others.  And if we ended up with more than one competing organisation doing crime prevention/justice I really don't know - but I can see problems.

But I'm guessing neither of us are in that position!  I guess we both live in lands that are currently governed.  Now if we stripped these governments' powers back to the extent that we both agree and strip their funding back to the extent we both agree I know we still have not gone as far as you want but we still have one government.  In this situation if a bundle of people (or one very rich person) decided they wanted to fund an army or a police force and do justice their way and for the sake of argument, at the risk of offending muslims out there, they decided the law they considered to be just was sharia law, would I trust them to respect the rights of suspects or to treat believers and non-believers with equal respect?  Mmm.  I think I would prefer to support the government in saying, "No you can't have your army" which of course means being prepared to prevent the army from being formed by force.  So I don't know if I would go as far as saying I have a 'right via proxy to threaten' but I think I would nevertheless take that step in the given circumstance.

I will give you the same consideration if you want to live, trade, rent and conduct your free life without owning land.  What's more, regardless of your wealth or lack thereof, regardless of your not electing to contribute to the public purse the police, the courts and the armed forces will protect you irrespective of who you are.  However if you decide to own land you do so under the understanding that whilst any increase in value that arises out of improvements you make is yours, any increase that happens as a consequence of others' efforts will not by right be yours and you will therefore be obliged to pay rent on it.

Please note I am not saying I have 'THE ANSWER' but i think I have AN answer that is a world away and is more just by orders of magnitude than what exists today.  I suspect by the time we got to having stripped away the powers and funding to the extent that we both would agree the differences in the connotations and likely outcomes of the remaining options would become clearer and I doubt very much we would come to blows over it!

I think centralisation is certainly part of the cycle, part of the picture but in the examples I'm thinking of if centralisation becomes excessive it get's lazy then competition springs up and shakes things up again

I think those who believe centralisation as an inevitable consequence of profit will tend to filter out signs that what is happening doesn't conform to that picture.

Let's look at mining first:

If ASIC mining gear generally keeps the same price per hash regardless of the scale of purchase (which is essentially where it is at at the moment) there is no economies of scale that will drive out the hobby ASIC miner.  And if the growth of the bitcoin user network is growing exponentially the proportion of those deciding to mine needs to decrease by even more for the distribution of mining to decrease - and I just don't see it.

As for the pools I think we're all aware of the dangers of some pools having too much power and it is simple enough to use another means, not least p2p, to mitigate those problems. I will not comment on the transaction capacity issue with SD and dice because I don't understand the technical issues nor proposed solutions well enough to form an informed judgement.

I'm still not convinced by the idea of competing law enforcement agencies etc. that I've seen anarchists argue for.  I would prefer police, armed forces and justice system to remain under one agency.  I would call that a government regardless of whether they are 'evil violent mafias' or not.  I understand purist anarchists say unless you're allowed to raise your own army you are 'oppressed' and the regime preventing you are therefore oppressive and evil.  I'm not saying they're wrong.  I just don't agree.

I don't believe it does 'distort' the market when it comes to land.  I agree with the principle of not interfering with markets relating to capital and labour because yes, it does distort prices making it an uneven and unjust playing field.  But the reason people mostly apply the same to land is because neo-cons and ancaps tend to bundle capital with land and call them both capital.  But classic economics differentiates between land, capital and labour, recognising land to be a special case.

At the risk of derailing this thread (I could go on about LVT till the cows come home - as I have over in the politics subforum) it is the fact of landowners reaping the benefits of the increase in value of their land as a consequence of the combined efforts of others that distorts and creates injustices.  LVT or other forms of GeoLibertarianism or Georgism look at means of minimising or eradicating those distortions.

As for VAT I can see what you're saying about sales tax being a much easier one to monitor and enforce than income or wealth taxes.  However it is still a tax on the productive and is still prone to a certain extent to avoidance whereas land tax simply isn't.  I own the land, I have title to it there is no argument.  It can not be hidden.  My land is valued the same as that of my neighbours and that's how their and my 'location levy' (a term I prefer) is determined.

You ask why should [holding] land be rendered less useful than other goods?  Because it is!  Well actually it is worse than 'less useful'; it is harmful.  Comparison with Bitcoin makes the essential difference easiest to see.  In common, hoarding Bitcoin and hoarding land both mean less is available for everyone else.  But regardless of how little Bitcoin is left it is just as useful for newcomers to use for trade, for international transfer or for hoarding.  It doesn't matter how much you scale it essentially it still works.  You try getting the same crop out of, or building the same house on a plot that is 0.00001 the size of what an 'early adopter' bought for the same price!

Well, either they will cease to be evil violent mafias or they will cease to exist.  Time alone will tell.

The way they 'milk' makes a massive difference.  I don't see this being a painless transition, especially to the mainly poor who believe they should pay their 'fair share' of taxes whilst the smarter and those who pay the smarter take more and more income and wealth out of reach of the taxman.  However I see governments being forced to totally rethink their income (and their expenditure) as inevitable eventually.

People propose flat tax or high VAT as alternatives but both are still taxes on the productive and both are among the taxes that become more difficult to impossible with the rise of anonymous currency.

Tax on land on the other hand does not.  Governments can, and should, give up on trying to keep tabs on how much people earn and how much wealth they own.  Tax on land is taxation without 'milking'!  Taxation as a rent on the increase in land value that is as a consequence of others' efforts (businesses, workers and 'public works' such as infrastructure) is not only not negative, it has a positive impact by ensuring land is used more effectively.

I happen to think Land Value Tax is part of a family of solutions that includes and goes hand in hand with Bitcoin.  But regardless of whether it is or not the eventual solution the fact that taxation via inflation will be impossible whilst taxation on wealth, on income and on sales will be very difficult will push the conversation towards better solutions.

Good approximation of a descriptor but the Scientology connotations...?

I don't know.  Nobody seems to be commenting on business-related reasons for the stock's diminishing popularity.  As far as I can tell nothing major has changed to the way the business runs nor to its popularity with players since it was commonly traded in the high .007x.  I see no reason to lose confidence and follow suit selling at what seems currently to be very low to me.

I guess we'd need time with the usd/btc in the new range to see whether the influx of new money coming into bitcoin that took the exchange rate so high is reflected in a corresponding increase (relative to USD) in the amount bet on SD*?  With as crude an instrument as watching the SD bets go by on blockchain.info I have no reason to believe it is different.  dooglus's magnificent data and charts don't either give me reason for concern on that front.  The recent losses don't tell us anything new so my only conclusion is SD investors may on the whole be a bit more fickle and SD considered as a less long-term-thinking reasoned investment compared say to other betting stocks on the stock market?

It is not much more difficult to own SD shares than it is to play SD so thinking about it that way may generate lots of interest in part-ownership when stocks are on the rise and there's a buzz about it then when all the excitement is back on the usd/btc side with SD plodding along doing its thing with a few more losses than average and maybe it's simply losing interest.

*  Sorry, I didn't word that very well.  What I'm wondering is if the amount bet in BTC can stay constant or increase despite the increase in exchange rate.

Yes I suppose it does have negative connotations looking at it that way.  I tend to think of squirrels stashing away their nuts and acorns for tougher times ahead.  The difference is the squirrel's time of shortage ahead (winter) is predictable and of limited duration. Ours (the consequence of decades of crazy government/central bank/private bank actions) is of unknown severity and of unknown duration therefore hoarding more is generally a good plan in my book

People will still be able to hoard hundreds of thousands of satoshis!  I don't follow the assumption just because the number of bitcoin representing their their wealth is small compared today that that will influence their tendency to save or not.