Hopefully my bank doesn't read that

What are your proficiencies?

I'm a programmer and I am building a WinRT networking API for communicating with nodes. I will hopefully be making a .Net framework API in the future as well. I'm a bit rusty on my C++, so I started using wireshark to build my C# library. I'm no stranger to sockets or asynchronous programming and I have been referencing this website quite often while writing the API. The project is still in it's infancy but I am currently exchanging several message types successfully. It is actually only a small part to a much larger project. Hopefully I get to finish it before I go to jail for counterfeiting

I'm also a Libertarian and have a deep understanding of fractional reserve banking, so as you can imagine I am a strong supporter of bitcoin.

This will be my 6th post, although I am not sure if I hit the 4 hours yet. Delay approval until tomorrow if I have not met the time constraint...

Thanks for your consideration.

The point has been raised that GPU mining will take a very long time to gain you 1BTC. While this is true, there is some flawed reasoning here. First of all BTC can be traded up to 8 decimal places, which of course today isn't worth much. Next year or the year after 0.1BTC could be 90$ or 9000$, we just have no way of knowing. When making an investment of any kind you need to consider both appreciation and depreciation, not just todays numbers.


Pros to Buying BTC
That being said if you are counting on BTC to rise in value then financially it makes more sense to just buy it with $ and hold it. If you mine it your just going to be waiting longer and paying the same amount in electricity bills. So for speed and convenience it probably makes sense buy it with cash right away.

Pros to mining BTC
The main advantage to mining is that it is 100% anonymous income that can never be tracked back to an exchange from cash. So long as you don't sell it. Even though it will be worth very little today it could be worth much more tomorrow. The benefit of course is that there will be no paper trail to acquiring BTC especially if it becomes illegal.



Either way there is still value in mining, and there probably will be even after ASICS go live. So long as you are expecting the value to appreciate.

Plus mining is probably a cool experiment to try anyway.

Chop chop!

I would bet no, at least not in large quantities.

I hope I am wrong though, because if they are investing then they are only giving it credibility. Also, it is very unlikely that they would destroy the bitcoins. They run the risk of losing a huge investment if they fail in crushing it. Bitcoin is also not the only decentralized currency, and they can't single out every one. If they want to stop decentralized currencies in general they will need some major deterrents.

Let's look at the USA track record, it is always about controlling the people and them always failing... They privatize banking and bankers maintain a monopoly for 100 years, they implemented income tax for 100 years, they wage a war on drugs so far has been failing for 40 years, they wage a war against P2P file sharing and are failing for approximately 10 years. Entrepreneurs sick of government attempts to control create decentralized currency and now government starts losing monopoly on banking/taxing.

The only battle against freedom the US Government/Private Elite has ever really won was controlling people with debt/taxes. Now they are at risk to lose it all. The future inability for the government to print money means they won't be able to wage war, and banks won't be able to fund them with fresh money off the press. Nothing they can do to stop it now, so they better get used to it.

Will Bitcoin hasten the collapse of the US dollar?

Here are some facts about the USA economy to consider
1. More money is owed in debt than exists
2. The only way to liquidate debt is through bankruptcy
3. If the government defaults(Bankruptcy) on it's debt, it will basically destroy the currency value
4. To avoid defaulting on the debt they perpetually borrow money to keep paying down debt. At the same time interest on newly borrowed money causes even greater debt.
5. Each day the Federal Reserve prints approximately 4 billion dollars further devaluing the currency anyway.
6. There is no limit to the amount of money that can exist
7. It is a debt based monetary system.
8. Private Banks Control money supply
9. Money gets created every time you borrow money, not only when federal reserve prints it.

Basically the USA is in a situation where they are screwed either way.


Here are some facts about Bitcoin
1. A negative balance, or debt cannot exist in a bitcoin wallet
2. It has a finite amount of coins that can exist
3. No authority controls bitcoin



So those are the facts, now here is my heavily exaggerated but still possible future scenario. Starting with Bitcoins inception.

1. Decentralized currency experiment is started by some anonymous hacker
2. War on drugs forces traders to find more anonymous methods of transactions(Bitcoin). Further increasing its adoption.
3. As more investors flock to bitcoin, it reduces number of transactions in USD
4. Fewer transactions in USD reduce liquidity, causing deflation.
5. Governments will likely compensate with a printing run as usually, causing inflation
6. Increased money supply continues to devalue currency
7. All the while the value gap between Bitcoin/USD continues to grow farther apart.
8. Investor confidence continues to grow in Bitcoin, confidence in USD continues to drop
9. Initially bank runs ensue, people try to get their money out.
10. People begin using loans/credit to purchase untraceable Bitcoins, and then declare bankruptcy
11. Banks begin to collapse because Bitcoins are untraceable assets. Meaning no assets can be reclaimed from bankruptcy.
12. Trading Volume between BTC/USD is at all time low
13. At some point the banking elite begins to mass purchase bitcoins to hedge their losses. Some may be too late, some may not be too late.
14. Any bankers that get into bitcoin early to hedge their losses in effect will have contributed to its success
15. The War On Drugs now indirectly caused the collapse of Fractional Reserve Banking.




I'm writing this post mostly for amusement so I can get into the other forums. I need those 5 posts... Anyway I am still interested in discussing this though. I am a Libertarian if you couldn't tell.

Value and price are two different things.

1. Value is the buying power of the currency

The buying power of the currency will be growing so long as there are more people investing in the currency rather than divesting. It is just basic supply and demand. Unless there are significant flaws in the protocol that are found it will likely continue increasing in value for a long time. For the most part this will be driven by speculation.

Luckily though since there are a finite number of coins that can ever exist this currency does not get affected with inflation in the same way as other currencies.


2. Price(in relation to USD) is the exchange rate.

The value of USD dollar will forever be decreasing regardless of the value of bitcoin. The USA monetary system is built on a concept called fractional reserve banking. In short it is a debt based system and more money is owed in debt than exists in the economy. The system relies on the creation of money to pay down previous debt. As new money is created it devalues what is already in circulation.  The Federal Reserve creates between 2-4 billion dollars USD each day, and this rate of printing must forever increase to continue paying down debt. (Unless they default, and they probably will)

To explain this more clearly, the government goes to the Federal Reserve(Where money comes from) and asks for a 100$ loan, however with interest the government owes 106$. Unfortunately that 6$ interest does not exist anywhere, so when it needs to be paid the government goes back for another loan.

As the printing continues the government devalues all your savings. In effect they are taxing you from right under your nose... So when you put all your money into a 2% savings account, too bad the government decreased its value 5%.



Summary....

So there are two angles to look at it from. Bitcoin rises in exchange rate because it is rising in value, and it rises in exchange rate because the USD is lowering in value.

We know the USD is headed for a cliff, we have no idea what is going to happen with bitcoin. If they both live long enough eventually we are going to see 1BTC equal to 1 million dollars USD and higher. It is just basic math... Either because bitcoin will increase so much in value, or because 1 million USD will be worth about as much as loaf of bread (Or Both). It all comes down to which currency will outlive the other.