On my screen the ads are all at the bottom of the page and aren't even visible unless I scroll down.

I think that's great but I doubt your advertisers do.

Based on that article if Bitcoin ever started to become popular with the masses in China you could expect a massive crackdown. This means that a lot more work would need to be done to enable the network to work in the presence of active attempts to detect and block it.

The fact that governments can't run a balanced budget is the problem. The unfunded liabilities they are trying to fulfill out simply can't be paid. IN the attempt to do so, however, they are going to suck an exponentially-increasing amount of the economy into their fiscal black hole until the cash flow can no longer be sustained. That's when we get a "disbanding of the USSR" event.

The actual GAAP deficit of the US federal government is $5 trillion, compared to about $1.5 trillion in revenue. The unfunded pension liabilities just for federal employees are almost as large as the rest of the population combined. This is not a fixable problem, especially when you consider medical costs growing at a consistent 9% since the 1980s.

All we can say for certain is that retiree pension and medical costs will never achieve 100% of total economic output. Somewhere between now and that point people are going to stop getting paid.

That's not an example of a conservatively run pension fun. That's an example of public sector idiocy.

Anyone with a calculator and a knowledge of 8th grade mathematics can see that it's not possible in the long term for an investment strategy to exceed the overall growth rate of the economy. Only a moron would expect to get 8% returns forever if the economy is growing at 3%-4%  because if your investment fund is growing exponentially at a rate greater than the economy as a whole after a certain number of years your fund would need to own more than 100% of the economy.

What happened is that a bunch of public sector pension funds got lucky in the 1990s and experienced about 8% returns for a few years. This was a fluke but they got greedy and wrote into law that the pension fund must achieve those returns every year forever, as if legislating investment returns magically causes economic growth to appear. All these pension funds are now insolvent and the people depending on those unsustainable promises are going to get increasing desperate and hostile as the mathematical reality inevitably closes in.

It's really very simple. Making political promises is free but fulfilling those promises is not.

It costs a politician nothing to promise everybody the ability to retire at 40 with their own private moon base. However all those retirees still need food, medicine, entertainment, clothing and shelter. They need people to construct the moon bases and to transport them to and from the moon. This couldn't be done because the economic output of the sub-40 population simply isn't large enough to give everybody over 40 their own private moon base to retire on. Printing money doesn't help because money printing doesn't cause crops to grow or rockets to be constructed. Real economic output requires human effort. If the entire population was expecting to retire at 40 to their own private moon base it just wouldn't happen for everyone. A couple people might get one but no matter how big of a tantrum the rest of the aspiring moon retirees threw it just wouldn't happen because the economic output necessary to support such a plan does not exist. You can't vote, bribe, threaten or cajole mathematics. 2+2=4 no matter how inconvenient or unfair we might think it is.

It was a simple matter of mathematics, just like it is here. Exponential debt growth can't last forever and the end comes much more rapidly than people expect because they don't intuitively understand the nature of exponents.

There's no reason to restrict the market-making function to a single entity. While the network is small you could even use #bitcoin-otc to match up buyers and sellers. That gives you an open order book and a reputation system to work with. When the network grows more exchanges could appear and people (or their software agents) could choose the best ones to use.

Creating a market mechanism is really as simple as automating the steps that you'd use to buy and sell manually. If you were looking to rent hard drive space you'd go to a place like #bitcoin-otc, look at the offers that were available and the reputation of the sellers and choose one or more of them to form a contract with. After the contract ended you'd leave either positive or negative feedback as appropriate and expect the seller to do the same for you. If either party provided inaccurate feedback the other one would attempt to prove his innocence in order to protect his reputation. People with higher reputation scores could charge more for their services than those with low or nonexistent scores.

Automating this is a matter of encapsulating in software a set of rules for the buyer and a different set of rules for the seller.

As the example above shows economics is not at all difficult in principle but we're taught so much self-serving misinformation that it's hard to figure out what's going on.

I'd recommend reading some Frédéric Bastiat. His examples are very approachable.

Currency backing is a red herring.

Imagine an economy consisting of 100 people who produce 100 widgets/time and trade with 100 currency units. The price of each widget is going to be equal to 1 currency unit and each person gets a widget every unit of time. Now imagine one person manages to forge 10 currency units and he goes out and buys 10 widgets before anyone else realizes what is going on. Now the other 99 people will be left with 100 currency units to buy with but only 90 widgets left to buy. The price of a widget will now get bid up to 1.11 currency units and will stay there because the extra 10 currency units will remain in circulating in the economy. The actual effect during the first round is the other 99 people either get less than a full widget each or else somebody gets none at all.

If the counterfeiter can get away with this continually he'll always be able to consume more than he produces at everybody else's expense.

In order for inflation to occur new currency (money or credit) needs to be introduced into the economy. The introduction of new currency devalues each unit proportionally but the first people who get to spend it do so before the devaluation manifests. So the way the monetary system works now people who have access to credit creation get to enjoy privileges indistinguishable from those of a counterfeiter - the ability to consume value produced by other people without any need to produce an equivalent amount of value first for someone else first.

Deflation means that in order to get people to spend their money you must actually offer products and services that are compelling enough on their own merits to convince them to part with currency. Inflation pushes people towards unnecessary consumption because the are driven to spend their money more quickly as it loses value.

Naturally people who want a system that allows them to live comfortable lives by skimming value away from the productive prefer inflation and high velocity to deflation and capital formation.

Perhaps. There are far too many parallels between the events of the last few years and the situation in the USSR circa 1980 for me to be certain that the current political system will still exist in 2016.

Since I don't know the laws of every country in the world I refrained from making a statement that claimed more knowledge than I possess. It's highly illegal in at least one jurisdiction.

In some jurisdictions that is highly illegal.

I hope it wasn't Snow Crash. That one is pretty nasty.

That's a pretty good description of the theory of operation of a futures market. Believe it or not such markets exists and function reasonably well.

Maybe it would help if you read up on some of the whitepapers of Mojo Nation and other similar projects. There's already a lot of material written on how market-based allocation of computing resources could work and it would save a lot of time to not rehash all that in this thread.

The same way that any other paid online services work right now - the owner wants to buy the service.

I want to store X MB for Y hours so I publish this information and then then let the those nodes who want to sell me storage bid on it. My node uses a set of heuristics to pick the best bid taking into account all relevant information (price, reputation, bandwidth, etc). The system does this for every resource that you want to allocate.

That's the advantage of using a market mechanism to figure it out. We don't need to know ahead of time the best allocation of resources and instead allow the relative price to float according to supply and demand. Most individual users are not going to sit over their nodes and daytrade bandwidth and hard drive space so it makes the most sense from a usability perspective for the trading to be done by automated software agents.
There's no reason to duplicate a currency system. Bitcoin has a lot of features, like contracts, that would make it useful for exactly this kind of use. If Bitcoin doesn't have sufficient features to be used as karma then wouldn't it make more sense to add them instead of creating a new currency?
This is the risk of all new markets - that there isn't actually sufficient demand for the product being offered. It's not like any bitcoins used in the experiment would be lost though. If more people sign up to offer disk space then there are people wanting to rent then it will be extremely inexpensive to store files. This will tend to cause people selling storage to leave the network because they can't make any money and will attract new customers because the price is so low. If there are no customers willing to buy at the price point that anyone offering storage is willing to sell then the network will fail.