There are many financial products that you can not find any merchant accepting them for goods and services: Bonds, stocks, options, futures, gold etc... But they usually worth a lot. From a pure financial point of view, as long as there is exchange, anything that have value is interchangeable. Similarly, those altcoins also have value if you can sell them for bitcoin and then sell bitcoin for fiat money. The reason that merchants do not accept altcoin is because their infrastructure is magnitudes weaker than bitcoin, and it is enough to have one cryptocurrency in merchants many different payment options

If your fiat money lose half of its value every day (e.g. everything's price doubles every day), then even every merchant accept it as payment, you will get rid of it as quick as possible. To be able to store value over a long time is the most import prerequisite for any kind of money. You can observe that when bitcoin price rises, merchant acceptance are higher, since it can hold value very well. When the price falls, more merchant will refuse to accept it

Exactly. The demand for bitcoin mainly comes from investment and saving, and the effect on its value is much more powerful than spending:

Buying one bitcoin and store it for 10 years, it disappears from market for 10 years thus permanently reduce the market supply. However, you have to spend it every 60 minutes to keep it constantly occupied thus permanently reduce the market supply, so you need much larger transaction activity to reach same level of effect as saving

Most people don't realize that saving is the largest demand for money because it has the lowest velocity. And nowadays you barely can find some project worth investing, almost everything is overproduced, more and more people from new generation are aiming for early retirement, all creating a large demand for investment/saving

If a money is depreciating fast, then people will refuse to accept it, thus further accelerate its depreciation. When hyperinflation happens it goes quite quick, even central bank raise the interest rate to 10% does not help to prevent its fall. It started at exchange and capital market level, consumers are the last to feel the effect

Transaction demand comes from trading, if fiat money are not accepted, some other transaction medium will gain traction. I guess the next big bitcoin rally comes when we were hit by a wave of severe inflation

Difficulty must rise. I guess the current rally is caused by some inside information about the mass deployment of <0.1W/GH miners, at least 3x increase in difficulty will cause a price rally of at least 3x

The latest news is that kncminer's account has been shut down by their bank, why? Might because of large amount of suspicious funds entering their account

Mining has become the new way to launder money totally clean, that's the reason difficulty just keeps rising

Mining has become a business with very large barrier of entry, this is really not good for decentralization. Chinese government only need to take down those large Chinese mining pools to heavily disrupt the bitcoin network

They are totally different, SW is a redesign of bitcoin, while BIP 65 is a planned patch toward lightning network which is easy to understand since it is very similar to a clearing based solution. Lightning network make things more simple (combining thousands of transactions into one) while SW make things more complex (split one transaction into two chains)

This will be very true if you add Btc guild's owner and dial back time to 2013, where they successfully prevented an accident fork by commanding more than 60% of the hash power and forced the chain go back to their desired direction

And today? Btc guild does not even exist, large mining pools from China have dominated hash power distribution, and even inside the core devs there are large disagreement

The core devs are losing dominance because bitcoin is open source. Suppose that a group of large mining pools are not satisfied with the solution proposed by core devs, they could easily deploy their own R&D people and make a version that they prefer, and because they have dominant hashing power, when they roll out the change, their fork will be the strongest chain immediately. Of course they could not persuade others to join them, and they risk being abandoned by the other pools and exchanges, but having so much hash power definitely can affect lots of things

This was not the case during early days of bitcoin when mining pools were just a couple of hobbyists, they didn't have resources to implement such large code change, they only listen to core devs (I still remember the deepbit pool refused to upgrade to any latest version and stayed at 0.3 for a very long time That could be the earliest case of mining pool not following core devs)

Fortunately, chinese mining pools are not very interested in codes, so core devs still hold a lot of saying power, but when there is a disagreement inside core devs, we have already seen on BIP101, miners have veto right

Let me quote Bitmain’s Pan Zhibiao's word here:
“There are many technical solutions. Every solution has pros and cons. The miners are put on a pedestal to be a jury. Right now there is no lawyer on both side. We need a lawyer, we need more discussion, more evidence. ”

I happened recall the movie "Divergent", there are 5 factions, each doing its own job, maintaining a balanced society, hopefully we can reach that status of balance here

Not everyone will sell at the same point, everyone has their criteria, so it is evened out in a longer time frame. There are 370,000 babies born every day, never ending saving capital inflow, keeps its value afloat

The current monetary system intentionally discourage saving by inflation and punish savers, but the demand for saving still exists, especially in new generations that seek early retirement, so it ends up with higher price for capital goods, bitcoin is also one of them

Yen's value is not directly related to the demand of Japanese goods, this is clearly proved by the Plaza Accord which made Japanese Yen doubled its value against USD over 3 years. Central banks can easily manipulate the forex exchange rate with their large reserve, which is magnitudes larger than the import/export of a country

Similarly, bitcoin's value is not directly related to the transaction demand of bitcoin (which is very little) but affected by those large capitals on exchanges. The demand does not come from transaction, but from investment, larger effect

In anyone's eyes, bitcoin is no difference than a foreign currency that does not accepted by majority of merchants in his country. Suppose that bitcoin is selected by a small pacific country as its national currency, and maybe no one will ever travel to that country in their life time, would that make bitcoin suddenly more or less valuable ?  No, it is still the exchange decide its value, and has nothing to do with the GDP of that country, since the economy activity of that country is too small comparing with the capital flows on exchanges

I suggest you google "gold standard". Anyway, no meaning in arguing over details, let's say that creating money out of nothing has been existing since 1913, then we have more reason to flee it since the scam has been going on for more than 100 years

The establish of FED is the result of centuries effort of bankers since John Law tried to create money out of nothing. This financial alchemy can work because majority of people want money, it is actually a psychological game. If no one want money, only want physical goods/services direct delivery,  then this trick will not work. Unfortunately, people all want money, and they became enslaved by their own desire

In fact I regard any kind of fiat money (even it is backed by gold or assets) to be a scam, the reason has been discussed long ago (With one ounce of gold, I can issue money to buy another ounce of gold and repeat the process until I have bought everything on the planet). Financial is all about fraud, if you think you are doing just fine, then it is very likely you are the one that is being scammed

At least before 1971 FED still can not print at will, it is limited by the number of gold reserve, which require equal amount of value to acquire. Then it became a "I print money, you work" model, this is equal to "all your properties belongs to me"

Of course with a limited money supply model, the money hoarder gains, but anyone can choose to save money thus benefiting from saving (In fact saving money is difficult thus the reward worth it). But in fiat money system, all the benefits goes to the money creator, rest of the people do not have a choice

Any rational person would first spend fiat money which lose its value constantly, they would get rid of fiat money as quick as possible in order to not be hurt by inflation, while they will hold bitcoin as long as possible in order to gain from deflation

If you have 10 bitcoin and 4K dollar, which one do you spend first?

There is a common misleading concept: Money's value comes from its transaction demand, without transaction demand money worth nothing

The reality is, throughout human history, money's value has never come from transaction demand, be it grain, gold, or fiat money. It comes mainly from the property that it can be trusted to hold value in a relatively long time, and secondly it can be accepted widely

No matter how much the transaction demand is, if a money is quickly losing its value every day, it will be refused in transaction. This is also the first mandate of FED, e.g. low inflation rate

Whether a person trust certain kind of payment medium depends on his financial knowledge. Some people would like to accept Euro when they are in US, because they often travel to Europe and know that Euro is accepted there. Managers of large enterprises would accept stocks and options as payment medium because they know they can liquidate them at exchanges for fiat money any time

From this point of view, as long as people knows there is an easy and quick way to exchange their bitcoin for fiat money, then they would accept them the same way as they accept foreign currency, stocks or options

Bitcoin is not used a lot in transaction. Its value ultimately comes from people's trust of its limited total supply, thus continuous purchase of bitcoin to store value. It is a superior form of store of value given you have enough IT skill

For traditional money, you need merchant acceptance to be useful, so it never goes beyond boarder of a country. But bitcoin is more universal form of money, you don't really need merchants to accept the payment, you can easily exchange to what ever currency they accept. It is amazing that you can exchange it to any currency on localbitcoins, no other currency in the world have this kind of worldwide exchangeability

Of course with the help of payment processors, merchant will also accept bitcoin. But since most of them just convert to fiat money behind the scene, it is still exchanges that matters most. And who is buying on exchanges? Those people who purchase bitcoin for long term saving or speculation, and international remittance sometimes

Did you miss that I said before? Fiat money's drawbacks are fairly well known (which I also mentioned, by the way). Do you see only what your eyes want to see, huh? And no, fiat money doesn't cut it (as a better system)...

In fact, for more than 40 years it is a parasite living off people across the world

Indeed, during early days of bitcoin, developers have much more freedom to do whatever they want, partly due to that no one cares about it, and partly due to that there are no major interested stake holders because of its low value

But now situation is different, the network has attracted so much venture capital and investors, these guys all have their own agenda thus the political landscape has changed. A good example is kncminer, they took the crowd funding money, realized their projects and start to drive their own mining operation secretly

At this stage, posting on a forum or reddit or checkin some code in git does not make a lot of sense, because the decision making power is not in the hand of developers, but in the hand of large mining pools, exchanges and payment processors. If devs represent a complex solution which those large players do not understand thoroughly, they would just ignore it (they have to protect their million dollar investment as best as they can). They could just keep running the old client, and build their clearing and settlement channel to avoid the scaling problem altogether

Imagine that when the blocks are full and each transaction cost a lot to clear, then only large service providers would be able to use blockchain to clear with their business partners. Users will find out that using web wallet services will cost just a few cents as usual and clears instantly, but using core client will cost $100 and maybe confirmed after 1 day, so they will definitely move to use blockchain.info or similar web wallet instead

You see, this is also a solution, since the risk on individual service provider is much smaller than the risk of the whole network, it can be accepted. And this solution is much easier for every investor to understand than that Segregated witness complication. In fact, most of the people are still very used to centralized service provider, so they would accept a locally centralized solution easily

The best scenario is that all the large players out there have deep IT expertise and can easily get what those new changes' pros and cons, but in my experience it is not the case. Rich people have totally another set of criteria in decision making

It's the verification part most resource consuming. Once downloaded, you would never want to do that again since next time it will take much longer due to the increase in average block size

Exactly. If a solution is not understandable for users with average IT expertise, then it will never be understandable for anyone with even less IT knowledge. And typically owners of large mining farms and exchanges do not have time to do those learning, so they tends to select the solution that they can understand or listen to people they like. This will turn the decision making into politics, and who are good at lobbying and PR will push in their changes. And this is not people would like to see in bitcoin. So, the knowledge gap of different participants decided that you really can't reach a wide consensus upon a radical or complex solution, XT's failure already proved that

I still don't really understand how that can be implemented as a soft fork. Softfork means backward compatible, when the upgraded SW clients broadcast new blocks through out the network, how come the original core client can accept such kind of strange block which does not contain signature data?

It seems the numbers and values of bitcoin at that time did not match: In september 2011, 1 million BTC worth more than 5 million dollar. And you really can not do a lot with 100K dollar in a trust

And by looking at such a contract you will feel sad that no matter how secure bitcoin is, you still can not trust another person without a contract and the protection of law enforcement. Maybe that's why he want to write all these into blockchain, but then the problem is who is going to enforce it without law enforcement?