Yes I think you have nailed it. In the long run, miners with the lowest electricity cost per hash are always going to be profitable. Other miners will experience good and bad times.

I think SgtSpike is suggesting that the Russian-language users are being counted under the country of their Tor exit nodes.

That's a non-starter. Every published price would need to say something like "43 Bitcoins (in Bitcoin-7 notation)".

And yet the top language is Russian? Those stats don't look very sound...

I think the secret to success will be to develop and evolve the business very quickly. Faster than the authorities can decide that it is non-compliant.

One millibitcoin ("one Millie") is 0.001 BTC or 1 mBTC.
One microbitcoin ("one Mike") is 0.000001 BTC or 1 µBTC.
One satoshi is 0.00000001 BTC or one base unit (or 10 nBTC).

Dear Randolph Munroe,

Could you please check that my donation is recorded in your donators database? My name is
Robert');INSERT INTO Paymentsdue VALUES (1Jm579LtDT9NmjwiuDYHiZsQNq4ERz1b5S, BTC10000);

Kthxbye
http://xkcd.com/327/

Here's an interesting business idea.

Suppose your pizzas are priced at $25. You could sell them now for $25 worth of bitcoins (say 5 BTC), then give the customer a full refund (i.e. $25 worth of bitcoins) in 12 months.

If the value of BTC doubles in that time, you have made a profit, and your customers have received free pizzas. Win-win!

(I'm sure you'd have no trouble hedging against any loss on #bitcoin-otc).

Indeed! The "carrot" in-joke was brilliant.

I'd like to nominate this one for "Human Bitcoin Video" competition:

"Bitcoin for dummies Part 1 of Many!"
http://www.youtube.com/watch?v=BU7_FmGp2N4

There are no hot chicks, but it contains priceless gems such as "Forget about how it works. It's just another currency ... don't try to over-think it". That guy is bringing Bitcoin to a new audience. I also love how he posted a plea to "Donate if you know how".

The viability of mining basically boils down to this:

Price increases faster than difficulty => profit!
Difficulty increases faster than price => ruin.

In-Q-Tel (the firm that invited Gavin to speak at this technical conference) funds the development of new technology that could solve the CIA's "pressing problems". For example, In-Q-Tel funded Keyhole Inc. to develop what is now Google Earth. In-Q-Tel isn't in the business of getting people to conferences to talk about stuff so that it can be "taken down".

As ShadowOfHarbringer says, Bitcoin is open source and cannot be easily subverted by an intelligence agency. And the CIA won't be bending Gavin's arm or threatening his family or anything like that.

But what In-Q-Tel could do is to invest in a startup that is doing Bitcoin-related stuff that is interesting or useful to them. For example, developing (secret) customised versions of the Bitcoin client, or developing other tools to interface with the Bitcoin infrastructure, or developing super-efficient Bitcoin mining hardware.

There's a possibility that the Bitcoin value will be much higher by January.

When I bought my 5870 GPU card six months ago it could get a block every couple of days. But the difficulty rose very quickly, and now it only mines one block every 25 days on average. But Bitcoins were worth $0.25 when I bought the card and now they're worth 20 times as much. Provided the Bitcoin price holds, my GPU card is actually more profitable now than it was six months ago.

I only type 85wpm, but I am actually accurate!

Here's how it scales automatically:

If blocks are getting full, people pay higher fees to get their transactions in the block. Increased mining profitability causes increased mining which causes increased difficulty.

Here's something interesting.

Take a look at the "Mt Gox All Time Chart" with the "Show Volume" option. Look at the bottom of the orange dots over the past few weeks:



The daily volume varies a lot, but even on quiet days it has been around a minimum of 3000 BTC. Then suddenly in April there's a step jump up to a minimum of around 13000 BTC. And this is when the price started to rise rapidly.

My hypothesis is that a single buyer wants a lot of bitcoins, and has started buying exactly 10,000 coins per day since then. When that buyer has enough coins, the upwards pressure will be removed.

At that time, one of two things will happen. If there has been enough growth of interest in Bitcoin in the meantime, the price will continue to increase but at a slower rate. Otherwise, there will be some price reduction.

As we don't know how many coins this buyer wants, it's impossible to predict when they will stop buying. But I will certainly be on the lookout for a reduction in the daily volume on the quiet days.

What? Difficulty will be above one million real soon now. Two to three months probably.

Why risk compatibility with existing software, just for the sake of a minor tweak that will only be relevant for the next two or three months?

Here's an idea that might be dismissed as stupid-simple, but sometimes stupid-simple ideas work really well.

How about: The maximum block size equals the higher of: (a) the current hard-coded maximum block size, and (b) 'difficulty' bytes.

No, that's not how it works. All that counts towards your success is the current difficulty and your own hash rate. The hash rates of other miners affect how many blocks per hour are found in total (and affect the next difficulty update), but they don't affect how many blocks you find.

This is Luke-Jr's Eligius pool isn't it? This pool "will only include transactions in its blocks if the sender pays a fee of at least 0.00004096 BTC per 512 bytes".

I approve of Luke's fee. It's small enough to encourage experimenting with micropayments. It's small enough not to matter for big payments. And non-standard transactions are accepted, which allows experimentation with interesting stuff. And Luke's pool is small enough that people who want free transactions can still get them.

If someone releases a work as PD in a country that does support it, that's compatible with CC0. You are free to relicense your redistribution of the PD work as CC0 (because the work is already PD, you can do anything you like with it). So the use of PD (where available) is never a problem.