Idiot.

You can't believe anything MtGox says.   ANYTHING.

GET THE FEDS INVOLVED.

That's honestly the only solution here.

Say bye bye to all your bitcoins.

I've given up on this community.  They show no ability to form rational judgments.  This situation is an example of the community's stupidity.  They trust some idiot in Japan that 1) had security exploits, 2) was most likely hacked, 3) offers no reasonable explanation for what happened, 4) posts confidential user information (time of user logins).

I seriously hope MtGox ends up in jail for this.  He deserves to be in jail for being incompetent and potentially losing millions of dollars.  This is fraudulent behavior and it should not be tolerated by the rule of law.  I hope to god he contacts the FBI, and wonder why he hasn't already.  Maybe because he's liable and scared shitless.

The idiots on this forum tolerating it are akin to religious fanatics, as you say.

Sure, dependin on where it is.

Try to transport your gold out of country.  With BTC it's easy.  With gold, not.  The disadvantage of gold has always been the transportation of it.  It's not efficient as a means of exchange.  Bitcoin is.  They also both share a high input energy to mine, which creates value according to the labor theory of value.

Gold is pretty much worthless as a commodity.  Gold is the most irrational commodity that humans trade.  It has no use other than it's shiny and it's perception of value.  Only a true idiot would believe gold has any meaning or value.  It is a business though and a very profitable one.  Where profit exists, money will follow.

Gold is only worth how much people are willing to pay for it.

Part of that is input energy.

Gold requires energy to mine.

Bitcoins require energy to mine.

What's the difference?

Bitcoins are much more easily concealable, transferable and encrypt able.  Gold is cumbersome and hard to deal with.

Gold is the most useless commodity.

Copper, silver, oil, wheat all have multiple uses.  Gold is pretty much useless to me and I could care less if it cost 1$ or 1000000$.  It's difficult to transport and costly to store and guard.  It makes no sense as a store of value or currency, since it's difficult to exchange.  It is a store of value in as much as quacks are willing to buy it and opprotunistic quacks are willing to mine it for them at significant profits.

Gold is stupid and useless.

Yeah maybe 350 or 325 not sure.

275 hash / 168
375 hash / 226

I'm sure if mining has little reward you won't be mining at all, regardless of the hardware.

Velocity of money means a decrease in the exchange of money.  That's what it means.  A currency that will be worth more in the future will decline in transactions because there is little reason to spend it, when you earn money by holding it.  A decrease in transaction fees leads to a decrease in mining profitability, which leads to a decrease in hash.

A decrease in hash will compromise the network.

You don't understand bitcoins, sorry.  Read the thread, hopefully you will understand.  If not, again, sorry.

Sure, there is self regulation.  That's fine.

You don't understand one point.  Without increasing hash, the network is not secure.  If hash begins to decrease or remain at equilibrium the network will be vulnerable to compromise.  This is inescapable.

Without an increase in hash, the network is vulnerable.  If miners don't profit, the network is vulnerable. 

Inflation expectations cannot creep in to a currency that is mathematically devoid of inflation.

Yeah, unfortunately with transaction fees you have to deal with the velocity of money.  In a deflating currency, the velocity of money declines, less transactions, less fees.  The numbers you have created are pure speculation. 

The other problem is that for hash to increase, there must be either an increase in velocity or block inflation.  We reach a point where block creation is negligible.  Thus, since we agree that the deflationary aspect causes hording (which i'm not arguing is bad in commodities like gold, etc) but the proof of gold does not depend on mining.  It's the proof itself.  A bitcoin requires future proof of work.  Gold requires past proof of work.

Deflation poses numerous problems to the future of bitcoin.  They should be easily solved by a competing cryptocurrency.

Listen please explain to me how mining is benefited in an deflationary currency.

Gold mining is inflationary, we mine much more gold now then we did before, but the price keeps increasing.

Why? Because it requires significant input energy to mine it.  The same follows for bitcoins.

Why would you not accept bitcoins that were mined later since they used significant energy to mine it.  It makes absolutely no sense.  Bitcoin is not fiat, and inflation does not affect it in the same way.

Lets please recognize this point.  Otherwise people cry inflation.  You people who do do not understand that it requires a lot of money to inflat bitcoin unlike fiat.  Same as gold, which requires abundent energy.

Well avoid the 2040 analogy for a second.  What i'm trying to say is that it's a threat for adoption.  Bitcoins will become a target if they keep growing.  There is no question about it, no one should really assume otherwise.  Everything should be created with the assumption that people will attempt to destroy the currency whenever possible.  If you base every design decision on that assumption, you create the soundest currency possible.  My conclusion is that a deflating currency limits the security of the currency and opens it up to attacks.

Technology advances ever year, if there's no investment in the infrastructure, the system will be prone to attack.  If mining is less profitable, there's little reason to invest in infrastructure.  If hash remains constant, ie. no new infrastructure is created to support a growing hash.  In 2 years, hardware efficiency doubles, in 4 years, it quadruples, in 6 years it's 8x more efficient.  That means hash has to grow in response to technological advancements.  If it doesn't, the barrier to control the market becomes very small.

You can make arguments, come up with theoretical possibilities - how to defend a deflating currency.  People may mine at very large loses to protect their coins.  Sure.  If there's no profit motive, what is the point of increasing hash?  Only to protect your own money.

So, in any way - my original argument is that deflation is bad for the system.

Inflation creates a reason to mine, which reinforces the system.  Once you remove inflation the argument trends into waters of possibility.  It may be possible to defend the system, but it's much more difficult and the arguments revolve around unclear means.  

There's absolutely no reason to favor deflation, there is reason to favor inflation.

The ONLY way transaction fees will increase is through the velocity of money.  Bitcoin is designed to favor a deflationary model.  The problem with depending on transaction fees for hash growth is that velocity of money will decrease, which decreases transaction fees.  The value of bitcoins is dependent on hash.  If miners are not profiting, there's no point to increase hash, the network is less stable and secure.

If mining is unprofitable and we begin to rely on institutions to exert complete control over the system, without any individual miners, the hash becomes centralized to a few authorities - you also decrease the security of the system.  The most healthy and vibrant system is where miners are small and abundant.  When centralized authorities control large percentages of the mining pool (say if banks or walmart invested quantities of money), the network will be LESS safe.

In effect, removing reward of mining still destroys the system.

The other issue is with the velocity of money.  A deflating currency decreases the velocity of money.  If money is worth more tomorrow, you're less likely to spend it.  If you know tomorrow your money is worth less, you're more likely to spend it. 

This issue has to be address with respect to miners.

If the velocity of money decreases (with a deflating currency), the processing nodes will experience less transactions which will decrease mining reward.

Everything about a deflating currency is BAD for miners.  If miners do not support the network with hash, the network will become vulnerable to attack.

A deflating currency creates a vulnerability inside the network to attack through the decrease in hash.

This is a fact.  The fact that people are hostile to consider this point of view is unfortunate.  If they're acting in their self interest then so be it.  But this is a very problematic possible outcome for the future of bitcoins.

That's obvious.  Hash will be tested at the first reward point in a year or so.  If hash falls significantly, we can say the bitcoin experiment will end in failure.  If hash continues to rise, then it's possible that mining can continue.

The issue with your presentation, and everyone else that has explained this, is that "transaction fees will support mining."  

1) There's no proof of this.
2) It really does not matter.

I'll explain why it doesn't matter, and it should be obvious by now - unless you have not read anything or don't think.  It doesn't matter because even if transaction fees support hash (which there is no proof), you still deduct a revenue source (block reward) from miners.  Which means, miners make less money than they would if there was block reward.  It's very simple.  Shouldn't be hard to explain.

Since miners make less money than they would with transactions fees and block reward, we assume that hash will decrease once block reward decreases.

(Mining profit = block reward + fees)
 
(Mining profit = (block reward)/2 + fees) in 1 year

(Mining profit = (block reward)/4 + fees) in 5 years

(Mining profit = (block reward)/8 + fees) in 9 years

It should be obvious that if you remove a source of mining income, miners will profit less.  This will decrease hash, hash secures the block chain, and it will devalue bitcoins.

INFLATION IS NOT THE ENEMY

I don't know why people believe INFLATION(BITCOIN) = INFLATION(FIAT).  It's NOT TRUE.  Inflating bitcoins costs computational power, A LOT of it.  Inflating paper currency costs almost nothing.  

Inflating bitcoins also secures the NETWORK.  Because it gives miners profit.  When mines profit, hash increases.  When hash increases bitcoins become more valuable because they're more secure and less prone to attack.

So please, enough with the "fees will support the network."  There's no proof of it, and even if there is, it's irrelevant because inflation + fees are more beneficial.

As I addressed previously this isn't a problem if mining is profitable because hash will continuously grow.  It may become a prolem when block reward drops and minin becomes less profitable.  Hash MUST grow to keep the network safe. 

Bitcoin is designed to deflate the supply which will deflate hash.  Inflation is GOOD not bad.  We need inflation to keep increasing hash to secure the network.  The currnt design is not sufficient for a safe network of ever increasing hash.

Hopefully someone will fix the fixed supply of bitcoins.  Otherwise the network will become insecure in the future.

Please.  Enough circle jerking.  That doesn't help this problem. 

Sure, the program is elegant but the creator obvious he isn't an economist.  Without inflation the network will become insecure.  I'm not worried about the ramifications of a deflationary currency with respect to anything besides hash.  Hash secures the network.

This is pretty much a fact at this point.  There's no way around it.  At some time bitcoins will begin to devalue after hitting a peak.  People will wonder why.  It's because miners were punished by removing inflation.  This is an inescapable conclusion.

I'm sorry people are having trouble understanding this.