Look, mining isn't just an "investment", you would be purchasing equipment that you are responsible for and have to run to make a profit.  The only way around this is to pay for hosting somewhere.  In this case, the hosting company would keep your hardware on site, connect it to a pool on your behalf, and pay out to your wallet.  Take a look at KnC, you will find the fees though are actually quite expensive.  You may never actually get an ROI on your investment because difficulty is increasing at a rate of 110% per month right now, rapidly diminishing returns that can't really outlast the cost of expensive hosting.

You do have other options, you can buy BTC, or you can even invest in BTC businesses.  My business partner and I are working on two projects right now.  We have purchased our own mining equipment and identified a commercial location with electric rates at .04/kwh.  This is significantly less than the average .15 to .18 that most americans pay, and in the EU rates can exceed .30/kwh.  We are planning out a data center for a hosting service on this location.  Our rates would be considerably less than most hosting services given that we can pass on the savings to our clients.

The other business involves a billpay service.  The company is CoinChex LLC, site is under development.  I'm spreading my risk all around and investing in multiple aspects of the bitcoin economy.  This is probably the best way to generate ROI and reduce your risk.

Thanks for this OP.  I've had this conversation so many times but needed the numbers to back it up!

MSantori, I'd be interested in knowing what direction the agencies are leaning towards in their regulatory brains.  Is the concept of virtual currency something that will be regulated into the mainstream much the way the USD operates today or will it be relegated to the outskirts of our FIAT based economy?

It would be in the best interest of the Bitcoin community and economy for the Foundation to have a general idea of what direction regulations should take.  I am a compliance officer at a broker/dealer with experience at a fortune 100 company and the big players in the finance game hire lobbyists to make their point. They have an agenda and a goal in mind in terms of how regulations should be developed and how it will impact the industry.  I'm not suggesting that the Foundation hire Lobbyists, just emphasizing the importance of that democratic, community-driven process.

I will say you've convinced me about the Foundation.  My colleague and I will be joining.

Thanks for the information and representation.

I really like this no waste attitude.  This is why I preordered from you guys.  Thanks Sam.

If it's not relevant why are you bringing it up again? If you don't do your job you get fired.  Is it complicated to you?

Completely different argument. You made a pure Employer-Employee contract argument.  If you don't do the job you're hired to do, you get fired.  That doesn't mean I don't pay you a reasonable wage to do the job when you do the job I hired you to do.

You can't negate the fact that the 1% controls the majority of the wealth in the world.  We aren't talking about redistribution, we are talking about supporting the base of the pyramid that the entire economy is built on.  If you don't take care of the foundation, the rest of the house will crumble.  The stronger the foundation, the bigger the house can be built.

Let me pose it differently.  If tomorrow McDonalds raised their wages and exceeded other fast food chains, would you still have the same argument that bums watching hentai and breaking bad all day worked there? Or would you instead be dealing with a higher class employee striving to get a job at the better paying McDonalds?

There is nothing wrong with paying employees more to do jobs, all it means is that there is an immediate reduction in profit margins for teh business and reduction in take home at the top tiers.  It is a better long term stance in terms of growing corporate profits through adding spending power to the consumer base.

I will never understand the comments about getting paid what you're worth.  The lowest levels of labor should get paid the lowest of wages, but those wages should be the bare minimum needed for food and shelter and wages should rise from there.  If you're workers can't survive, how can they continue working for you and further, how could your business continue to thrive?  It's again very simple economics.

To argue the alternative is to basically say, corporations are entitled to all the profits they make and owe no one anything.  The CEO's at the top should be able to take the chunk they want because they are at the top of the entity that deserves it all.  Clearly this is misleading, because corporations wouldn't have profits without consumers and they wouldn't have profits without workers providing their services or producing their goods.  Lose the economy, you lose the profits and the benefits of running a business.   Again, econ 101.

Lastly, consider that workers are paid because they are NEEDED by the company.  Do you really think you get hired at McDonalds to flip burgers because they are just looking to help you out?  It's a fair transfer and should have a mutual benefit for both parties involved, even if it requires low skilled labor. 

Won't be long until machines are able to replace many of the labors we do on a daily basis  I read an article this week about artificially generated beef, grown through stem cells.  So how far away are we from artificially grown beef, automated cooks and serving machines and a prerecorded voice taking your order at the drive thru?  Should be a super fun argument when we start debating labor and fair living wages then.

Not everyone is intelligent enough or motivated enough to start a business.  If they were, we would be chock full of businesses with no workers!  We need workers, don't fool yourself.  If you are a business owner, you understand the value of having employees and people under you.

Also, they are still bottom of the barrel.  So does that mean they do not deserve a living wage, even if they work 40 hours a week?  I fail to see your logic on whether they deserve it.  You deserve a living wage if you work, period.  If you do MORE work, start a business, provide more value to society, you deserve more than a living wage.  Pretty basic stuff.

If they have 100,000 US employees, and paid each of them an additional $1000/annually, that would amount to $100m in wage increases.  Their net income would fall from $5464million to $5364million.  You still don't think they can afford it?

I agree they tiptoed around the word Money and even plain Currency.  It was certainly implied and the direction was clear.

Next question is when will dividends from companies like ASIC Miner require a 1099-DIV!

Ah this entire thread is too good to pass up!  The OP was clearly enticing an argument, let's be clear on that.  He feels one way, provided little to no factual data to back up his argument, then invites an opinion.  Clearly it will not serve to convince you of anything.

Inflation = Basic function of economics.  As economies grow, as we add GDP and produce additional goods and services, as money supply increases, then the value of what you currently hold decreases in proportion to the goods and service available.  This is called inflation.  It is the same thing happening to your mining rigs as difficulty "inflates" and reduces the amount of "transactions" it can do proportion to the rest of the network.  So first point, this happens in every economy and is innate, it can't just be blamed on certain entities or people because there would be no growth if there was no inflation.

As the economy grows, those at the top are the ones who reap the largest reward.  Think of the economy as a giant pyramid full of workers at the bottom and Businesses at the top, followed by CEO's and Execs until the lower levels reach back into the basic workers at the bottom.  Revenues, product creation, services all start at the base level with the workers.  The revenues flow back to the business at the top, trickle down the CEO and Execs and through middle management till they reach the bottom of the pyramid.  The bottom produces the most but everything flows through the top first where the lions share is consumed by the business and corporations then passed on the top tier individuals and downward.

Now workers are producing all the product and through productivity they are growing the economy.  As the economy grows, what happens? That's right we get Inflation!  Yes, it's a sign we are doing well!  The problem is that the workers are not compensated for this growth in the economy, they are not paid wages based on inflation.  They are paid wages based on the box that they were originally hired into. Good bad or indifferent, that's their box.

Ultimately it falls on the corporations and leadership to make SURE that their profits and growth are actually passed on to the workers producing the goods and services.  

When the cost of living continues to rise and workers do not receive basic living increases, they are basically working themselves to achieve growth for someone else WHILE their standard of living decreases.  No one wants to be in that situation.

Whether these particular strikes are founded or not? The OP needs to provide more information.  Does McDonalds actually have 5-10% margins? On how much Revenue? How much is Top Brass being paid in comparison to their lower level employees?  What is the basic standard of living in the area?  

Fact of the matter is, corporations need to go back to the basics.  Better paid workers mean better paid consumers and equal higher corporate profits. So inflation continues to rise.... We need dynamic wages and income increases to keep up!

This logic would work, if bitcoin wasn't taxable. Theoretically it IS taxable income the moment you convert it to USD.   For now, you most certainly can pay for goods and avoid income taxes with the coins you earned but it would be foolish to assume this is "tax free income".

Today there was a court ruling that Bitcoin denominated investments were in fact securities and would be treated as such.  https://bitcointalk.org/index.php?topic=269612.new#new

This means that those bitcoin dividends you are talking about spending, those are coming from a security in bitcoins.  That security in bitcoins now needs to obey SEC rules and regulations. The exchange offering those BTC securities also needs to obey rules and regulations.

The implication here is that dividends, are 1099-DIV income.  If you are being paid dividends that's taxable income.  It may not be today, but it could definitely be backdated and reported to the IRS if companies like ASICMiner are now required to comply with regulations....

Buyer Beware.

Bitcoin was already deemed money when FINCEN started requiring MSB filings.

The interesting part of this ruling is that all the complex products out there that are derived from bitcoin will now be under regulation by the SEC.  Companies like ASICminer with public exchanges of their shares paying out dividends will now be subject to SEC regulations.  The exchanges allow for these securites to trade will now also have rules and regulations to comply with.  Any sites offering CD's or notes that pay interest will also have to pay close attention to the regulations they fall under.

I can see the argument being made that perhaps these securites are offered and solicited on the web in countries outside the SEC's jurisdiction, but any US based site or service will absolutely need to reassess whether or not they are complying with regulations.

Very interesting indeed.

Tried explaining to my wife what Bitcoins were.  That didn't go over so well

BFL is a scam.  How can anyone seriously argue otherwise?  OK, you can make the case that they ARE shipping product right? They still aren't delivering on promises, to people who should have received units. They aren't offering refunds to customers either who are clearly not going to receive their product anytime soon.

WAKE UP PEOPLE.  You mislead customers = SCAM.  You pay for product that you haven't received and you can't get your funds back = SCAM.  Customer service won't answer your questions or give you a reasonable expectation = SCAM.  Sure you might get a unit, or you might get your money back, but most people won't.  Even in a Ponzi scheme a few people can take out what they put in, the rest get burned.

Cut and dry.

Is BFL actually shipping chips? Or are those on backorder like the rest of their products?

Bitcoin's market cap could absolutely exceed $1trillion.  It isn't a near term goal but 10-20 years from now, who is to say it isn't possible? The market cap is a direct reflection of the value it's holder's give it.  If the market cap isn't large enough for individual holder's to maintain a sizeable portion in their wallets (i.e. enough to make daily purchases, receive wages, pay taxes, pay your mortgage, have a savings, etc) then it cannot ever replace FIAT.  There are other obstacles mentioned in this thread as well.

If 15 years from now, bitcoin is worth $40,000 USD per coin, the market cap will be roughly 750 billion.  That means 1 billion people could hold $750 each, or 10m people could hold $75,000 each to put it in perspective.

I want to point out that the OP's question was whether Bitcoin could or should replace FIAT.

The answer is a resounding no.  Bitcoin is a substitute or alternative currency.  It is a global currency and an online currency, very much unlike any of the current forms of FIAT.  This is where it's primary strengths lie.  As the economies of the globe become significantly intertwined it makes sense to share a simple and easy way to make transactions and spend between countries. No other currency allows for this in a simplistic manner.
 
FIAT of other countries will remain the base for determining the exchange rates between countries....  Bitcoin is no where near large enough to operate as a currency of scale on a stand alone basis.  It's value is going to be derived from the other currencies of the world as it changes hands.

Bitcoin is significantly less expensive for businesses. There is no risk of chargeback and the fees are exceptionally lower than standard payment methods.  You can't ship cash to pay for something online. There is also a very low risk of fraud.  Without more research, it is hard to say if it is a safer form of payment for businesses than accepting credit cards but I would venture to say there is far less fraudulent activity in bitcoin purchases than credit card purchases.

The benefits for business, the ability to be used globally, as well asthe low risk of theft and ease of use on the internet are all factors to promote the adoption of bitcoin AS an onlien currency.  Not necessarily a replacement for FIAT....

That being said, Bitcoin isn't even large enough to support replacing a FIAT.  If it has a $1billion market cap, then 10 million people could each hold $100.  That is not enough to support a population in standard trade.  The market cap would have to exceed $500b to $1 trillion to service a large portion of the global population.

My vote was it stays around 100.  I would actually say there is a soft ceiling around 111 at gox. If it breaks it could run and hit another soft ceiling.  Long term I say growth, necessity of it's design and assuming adoption in the economy.

I wouldn't be surprised if you see a flat coin for another month, trending between 85 and 115.

That's correct.  First to market has to reap the benefits, that's the only incentive for even attempting to be first at something unproven.  Granted, everything about bitcoin is speculative.  It's a new currency, only a few years old.  It still has limited adoption rate and usability given comparison to the rest of the world.  And it is exceptionally volatile, easily trading in -+ 10% a day.  

With all that being said, speculative can also be extremely lucrative.  Bitcoin has established a pretty solid history, it averages somewhere between 30k and 50k transactions a day.  The current price has actually hit a floor around 70/coin and rebounded from there.  It has peaked around 260/coin and is currently facing a ceiling at approximately 111/coin.  

Take a step back and look at the market as a whole and you see that a large amount of USD is constantly being pumped into BTC right now.  MTGOX CEO made a statement in April in an interview that between 300-500k was being withdrawn for every 1-3m coming in.  ASICS purchases are direct investments into the Bitcoin economy.  There has been millions spent on ASICS in the last year, probably in the realm of 50-100m at a minimum.  This has a positive impact on the price of bitcoins.  When bitcoin spiked to the 260 level in April, it was shortly after the introduction of ASIC miners into the community.

We can "Speculate" that growth will continue based on the current trend line.  That would indicate the price of BTC has to rise.  As adoption rates continue in businesses across the globe and BTC finds more uses, you will see an increase in demand as well as an increase in transaction volume.  When demand rises on a limited supply, you will also see a price increase.

The point here is that this is a speculative investment.  It's not a foolish one if you understand the risks, BTC could suddenly see massive regulation, drop to less than 25/coin, and all these ASIC's would be far from profitable.  Such is the risk you take, tread carefully.

I have to agree.  I just found this thread.  I for one feel no trust in Butterfly.  Most of the community is probably starting to realize that not only is Buttefly making very little measurable progress shipping units, they are refusing refunds and being exceptionally derogatory to customers.  That's just not the way any reputable vendor does business.

Micon, if you hit this one right you seriously have credence in my book.  If anyone else wants to judge Josh and his actions, take a look at some of the posts he makes in the Newbie forums under Butterfly Huge Scam thread.  Just unreal.

Can't hate on ASIC Miner for being the pioneer.  Competition will prevent them from reaching 51%.  Hopefully it won't be an issue anyways.  But at some point, there will be more profitable ventures for the company beyond simply mining and competition will continue to erode their hashrate share.