One thing people tend to forget: The difficulty rise is already priced into the market rates.

In other words: All people who trade BC know that the difficulty will rise and thus they already considered it in their decision to buy or sell BC.

Thats very common in stock markets: There are often situations where a company releases very good raised earnings - and still the stock of the company goes down? Why? Because the people who buy/sell stocks always have expectations in the future - and those expectations determine the price, not the current situation of a company or a commodity.

With BC it's the same: The current price is based on expectations of BCs future, not the current "state" (like difficulty). And since everybody already expected the current difficulty jump (and also the next etc), those informations are already considered in the current price. It only has an impact if for example the next difficulty jump is much higher or lower than expected (or other unexpected things happen).

Not necessarily. The green line is only updated after trades while the yellow is updated on order-book changes. Lines can overlap if new orders are added which are higher than the value of the last trade and no new trade is done for enough time to make it visible.

You can also increase your mining gains:

The idea is to delay the next difficulty jump a bit which means that you will get "cheaper" BC for some more hours compared to the situation without disruptions. At the same time, parts of your competition can't use this "cheaper mining time", because they are DDOSed. As a result, you got a slightly bigger piece of the cake. It's hard to calculate the gains exactly, but if you have cheap access to a botnet and also some nice hash-rate at hand, I think it can be quite profitable.

I don't really see why people think that Bitcoin would really change the balance of power.

What hinders people with lots of money to simply buy lots of Bitcoins? Of course not from one day to another, but in small packets over time, so that they own enough to have as much control in a "Bitcoin world" as they have now. I suppose this is already happening to a certain degree.

Or what hinders a government to impose similar legal regulations over Bitcoin comparable to the regulations which exists today? Even if Bitcoin in itself may stay independent, its always possible to regulate the interface between the currency and the "real world". Even if they can't get a grip on BC itself, they can control services like Mt. Gox and all the companies who trade in BC. While it's convenient to be able to trace money flows, it's not necessary to stay in control. You only need to be able to look into the books of one side of a trade to know gains/losses of the other.

Can you go into the the admin-interface of bitcoin.cz to get your IP adress whitelisted? Afterwards set the url in your miner to api.bitcoin.cz and try again.

Also to consider: The system regulates the number of BC mined to 6*50 per hour in the moment. This means: The more miners there are, the less each of them gets. The size of each share is proportional to the hash-rate of a miner, so you may out-power other miners for some time, but in the end, your share is always proportional to the total has-rate of the all miners. So if you think to tell all your friends and their cat: Think again. OTOH: The more people know about BC, the higher the exchange rate may get...

And all this has nothing to do with the current exchange rate of BC. This rate mainly depends on market expectations and influx of real money. So expectations that the price of BC in $ will grow together with difficulty may be disappointed. In the moment I think this is simply coincidence because both influx of new miners and influx of money stem from public interest and this grow in a similar way.

Spread isn't just a matter of volume, on most stock exchanges there are so called "market makers" who try to limit the spread and make some money in the process. It's primarily an automated process which is done by programs now. It only works because the market maker get special prices for their transactions and in exchange the market maker reduces the spread of a stock.

That's very hard, because the central bank can hold against it. They generally don't do that if a fiat currency loses against another fiat currency (sometimes a bit, but that's more for psychological reasons), they do it to hold the currency on a small price rise rate (which is seen as useful by most economists). Also as I wrote above: Most people don't have that much money, even if they have a lot of wealth. But with Bitcoin there is no such stabilizing entity, it's all on the market. And markets tend to fluctuate a lot, even with high volumes. And from time to time there is a crash. That's natural. The question is: Is this really something we want for a currency?

Most people here seem to have an "everything will be fine in the long run" attitude. While this is certainly good to get Bitcoin started, I still see the problem, that Bitcoin is to much defined es a commodity instead of a currency. Its design is to mimik some properties of gold in this regard. But while gold has the big advantage to work very good in low-tech situations, it doesn't work that good in a world with world-wide stock exchanges and global trade and competition (that's why it got abandoned as a base for most currencies).

Gold is also still a nice way to store a certain part of personal wealth, and in the case of global economic and technological collapse it may get back it's role as currency. But that's because of it's physical properties - properties, Bitcoin don't have. If "the system" breaks down, Bitcoin will be useless because it depends on todays high-tech infrastructure which probably won't survive a real collaps.


But this only works because we have the Dollar as a relatively stable benchmark. Without such a standard it would be much more difficult to really judge how to fix your prices. You would always have to match it against your purchase and restocking prices. While this would be possible, it opens up lots of potential problems which are hard to handle. Because of this, bigger companies often use futures and the like to protect themself against such currency risks (which do exists in fiat currencies, even if to a much smaller amount an primary in international trades between different currencies). Now imagine, everybody has do do something like this because of much higher currency volatility.

They don't distribute it evenly, the give it the government which uses the additional money instead raising taxes or cut spending. Of course the people who would pay the highest taxes profit most from this, because those people would otherwise pay the majority of the additional taxes, too.

But those people generally don't own much money, they have much wealth. That's an important difference here: Much wealth doesn't mean much money, it just means property which may be sold later for money. But unless someone really does this, there is noone with a huge stock of money. And why should someone trade his wealth for fiat money unless for short-term trading purposes?

Only if I would be able to sell them to this prices, too. Which isn't possible, of course.

You (and lots of other people here) make the big mistake to look at BC only from a "consumer point of view". But to make BC succeed, the people who sell things are at least as important, if not even more so.

Now imagine you want to sell goods over the Internet. Do you really want to think about massive price fluctuations of the currency people pay you with? For certain goods (like drugs or porn) this may not be a problem because the advantages of BC are bigger. But if you sell for example computer hardware over the net, you have small margins and need some price stability. If you can use a fiat currency for this and only switch to BC directly before and after the trade (with a reduced risk of losses), this may work.  But how would BC replace fiat currencies, if you still need them as a "safe haven" for trading?

Also people need to consider the emergence of a derivative market for BC in the near future. This would increase fluctuations even more and could lead to additional risks and market manipulations.

True. But:
- Even much smaller movements can cause enough trouble for a real currency.
- The hen and egg problem: To get Bitcoin into the position as a real currency it first has to prove its suitability - which will be very hard with these huge price fluctuations.
- One of the reasons no single entity besides the central banks controls those huge amounts of money is the central bank system in itself.

No, because the bigger the market, the bigger the participants of the market.  Also there are well known psychological effects which lead to mass sells/buys in certain occasions.

This is not a problem in some limited sub-market (like a certain part of the stock-market for example), but if it hits the primary means to do trading, it can be very dangerous because it affects the whole economy.

Fiat currencies are a means to do short term business. They are not useful as a long term value store.

If you have some wealth, it should be put in something which is independent of a currency, like real estate, stock etc. Of course this has it's own risks, but there nothing like 100% security.

OTOH: Fiat currencies are much more stable in the short term as any other means of parking value because they are stabilized against the market from the central banks. Unregulated systems like Bitcoin have much higher price fluctuations which makes them less predictable and thus much harder to to business with.

Gold is no currency. For the same reason: Because it's a limited resource, it's prone to speculation which leads to heavy price fluctuations which in turn interfere with the economy.

Of course this is something relatively new. Before there where global stock exchanges, speculation was much more limited as today and thus price fluctuations because of speculation.

The core idea of (modern) fiat currencies is to provide a stable exchange media which is required for every stable economy. This is done by having an independent organization which controls the amount of circulating money to stabilize it. While it's still possible to speculate with fiat currencies, it's less profitable because of the artificial stabilization through a central bank which often goes against the market. As the result the currency is much more stable which makes trading etc much more predictable if done with a fiat currency. Which in turn leads to economic growth.

With Bitcoin we see what happens if currencies are subject to heavy speculation: The value is changing rapidly, and this makes trading and any kind of accumulation (which is necessary if someone plans bigger investments) with the currency very risky. And this will probably prevent the use of Bitcoin for it's primary use: Trading. People want to trade and people want to speculate. But only very rarely they want to do both at the same time with the same thing. If you have to take currency fluctuations into account to find the right time to buy things, this isn't what most people are willing to accept. As a result they will probably stay at some fiat currency for trading and use Bitcoin for speculative purposes only - which may kill Bitcoin in the end.

Any idea how to overcome this problem?