Because there are bit torrents?

hi I'm a smalltime btc miner since 2011, been hoarding bitcoins ever since, I hope for the best with bitcoin's future, although I'm worried about scalability.  Here's to a new world of opportunity afforded by btc!! Cheers!


oh btw, blatant attempt for alms...
12daoeCw2CWboGTY8AzrB4FfEKNcKkuMdx

 lo and behold, the powers that be have just "crushed" the "value" of gold. hmm down 9%, buy buy buy?

20 million $ figure just popped into my head, me trying to figure out a way to give bitcoins (or any "cryptocurrency") some tangible intrinsic value in a traditional sense [ie in terms of $ or preferably gold].  Such a continuity might be crucial for the wider adoption of bitcoins (or any "cryptocurrency").  History has shown us even paper money had its origin in bank notes in exchange for real money (gold) [Whether a bank had enough gold to pay out its outstanding notes is another matter...].   And paper $$ was even backed by gold  (although "appropriate downward revaluations" was done from time to time) until the nixon shock that made paper $ fiat.

All I can say is from my experience from cashing out at mtgox,  I saw a bid and ask spread of 14$,  I made an offer to sell my bitcoins at the midpoint between the ask and bid.  I waited 20 minutes and saw buy orders executed above my ask.  Now in a "fair" exchange, this should not happen.  Now I am wondering if this is really a "technical glitch"??  Or is mtgox purposefully designed to create the necessary volatility to magnify the feedback loop mechanisms of a bubble market to inflate the value of bitcoins??   I mean, from my above experience, a bid/ask spread of such magnitude should attract market makers looking to profit from the spread who would in turn compete with each other thus closing the spread into a more "sensible" equilibrium.

Now this might all be an accident due to mtgox's poor implementation of an electronic exchange couple with the ddos attacks from entities with dark intentions for bitcoins.  But with such episodes of crazy volatility, it only undermines the adoption of bitcoins as a serious medium of commerce.  Who in their right mind would conduct business in such a "currency" whose relative value to fiat $$ fluctuate so widely???  Some vehemant backers of bitcoins say that we should abandon $$ and create a bitcoin-only economy, but the fact is businesses still use fiat and have costs in fiat.. now if btc/usd fluctuates so widely what legitimate productive entity would venture to earn btc while having costs in $???  The feasablity of a "transitional state" of earning btc and have costs in fiat needs stability in btc/usd exchange rate.  While it is true the total market value of bitcoins is insignificant compared to the total value of the world economy expressed in fiat, without this stable "transistional state" it might well serve as a barrier to btc adoption and thus undermine its future value.


  We simply need a better and more robust exchange or system of exchanges that can handle the neccesary volume of btc/usd exchange in a more orderly and sensible fashion to solidify this new currency's status.

In other words, mtgox sucks (for now, i'll give it a chance let's see what happens).

One cannot argue that mtgox is quite naive in terms of "market making"... mtgox with 80$ share in THE market for bitcoins.  The delays caused by huge lags and other technical issues have only exacerbate volatility.  If bitcoin becomes too "hot" or volatile a currency for any serious entity to conduct meaningful commerce with it then that could spell its doom.  Current backers argue that the anonymous and worldwide instantaneous nature of bitcoin transactions and an upper limit on the total bitcoins in existence command a high price for a bitcoin.  After all, there can only be 21million possible to come into existence, there are 7 ? or 6 billion people on earth.   On the other hand, detractors say that there is no intrinsic value for a bitcoin, such that if one were to amass as much bitcoins in existence it would not be worthwhile because its intrinsic value is 0$ if everyone in the world suddenly stops accepting it as a medium of value.  That wide gulf in opinion along with a poor trading infrastructure either by design or accident is what is causing the current wild swings in current prices. 

Now what if an altcoin upon its inception was backed by a prize.  let's say 20million $ in gold for 20 million said altcoins and only 20 million with similarly a 21 million coin upper limit.  Theoretically, it would have a book value of 1$ per coin (not taking into account discount/premium calculations that would affect its present value).  So assuming its "mining" infrastructure would reach a point at par with bitcoins, speculation on what should the value of this gold backed altcoin would be tempered as it would affect..

 1.speculators argument that its value should shoot to the moon because another viable altcoin with all the features of bitcoin has been created.

 2.detractors argument that it is worthless, it is has a prize $20 million worth of gold for 20 million said altcoins. 



Now my argument could definitely be too simple to create intrisic value for this altcoin, because...

#1... one unit of said altcoin is worthless, you must get 20 million out of 21 million to get the prize.  How should one value 1 unit?  What if everyone see that the condition of getting 20million coins for the prize is intractable then the value of one coin might as well be worthless.

#2... what if the database is corrupted or forked??? what will happen to the prize, that being said,  the same thing can happen to bitcoins...

#3.. other nuances or details just hast come to my mind yet..


Another possible solution is to pre-create the altcoins and "sell" them at book value, but then who would "mine" for the next block? 

The current situation would need one very rich patron though.

Offer to sell 10,000 bars of gold for let's say 20 million bitcoins and only 20 million bitcoins.  So one person would need to amass 20m out of a total 21m coins to get the gold.  at 400 troy ounces per bar and for simplicity let's say about 1500$ per ounce. 

thats 400x1500x10000  = 6000000000 or $6B

if you can find someone with this much gold AND is willing to exchange this gold for ONLY 20m bitcoins for this then the book value of a bitcoin would be 300$ ($6B/20M). But of course it would might well be discounted for future value (ie. figure when do we actually get to a total of 20m bitcoins in circulation) and the  volatility of gold pricing in $$, and the risk of bitcoin's compromise (crypto cracked, database fork, scalability issues, etc etc.)... 

Such an offer that can be proven legitimate would put a psychological floor in the value of bitcoins other than 0$ to those who need to see tangible value in the coins. Right?  But of course it would all depend on the fine print of the offer where everyone can see the race for the gold is a fair game. 

Also, we have to answer the question... would such a game lead to a stable equilibrium for bitcoin pricing???