It is common to hear people explain to newcomers to bitcoin that "its not about the coin generation or getting free money, its about creating a medium of exchange". I am interested in what the current ratio of generators to non-generators in the community is. Obviously this is an extremely NON-scientific method of examining that. So:

1) Have you been using bitcoin for more than two months?

2) Are you currently attempting to generate coins?

3) If not currently generating, have you attempted in the past? If generating, how long have you been generating?

4) Have you ever succeeded in generating a block? Many blocks?

5) Why or why not do you generate? Purely profit-oriented comparison of cost of generation with market value in another currency? Just for fun? As a selfless contribution to the mathematical strength of the proof of work?

Feel free to answer as much or as little as you like and I'm also interested in anything else relevant you would care to add. I will reply to my own post as the first answer.

I have a couple suggestions for additions to the bitcoin FAQ. In the section headed "Where does the value of Bitcoin stem from? What backs up Bitcoin?", the material that is there now is true but seems to be missing a few important points that I think would help make the section more convincing and explanatory. My understanding of this has grown from the discussion in a previous thread on whether or not bitcoin minting was "wasting" energy. I feel like I now have a better understanding of the value of bitcoin, so I hope my understanding of this might be useful in explaining bitcoin to others. I would propose adding something like the following after the first two sentences:

"At the time of this writing, Bitcoin's chain of proof is the result of over 6 quadrillion cryptographically secure, verified calculations carried out by many independent computers. This large and growing input of energy and technology is part of Bitcoin's value, and represents a substantial investment of resources by Bitcoin users in creating the benefits of a trustworthy medium of exchange."

I think related material should also be added to the section headed "So your wealth is determined by the amount of CPU power you have?", something along these lines:

"All currencies need a method for regulating the money supply and creating circulation. To make Bitcoin secure, a large amount of computer work is required. The Bitcoin process for introducing new coins into circulation is designed to make the currency secure by encouraging users to perform the necessary computational work by awarding the role of introducing new coins into circulation in rough proportion the amount of computer power contributed to this goal."

I think explaining these positive features of the Bitcoin design would help people understand where the value of bitcoins comes from.
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Let me begin by saying that Bitcoin is an amazing project and I am very impressed with the implementation and the goals. From reading these forums it seems to be understood that debate about the design and operation of the bitcoin economy ultimately serves to strengthen it, so I hope these comments are taken in that spirit. *EDIT - I have been convinced by further research and discussion that Bitcoin is actually highly efficient compared to most traditional currencies, because the infrastructure required to support a government issued fiat currency represents a much larger investment of resources than Bitcoin's cpu power consumption. I am leaving this thread active though because it has been generating a lot of interesting discussion.*

I believe that the amount of energy input required to the bitcoin economy represents a serious obstacle to its growth. I think in the long-term, transactions may be even more serious than minting in this regard, but I will for the moment discuss minting because it is more precisely bounded and defined. The idea that the value of bitcoins is in some way related to the value of the electricity required, on average, to mint a winning block is generally accepted, but the precise nature of this relationship is contentious.

One argument is that anyone who chooses to generate coins is actually making the choice to purchase bitcoins with electricity/computational resources, and that because some/many people are in fact making that choice, bitcoins have at least that much "value" to the generators, who can be assumed to be maximizing their utility. A contrasting argument is that cost of production is different than market value, and the most objective measure is the current market conversion price to a more liquid and widely traded currency such as the US dollar.

My contention is that both of these arguments miss the point and the real problem, which is the fundamental perversity of wasting large amounts of energy and computations in generating the winning blocks for the minting process. The minting process exists because of the necessity of actually "printing" the currency, and certain desirable properties of crypto-math for making the currency's behavior predictable. The fact that the current minting process requires a large energy input of computational work is highly unfortunate and has the perverse consequence that bitcoin may actually be "destroying wealth" in the sense of wasting energy producing a digital object worth less than the resources invested in it.

As is often pointed out, a currency does not necessarily have, or need to have, any inherent value - a medium of exchange is a useful tool and can have value purely as a consequence of social convention. The cost of production of bitcoins in electricity consumed represents a waste, a "thermodynamic burden" that the currency has to carry. Consider a hypothetical alternative digital currency called "compucoin", which purchases cpu cycles from nodes on the network. The market value of this currency would converge very closely with the cost of electricity required to generate cpu cycles. Instead of costing cpu cycles to mint, the value of the cpu cycles the coins could be exchanged for would create a rational basis for the currency's value and integrate it with an existing market. I imagine that alternatives to Bitcoin (many of them probably sharing a lot of Bitcoin's source code) will inevitably emerge and Bitcoin's current minting process makes the currency "expensive" in terms of energy input. I believe this places it at a competitive disadvantage to other currencies and can only hinder its widespread adoption and long-term value. *Edit - as mentioned above, I am now much more optimistic about Bitcoin long term. I still think compucoins would be a cool idea, though!*

After downloading and starting bitcoin from the sourceforge download last night, I was not at all pleased today to discover that Bitcoin had decided to add itself to my Gnome startup applications as its default behavior upon being run. Deciding that just because you ran an application once, you want to run it every time you start your computer is behavior I associate with junkware and malware - and the fact that Bitcoin is a p2p application that dials out and also runs a listener makes getting users' informed consent before making changes to default system behavior all the more important.

Please change the option "Start bitcoin on window system startup" to default to off. I understand this is intended as a feature and has no malicious intent, but especially for software that has the goals of privacy and security for users, I think it is best practice to have minimalistic about making changes to the system. Bitcoin is a very exciting project and maintaining a high degree of user confidence in the software and strong reputation for honesty and transparency will add value to the currency.