Because the USA might not default?

No one said there would be no spending. Just no spending of bitcoins. see http://en.wikipedia.org/wiki/Gresham's_law

Fun read. Maybe we should write up a new one...

http://www.thebitcointrader.com/2011/10/365-days-of-bitcoin.html

Tuesday, October 4, 2011
The Next 365 Days of Bitcoin
Day 1: Seeing an ad on his college dorm's notice board, a teenager downloads Bitcoin. His download is the 933,112th.

Day 2: Someone in L.A. buys a Mercedes SLK grill off of Craigslist, for Bitcoin.

Day 9: The estimated next Difficulty appears to bottom out. The long steady climb upward continues.

Day 11: A member of the Bitcointalk Forums reports that his Bitcoins have been stolen from Mt.Gox. No one cares.

Day 17: A Bitcoin is still worth $5. Conspiracy theories begin to propagate through the Bitcointalk Forums. The CIA is the primary suspect.

Day 18: Bitcoin hits $5.50. The CIA is the primary suspect.

Day 25: All-time Bitcoin client downloads hit 1,000,000.

Day 27: At least three people in the United States go out to Halloween parties dressed as Satoshi Nakamoto. Satoshi Nakamoto dresses up as Lady Gaga.

Day 29: The BitLotto jackpot hits 500 BTC, the largest ever.

Day 31: Bitcoin.com comes out of Beta. No one really notices, though Tradehill sign-ups begin to climb quickly as new users search for Bitcoin.

Day 39: On a Bitcoin poker site, the first 100-player non-freeroll tournament begins. The Bitcoin poker segment begins to pick up steam.

Day 41: The French courts declare Bitcoin a "virtual currency," subject to the same laws that govern fiat currencies. Bitcoin's value nearly doubles in less than a day.

Day 46: Greece officially defaults on its debt, starting a cascade of bank credit rating downgrades.

Day 59: In the freezing cold streets of Manhattan, the protest continues to grow; the protesters increasingly fed by food paid for with Bitcoins.

Day 61: Open-Transactions goes live, changing the way wallets are stored and traded, forever. Confirmation wait-times will eventually become a thing of the past.

Day 67: Bank runs begin in Europe. The Euro continues its downward spiral towards parity with the US dollar.

Day 71: The first Bitcoin point-of-sale devices go into operation in New York City.

Day 89: The Occupy Wall Street protests are now a nation-wide phenomenon. As the protesters increasingly shun the banks, Bitcoin becomes their predominant way of exchanging money amongst each other.

Day 91: Bitcoin Realty sells its first piece of property.

Day 92: A kid in Germany receives five Bitcoins for Christmas. He quickly blows them all on Dragon's Tale.

Day 94: The US Federal Reserve conjures over a trillion dollars out of thin air to help weaken the US dollar, as American exporters are getting hit hard by the increased strength of the currency.

Day 101: Gold continues to hit record highs in all currencies.

Day 106: Bitcoin has convincingly returned to its three-year up-trend, threatening to break the all-time high set in June, 2011.

Day 117: A major exchange is hacked. No Bitcoins are stolen, but the community is shaken.

Day 122: The Wall Street Journal publishes an article on Bitcoin, asking the question, "is it time for Bitcoin?"

Day 126: Bitcoin's value doubles over the course of three days.

Day 135: Ruxum finally comes out of beta. Backed by former banking executives, it gains significant marketshare among wealthy investors.

Day 141: Anderson Cooper spends Bitcoins, live on CNN; he buys lunch.

Day 156: As the global economic collapse crushes banks worldwide, bank runs begin in the United States.

Day 161: A new crypto-currency is unveiled. No one cares.

Day 166: Someone buys a burger at a national chain restaurant, using Bitcoin.

Day 176: Version 1.0 of the Bitcoin Client is released. After more than three years, Bitcoin is no longer in beta. The client is robust, feature-rich, and grandma-friendly.

Day 184: Bit-Pay holds a "Miss Bitcoin" beauty pageant.

Day 192: A Bitcoin Conference is held with over 500 attendees. There is major media coverage - for real.

Day 201: Over 1000 people, world-wide, now earn their primary take-home pay in Bitcoins.

Day 212: Satoshi Nakamoto reveals himself to the world, declaring Bitcoin to be his Magna Carta. The FBI picks him up for questioning. He will not be seen again for 22 days.

Day 219: The first Fortune-500 company starts accepting Bitcoin as a form of payment.

Day 234: Satoshi Nakamoto is released by the FBI and goes into hiding.

Day 266: An arrest is made - the first time the identity of a drug dealer, conducting business on Silk Road, has been determined. Bitcoin's value drops 10% in a matter of minutes.

Day 291: 90% of Bitcoin transactions are now completed with zero confirmations. The double-spend is almost unheard of.

Day 301: The Bitcoin network hits one peta-hash.

Day 310: An Eastern-European country officially recognizes Bitcoin as a legal currency to supplement its own.

Day 322: While gold's value is consistently increasing, Bitcoin has decisively out-performed gold for the year, making Roger Ver look like a pretty smart guy.

Day 330: The first major online retailer begins accepting Bitcoin.

Day 336: Chinese Bitcoin users out-number American Bitcoin users, for the first time ever.

Day 347: Bitcoin's value begins to rise quicker as the 210,000th block is approached.

Day 365: Someone's actual grandmother downloads Bitcoin. She is the 24,235,920th downloader. Gavin Andresen is pleased.

It still amazes me that most people involved in bitcoin are not cognizant of the ramifications of a deflationary currency. In a deflationary currency the best decision when deciding to purchase anything is usually to decline to make the purchase. That is because whatever you intend to purchase will cost less next week than it does today, the exact opposite of an inflationary currency. The best strategy is almost always to be a hoarder.

If one assumes adoption of bitcoins will continue to increase, then the need for coins for transactions will increase. This is a constant price pressure.

Miners are not generally idiots. They must know at an instinctive level that a coin mined today will be worth more tomorrow.  It costs nothing to sit on a wallet full of coins, in fact, it is generally profitable to do so. In most cases there is no pressure for them to sell when they see daily increases in BTC value. "Why sell at $160 today when it will probably be $200 next month?" They all ask themselves this question every single day. Rather than sell their coins for more mining gear, they are far more likely to scrape together more fiat for purchases and hoard their appreciating bitcoins. This is a rational path for a rational actor.

The cost of ASIC hardware in part will always be a component of defining the price of bitcoins. "How much must I spend on hardware today to get 1 btc over the life of the hardware?" This question has as much to do with the price of btc as the need for transaction coins does. The difficulty level increases as factories churn out ASICs by the thousands will ensure that the answer to that question is "More than yesterday".

If we continue on the current path, the days of getting any daily or weekly return, even from a pool will be numbered. ASIC miners will be more akin to a lottery ticket model. Maybe your pool finds a block this week. Maybe it doesn't. Maybe you get lucky and get a few satoshis. Probably though, you won't. People will still buy ASIC miners, each Ghs a ticket for a possible payoff. Some folks will only buy one ticket. Others will buy thousands. In this environment, a single bitcoin could be worth tens of thousands of dollars. So in the end, i think the discussion as to whether miners will hoard or spend their coins is a transitory question that in another year may not even matter. Because most miners, like most lottery players, will be receiving essentially nothing for their investments. The winners will not be the clever, but rather the lucky.

Reposted to show validity of the assumption. Original post August 31,2013. How much was AM worth back then?

"The models for a deflationary currency are really not as established as inflationary, so people tend to not really understand the differences.  When the value of a unit of currency is continually rising, one of the best investments will always be buy the currency and hold. This is because the prices of everything as priced in the defationary currency will continuously drop, as opposed to always rising as in an inflationary currency. You can get more for the same unit of currency next week than you can by spending it this week. Savers get wealthier every day by doing nothing.

In an inflationary currency the opposite is true. The only way that your currency can be out there working for you is if you exchange it for something else. You must hold an asset, such as land, commodities, equities, bonds, anything that will generate an additional cash flow to at least compensate for the lost value of holding the currency. Infaltionary currency was designed to be spent, and deflationary currency is designed to be held.

Equities are not immune to this fundamental feature of a deflationary currency. If a stock costs 1 btc and the value of btc doubles, all things being equal the stock price should move to 0.5 btc. This is a simple concept that everyone should agree upon. The problem once again, is that you went nowhere. Had you held btc your wealth would have doubled. But since you are holding an asset, you gained nothing. This is fundamentally true in a deflationary currency system. You see this problem every day when people purchase asic miners, although it is overshadowed by difficulty increases.

The deflation is like and endless juggernaut, it never stops, and the base prices of everything priced in it must by definition drop and drop and drop. Market fluctuations and speculation can mask it for a time, but in the end it is relentless as gravity and it will reign supreme eventually.

Equities can certainly counteract this effect, by the inherent creation of value by the underlying company. A company may for example cost 1btc per share, and return 0.01 btc per week. This is enough to account for a 1% per week increase in the value of btc. If you purchase this stock for 1btc, hold it for a week, get your dividend, and the value of btc increases by 1% you are exactly where you would have been if you had just held btc, because the value of the stock should have decreased in a rational market by 1%.

Rumors, announcements, FUD, competition, momentum, perception,these things can also affect price. They can cause big moves and make everything look crazy to an analyst trying to sort it out. But working steadily and continuously in the background the gravity that is deflation will eat the value from any held asset. Even an asset such as ASICminer. In infaltionary currency, any asset that is not increasing in value is dead money. In a deflationary currency, an asset that that is not decreasing in value is a win, and if it rises at all you have really really really done well.

So, in conclusion, any equity that can consistently provide dividends to the shareholder at at rate that exceeds the rate of increase in the currency is better than just buying coins and holding. If it cannot, it needs to be taken out in the yard and shot because you are losing value every day you hold it."

yes, FC promised at financial statement on the 20th. That is only 5 days out.

Yes, that whole concept of not reaching ROI because just holding coins would have offered better returns really does not preclude people from attaining a profit in pure dollar terms.

There is always something that could have gotten you better returns. The only question to be answered is whether you personally end up with more of anything than what you started with. If yes, then you win.

Just curious here, but it seems to me that the community as a whole has control over what transactions are valid and which are not. Would it be possible to create a fork in the blockchain that contained a transaction from the .gov wallet that houses the seized Silk Road coins that send them to another wallet? Perhaps to bitcoin.org, or a charity, or to somewhere where it will do some good for the community at large.

Of course, 51% would have to agree by updating to new clients. But my question is not so much if we should try to do it, but rather if it is technically possible. Thoughts?

Moving forward to over 100 Th/s over the next few weeks. Sounds good to me.

Actually, one should study basic economics. One source of profit is the concept of adding value. A kernel of corn has marginal value. Within a few years it can become a whole field of corn. Value can be created, and so can profits.

If no one is making any profit, how will anything get developed and brought to market? You are predicting the end of bitcoin mining, which I feel is unlikely. Folks will always find improved designs, improved processes, and will continue to profit for the foreseeable future.

This projection could be made for any mining stock or hardware manufacturer. Profit margins are indeed falling for 130nm technology. This does not mean margins for Gen2 and Gen3 will start out where Gen1 left off.

Your estimate is a bit off. I have 9 of them and I am getting almost exactly 0.01 BTC per day. You are doing something very wrong with 34 of them.  11Gh/s should be doing far more than 0.02 BTC per day.

Too bad all of the Labcoin folks got fleeced. Their investment btc would have been appreciated by the FC sones.

My website has two wallets. One holds the customer accounts and balances, and the other holds the "house" profit. The private key for the house wallet does not exist anywhere in digital form. No one ever anywhere can possibly compromise the house wallet without physical access to that private key. And that key is not even in my personal possession, although I know exactly where it is. Someday I will use it, but not for many years to come.

Kind of like burying gold bricks in the desert. No one will ever find them without the map. If he thinks like I do those btc will never be recovered unless he chooses to recover them.

A hot wallet is only required to make payments, but is not needed to receive them.

I don't think the btc can be seized. I imagine the private key is stashed somewhere far away from any digital device he may have utilized.

If I was him I would have had the private key laser-etched into a piece of gold jewelry and stashed in a safe deposit box in some unknown country. Come back from prison 20 years later and collect your btc.

I don't think anyone will ever get at it, or at least if he was smart they never will.

Accumulating.

From a technical standpoint, every update precedes dividends since they are paid weekly. The odds of an update occurring the same day as a dividend is obviously 1/7. I doubt you can draw any conclusion from that.

It appears as if FC is investing in that newfangled cooling system which can be used in multiple industries and applications aside from mining. I am not certain this is the sort of thing many investors had envisioned when they purchased stock in a mining and ASIC company. There are however related upsides. Heat generation from chip densities might well be a future issue with ASIC producers particularly in data centers. Solving this problem before it becomes a roadblock could indeed provide AM with another competitive advantage as the saturation phase advances. Heat dissipation gave BFL a big black eye when they had to redesign. This problem is only going to get worse, and addressing it now may be pure genius.

I can't even imagine the hash capabilities of a single card jammed with hundreds of 40nm chips if you could keep it from melting down to the center of the Earth. Or a datacenter with thousands of them.

 

We may need to start pricing Labcoin in litecoins soon. 1 satoshi might be too high of a price for a share.