Guys guys guys... don't let averages confuse you.  Just because btc sent / transactions = 400ish DOES NOT mean that the average transaction is that large. Easy mistake to make.

Actually, most transactions are under 100 btc, and easily a third of those are less than 10btc.  Just watch bitcoinmonitor.com to see this.

When large accounts move a boatload of coins around, it skews all those averages you're calculating. So Synaptic, how do you like them apples?! =)

So those are pretty bad ass.

I want one now... to where do I send payment??

Awesome... any change there will be video of this?

Thanks for making the calculator, but it rests on the assumption that every mined coin is sold at market price. As long as people realize that assumption is implicit in that calculation, then it's a valuable observational tool.

It needs to be understood, though, that if miners hold all the coins they mine, then exactly $0 new dollars are needed to keep the price flat, (ceteris paribus).

There are almost too many fallacies in this thread to even begin, but let's try...

1) OP - your thesis is self-contradictory. You are claiming that bitcoin is deflationary, thus its price rises relative to goods, thus nobody spends it, thus the price is falling. Well, I must ask, if the price is falling relative to goods then it's suddenly an "inflationary" currency so people should spend it. This whole deflation argument is a fallacy - work your way through the whole process and you will discover that it fixes itself. It's the same reason you buy a new computer even though the same computer will be half the price in 8 months.

2) Bitcoin is not deflationary. It is perpetually inflationary at a decreasing rate. The fact that demand may increase so quickly as to drive up the market price is a question of demand and supply, not quantity of money. The quantity is always increasing at a decreasing rate, thus it is always inflationary until that last coin in mined, at which point it will be neither inflationary nor deflationary, but static.

3) Contrary to popular belief, spending Bitcoins does not make them more valuable or bolster their market price. In fact, the opposite is true, when you sell a Bitcoin in exchange for a good, you are expressing a preference of the latter over the former and increasing the supply of Bitcoin while decreasing the supply of goods. In other words, every time you sell a Bitcoin, whether for USD or a good or service, you are increasing the market supply of the coin and thus it's relative price will be slightly less. Consider the counter-factual: if nobody ever sold a Bitcoin for anything, it's price would rise to infinity. If your goal is to increase the BTC price, don't ever offer them in a transaction for anything.  

4) The supply and demand for coins on the market dictates their price, nothing else. The "mining difficulty" doesn't matter. It's super hard for me to mine mud from the bottom of the ocean, but I reckon the market price of such mud would be less than impressive. The value of Bitcoins is not "backed" in any way by the difficult of creating them.

5) The price of Bitcoin is greatly affected by the fact that 7200 new coins are mined each day. However, this number was the same back when we were at $30 per coin. The much larger driver of price is market psychology. When people are feeling good about Bitcoin, they buy it and when they feel concerned they sell it. Miners producing those coins will stop putting them on the market the moment they think the price is likely to go higher.

6) A good speculator knows that the mood of the market is often wrong. It is precisely when price is low, yet value is high that you should buy something.

And while the price has been falling these past months, the value of Bitcoin is much greater than it was a few months ago. It is maturing rapidly with new usefulness. Merchant solutions are finally now available. Casinos like Strike Sapphire have launched. Prediction markets like Bets of Bitcoin have launched. Massive retail offerings like BitcoinDeals are in testing. And there is much more going on than the people on the forums realize. Plus, we've now seen just how resilient Bitcoin is, surviving numerous scandals over the past few months. Even the perceived threat of new forked chains is proving totally unfounded. The Bitcoin ecosystem is being constantly bombarded with problems and inoculated against them. And STILL no significant bug or vulnerability of the Bitcoin protocol has been found.

ssaCEO - I really like your candid posts. I like that they're not sugar-coated PR corporate crap. I like that you have an opinion, and I think your reasoning is sound. I fully share your sentiment.

As an American, I too am pissed off by Washington's tyranny (thus I've moved to New Hampshire for the Free State Project). The sad, dismal truth is that America's public has permitted itself to become ignorant and slavish, increasingly happy to surrender responsibility and power to the government in return for promises of comfort. America is a socialist nanny-state living under delusions of liberty, and feeding off the lingering wealth and hegemonic status generated almost a century prior.

America has become so inverted in virtue that one is now permitted to gamble with other peoples' money, but not with one's own.

So, good luck to you and your business operating outside the tyranny zone. I love your casino and wish I could play there... especially after hearing your impassioned postings. Let's hope Bitcoin helps move the world in the right direction.

Confirmed!  Pretty sweet!

Really well said!

I've registered a few domains with Cinfu.com using Bitcoin. Was very happy with the ease of service. You can pay for all hosting, etc with bitcoins so I'd assume they can accommodate your needs.

A Bitcoin client/wallet doesn't need to be running or online in any way to receive funds. You can bury it in the backyard for ten years, sending BTC to it periodically, and upon retrieval it will update the block chain and discover your funds there waiting for you =)

So, you only need to be "plugged in" when sending money out.

Copied from Ruxum's FAQ today... what's that song about another one biting the dust? Bitcoin FTW

Half joking... let's just call Bitcoin a religion! Then, not only will it not be a money and subservient to the arbitrary rules of monies, but it will in fact be tax deductible!

Maybe it's the vodka talking =)

I sold out my dollars to buy Bitcoins. I was sick of this...

I really like the site... nice look, simple and elegant. I've sent a coin to start gambling!

good lord 

My only question is, does your definition of socialism permit an individual to own the product of his labor and that which is voluntarily traded to her?

If not, then how do you justify using force and coercion on peaceful people?

Very interesting, thanks for the post Tux. I think the phrase, "Bitcoin is a protocol" should be used ad nausem.

This whole question of whether Bitcoin is legally defined as money is a double-edged sword. If it is defined as money, then it lends legitimacy (not that it needs it). If it's not defined as money, it can remain more anonymous and more disconnected from current financial regulations.

And indeed, if Bitcoin is defined as online currency due to the fact it has market value and is traded in exchange for things, then WoW gold must also be online currency. Indeed, WoW gold even has a central issuer.

Stick the "Bitcoin Accepted Here" badge on that site... consumers need to start seeing that just like they do with the Paypal banners all over the place.

Help I'm an ignorant American... what is an "overlay currency" in the EU??

works for me too