That's not a mystery at all.  The reason the difficulty has been postponed is many namecoin miners learned to use a calculator.  They figured out they'd be making at least 30% more nmc/day buy mining bitcoins and buying namecoins.

http://dot-bit.org/tools/nextDifficulty.php

That difficulty calculator is a bit off.  I expect the actual difficulty to be lower than 22,000 but let's use their estimate.

22600/1696899.99 (their estimate of btc difficulty on the 19th) = .0133.  Current exchange rate is double that at .025, so for about a day namecoins will become 2x as profitable as bitcoins to mine, which means we'll all dogpile on.  Or price of namecoins will drop to the current discounted rate of 40% vs bitcoin, or roughly .008 BTC/nmc (1/4 current price) and nobody joins.

Assuming we all dogpile on and mine out all 2016 blocks in 20 hours or so we'll have a difficulty jump to about 80k.  Which would give us an NMC price of .0532 - well over current .04.

But wait!  People will anticipate that BTC difficulty increase and the next NMC difficulty drop after ~2 months or so of NMC miners eager to mine at a loss, so we'll be right back to roughly current trading levels.  Except NMC miners will enjoy giving away another 10-20%.

https://exchange.bitparking.com/main

At the moment they are only convertible to BTC (for a fee), so anything applicable to bitcoin is also applicable to namecoin, except even more so.  Also at the moment there's a 40% discount built into bitcoin (for miners).  On the 22nd or so you will be able to mine one namecoin to every .013 bitcoins, and they're currently trading at .025 -- which means there's already a 100% appreciation priced in even with namecoin miners accepting 40% loss for their processing power this minute.

In other words, you would be mining at a 40% loss relative to mining bitcoin and buying namecoin if you did it now, and have a 50% potential downside built in.

But don't let that stop you, plenty of people are doing it anyway.  I'm waiting till the 22nd to mine, and prices below .012 to possibly buy.

People have been selling for weeks and considering the volumes are much larger than 7200 a day it's not just us miners.  There's plenty of cash available, it's just not ready to go back in.  New deposits have little to do with it. 

Now, if the price drops to $11 and you still don't see buyers lining up you may have a point.  I'm sure I'm not the only one waiting for either a resistance level to hold or a clear up trend to manifest before I start building a long BTC position.

When my wife learned about this hobby and my re-ignited trading interest she was all like, "wait, you're excited about playing with less money than this date night is costing us?" but then she was all like, "cheap entertainment I guess..."

At this point my target is either an ATI 7 series card equivalent to a 580GTX or so or the 580 in the first place.  Timeframe is around January.  Let's see how it goes.

Oh yeah, definitely eyeing this one with a massive bear bias short term.  Money briefly flowed back in, but that appears to be trending down again.  Evening could very well be interesting, and I'm prepared to buy.  Or sell the 2 newly minted coins, as soon as they're at mtgox. =)

We also have to keep in mind ONE early adopter wanting a Porsche trumps all the charting and prognosticating we're doing.  90% of all bitcoins are still MIA and that's a massive stick to beat any TA with.

Looks like bid wall moved to $13.  Massive amount of ask walls up.  Yeah, someone is working very hard to get the prices down this weekend.

http://bitcoincharts.com/charts/mtgoxUSD#rg5zvztgMzbgBzm1g10zm2g25zi2gMFI says it's not time to go back in.  Not by a long shot.  Money is still flowing OUT, and has been the entire time this thing was utterly flatlined.  When the trend reverses there may be quite a bit of pent-up demand and we could rocket up -- or not, if this was someone expertly manipulating bid walls to cash out on the ask side the whole time.  Only time and charts will tell.

Mined 2 coins to sell again, but going to risk the Monday/Tuesday effect to sell them.  Yeah, I'm ignoring technicals for pure faith-based speculation.  That never ends well in the real world -- but then again, it's only $3 or so considering my first buy target is tenatively $12 anyway.

Hasn't this functionality already existed in current miners?  I can simply fire up a miner or two or three using the same OpenCL device and point them to multiple pools.  So I could fire up 2 vs btcguild, one vs deepbit, one vs slush and one vs bitparking and have roughly 4:1 split on mining power between the two block chains with built-in redundancy for pool failure.

Am I missing something here?

edit: apparently I am.  very clever.  going to check into how I can implement this.

The "kids" who "wasted" their time and money in '09, '10, and early 11 with this could now buy an entire data center with the proceeds.  The exact same arguments were made then, are made now and I guarantee you will be made until bitcoin either becomes mainstream or disappears.  Check back in a year to see which is more likely.  At some point those arguments could all be right, or they will all be proven wrong.  IMO there's no reason to believe the point is now.

Developing a $ to BTC exchange and mining pools also seemed like a dumb waste of effort at the time.  And look at the income they're generating today.

Those being negative then have nothing to show for their efforts.  The ones taking risks and initiative, however, are pretty well off.

No, the people mining namecoins simply can't do math.  If they had mined bitcoins instead and bought namecoins one of two things will have happened: they'd have wound up with MORE namecoins (30-40% more) or the price of namecoins would have reached difficulty parity with BTC.  I suspect a combination of the two.  Oh, and more people would be mining NMC because of that price parity, so NMC isn't stuck in 1-2 transaction an hour hell for over a month.

Early bitcoin pioneers didn't have the option to mine "bonuscoins" which easily converted to the exact same bitcoins but with 30-40% more output.  If they had you can bet the clever ones would have mined those instead.

You seem to confuse "going long namecoins" with "mining namecoins."  The second is a way to accomplish the first, but with a massive penalty.

And you're the bright bulb who can't figure out "The Long View" doesn't mean "next week."  For the rest of the month, sure, your points make sense.  I already said taking a myopic view I agree with you.

Long term none of that matters.

Change your title to "Re: Bitcoin Shrinking - the next week view.  Probably." and we're in violent agreement.

It's a good thing, or otherwise we'd have had 300 million Facebooks, Googles, Microsofts...

Great spirits have always found violent opposition from mediocre minds.  The later cannot understand it when a man does not thoughtlessly submit to hereditary prejudices but honestly and courageously uses his intelligence and fulfills the duty to express the results of his thoughts in clear form.  -A.E.

Not to say that every hare-brained idea is genius, but you really are blind if you don't see the advantages of a secure, easily transferred, convenient digital currency exchange medium.   We're done here, your argument boils down to "I don't believe in bitcoin and neither do other slack-jawed types."  That can't be addressed.

You are talking about today.  And hell no, I those people wouldn't sign up and trust Dwolla just because I told them so.  It's good for Dwolla that people you know are instantly trusting, the people I deal with not so much.  And by the way, TradeHill *used* to have electronic funds transfer in and out functionality.  What's to say they or MtGox won't have it again?  Besides, dollars need not be involved at all if bitcoin is mainstream, which is when my scenario is practical.  I consider bitcoins far far FAR more secure than numbers at a single web site "associated" with banks.  Yes, even today I'd rather have enough funds in bitcoin to buy a house than several hundred grand at Dwolla.

Your "thesis" is long term.  Long term bitcoin will become mainstream barring technical flaws with implementation or regulatory hurdles.   As a mainstream currency it is vastly superior to current offerings.  But you go ahead and spew obscenities and nonsense.

Dwolla?  Really?  Dwolla?  An unknown internet site that takes forever and a century to clear funds, isn't a regulated or recognized financial institution?  People will accept a personal check LONG before they buy off a "now, I'm going to enter a few numbers into this web site and you'll see your money in your bank account in about 3 days.  Oh, and I'll need your account's electronic transfer code, and I'll be driving off with your car as soon as you sign that title..."

I too have bought several cars with cash, and I know what I'm talking about.  You clearly do not.  (p.s, other guy: instead of cash, try cashier's check.  most people are willing to accept that if you negotiate it beforehand).

This is trivial.  Bust a drug dealer, offer him or her prosecution immunity in return for setting up sting op.  Done deal.

Have you ever tried to buy a car belonging to her recently passed away husband from a little old lady in Salina, Kansas with "cash" while her apparently inbred yet highly paranoid relatives supervise the transaction?  Let me tell you, it's not fun negotiating what type of check and guarantees she will accept let alone getting them in the middle of Outer Mongolia, 400 miles from home.

If (and this is still if) bitcoins were mainstream enough for her and her relatives to know it's an irreversible, secure transaction I could make from my phone and they could verify in 10 minutes I'd have had that 67 Bronco without two dozen new grey hairs.

But what does that have to do with the OP?   I may be out in left field, but this is what I feel people associate with various trading timeframes:

"retirement" - 10+ years
"long term" - 3-10 years
"short term" - 1-3 years
"this year" - 0-12 months
"near term" - 1-6 months
"swing trade" - 1-4 weeks
"day trade" - never take your position home

If you meant "swing trade" timeframe and use that in your OP I'm sure plenty of people disagreeing with you in this thread would sagely nod their heads.  But you said long term.  If bitcoin isn't $0 in 10 years it's going to be a lot, *LOT* more than that.  And that has nothing to do with trading or early adopters or any of your points and everything to do with regulation and other as yet unforseen factors.

Shows how little you know and how much you assume.  *MY* analysis showed BTC overbought.  I started selling as quickly as my rig was producing BTC.  At 24 on 13th of June, 22, 20, 19.5, gox pause,several x 16, 15, 14 and the last ones at 13.88 yesterday, 14th of July.  Another got produced last night, and a couple more are in a NMC<->BTC trading account.

So for me, my investment in video hardware including power was paid for in about 12 days, with the past 18 being pure profit (granted, I didn't make anywhere near as much during the past 18 as the first 6).  Oh, and the hardware was bought for entertainment, not income.  I'm really looking forward to mining not being viable any more so I get to enjoy it guilt-free.  This is the first time my hardware hobby ever paid for itself directly.

If BTC prices (and most likely difficulty) crash hard but I feel BTC itself is still viable you know what I'm going to do?  Gamble several 10s of K on a rack setup and industrial power rates at a co-lo facility.  I may not be an early adopter but there's still plenty of pyramid to be built under me, and there are far riskier investments which don't yield anywhere near as well.

OP, you're confusing bitcoins market price with bitcoin itself.  The two have about as much to do with each other as executive compensation and stock performance.

If bitcoin's price crashes through its "true value" then it's once again a golden opportunity for new investors.  Sucks for those who bought in at $20-30, but such is the nature of investing in trends without proper technical and fundamental analysis.   Riches to rags stories are just as sensational as rags to riches, as are "I told you so" analysis from the self-important.  Media coverage will continue, attracting more and more attention.

You also underestimate the importance of grass roots word of mouth advertising.  I'm here because of a posting in a GPU forum (anandtech, for the curious).  Had I known earlier I'd have been involved earlier.  Since I found out about bitcoin I've introduced 20 people to it, several of whom are now following the story as it develops.

TL;DR -- If you view this as a flash in the pan get rich scheme you're right, the easy money is gone.  Long term is still a giant questionmark.

Oh, and by the way, how'd your return to Newegg go?

What immediate use is a stock portfolio to the exact same hiker?  Gold futures?  A timeshare?  There exist several sites which will happily take bit coins and deliver items from newegg and amazon.  Just like Visa will take your dollar deposits and provide a similar service.

Moreover, there is now a mobile android app which allows you to spend (and receive!) coins while walking down that street.   Even a street without an ATM. So your original point is invalid in the first place.

Bitcoin adoption is growing, not shrinking.  Value is being added to the ecosystem at a rapid clip.  It won't be long (real world time, not bitcoin time) until $14/share seems like a pretty good value to the average Joe.

All that's needed is a bigger community.  A year ago it was < 3k.  30k people is a slow but steady start.   Six months from now and 300k you'll see more businesses accepting bitcoin and real FX trading it -- early mainstream bitcoin adopters are likely to be affluent, have disposable income and like shiny gadgets.  In otherwords, an ideal market for many businesses.   A quarter from then and 3 million users will have mainstream get on board.  At that point 300 million and FDIC insured banking is only months away, and 3 billion weeks away from that.  

30 billion might take a while though.

This is all within the realm of possibility *IF* (and that's the only IF) we continue with the current trends.  There are plenty of factors which could kill these trends, but none of them have materialized.

This could work!  Rig up some sort of sling for your groin to hold the battery (or batteries) and smuggle them in a pair of hammerpants.  When co-workers ask you why you're walking funny tell them you just got a vasectomy.  If they ask again a month later tell them you had to get a couple more because of how potent you are, and they'll stop asking ever again.

You could expand your operation by siphoning gas from cars in the parking lot and running a generator.

Assertion refuted.  The fixed costs (distribution fee, fee collection fee, usury fee) would be there whether or not I mine, so they are irrelevant.  The additional cost of running a miner is .046c/kwhr, of which another 13.5% is fixed taxes.  Total cost, as reverse computed from monthly bill: .0522c/kwhr.

Plenty of people live in apartments or other shared housing where their power cost is fixed and part of their rent.  To them the marginal cost of running a miner is exactly $0/kwhr.

So there's two examples.