Puppet here is the great thing (your easy to overlook 25% vs 3% mistake aside).  The price of BTC and thus the direct reward to miners is related to the exchange rate (since most miner's costs are in USD/EUR).  When the exchange rate rises global mining rewards rise and more people mine.  When it falls less people mine.  The exchange rate is at least loosely related (we could say positively correlated) to adoption.   If the amount of ASICs sold is relatively low (say $50M USD worth) that means the BTC exchange rate is low.  If the BTC exchange rate is low then adoption is low.   Who is going to spend $50M+ to attack something almost nobody is using? 

IF however adoption is extremely high (say a user base 100x larger) then we would expect the exchange rate to also rise by at least a magnitude.  This will mean more global reward for miners (in USD terms) and thus more mining equipment sold.  Potentially hundreds of millions of USD worth of units.

The economics of Bitcoin make it such that it is only "cheap" ($30M attack) to attack Bitcoin when almost nobody is using it.  The one weakness in that economic model was the ability for those with deep pockets to "cheat" (use ASICs to fight a GPU war) and drastically reduce their costs.  Once ASICs ship in bulk that shortcut will be closed.   Meaning attackers have two choices.  Spend $30M (or $xM) to destroy something nobody is using (and likely spawn a number of second gen cryptocurrencies hardened against 51% attacks) or wait and spend $300M or $3B or ($xxxxM) to destroy something a lot of people are using.

The window of opportunity is rapidly closing.  Within 10-20 years it will be cost prohibitive to make an attack especially if you see "ASIC heating" become mainstream. 

"Nothing writes blocks to disk except bitcoin-qt"

Think from a security point of view that is a good assumption to make?  The blockchain is simply an unprotected file on the file system.  Would be downright trivial to design a malware which replaces it with bogus transactions.

By going back x blocks it requires the attacker to produce x blocks.  2500 blocks at current difficulty is beyond the ability of all but the most determined attackers.  They simply can't replace history.

Probably the later.  IIRC FedWire uses asymetric encryption to sign transactions with the bank's private key. The whole PKI nine yards with CA, key revocation, HSM (hardware devices to securely store private keys).  How each bank chooses to sign transactions is up to internal policy but it isn't like FedWire is a web app which each bank CEO logins from his personal computer using his weak password and approves $250,000,000 worth of daily wire transfers.

Others have helped at a detailed level but maybe taking a step back and looking at the high level will make it easier to understand.

There are no "coins" in Bitcoin.  I know that seems highly dubious but it is true.  Bitcoin is a distributed ledger.  The blockchain is the consensus history of transactions.  Each transaction (except coinbase) is signed by the sender which is a transfer of ownership to the receiver.

Regarding coinbase transactions.  Yes "coins" are mined from absolutely nothing.  The rest of the network accepts this "minting" as long as it follows the rules of the protocol (namely the amount of the minting follows the predefined block subsidy amount).

If you think about it this is obviously necessary.  "normal" tx involve transfering coins from one entity to another.  However where do the coins come from.  Miners are "given" them by the network as a form of subsidy and initial distribution.  The network is just a collection of nodes.  It doesn't have a bitcoin wallet with all the undistributed coins and signs each miner's paychecks.  No the miner just mints new coins from absolutely nothing.   This is allowed in the coinbase transaction of each block (and only there).

Not particularly.  They are time intensive and often new users need assistance.  I was thinking more "retail".  Like a moneypak but for Bitcoins.  "Consumer proof".  Buy, get a card.  Nothing more complicated then that.  If we don't do it, someone will eventually.  It is the only thing which will bring transaction costs down to less than 1%.

Which doesn't apply to bitcoin mining.  Post QC algorithms are theories to improve the security of asymmetric encryption (public private key) algorithms.  They aren't applicable for cryptgraphic hashes. 

Yeah not sure where people get the idea that QC "instantly solve" problems.  They don't.

Using Shor's algorithm a lot of solutions can be found in polynomial time but polynominal time doesn't equal instant time.  Note Shor's algorithm isn't useful for "breaking" a hash but there is no known Quatum algorithm which can solve that problem in polynominal time or faster.

http://en.wikipedia.org/wiki/Shor's_algorithm

So lets look at brute forcing a private key.  To brute force a 160 bit private key would require 2^160 attempts using a classical computer.  A QC designed to implement Shor's algorithm could do it in 2^80 attempts.  So the QC can perform the same search in 1/2^80 as many operations.  This is a massive increase in speed but not "instant time".  Also 1 operation on a classical computer and one operation on a QC aren't comparable.  It may take 100x or even 10,000 times as long to perform one operation using a QC.  

It is possible Grover's algorithm could be used to brute force hashes but no proof of that exist yet.

http://en.wikipedia.org/wiki/Grover%27s_algorithm

Still Grover's algorithm doesn't "instantly" solve anything either (to my knowledge nothing does quantum or otherwise).  Grover's algorithm can only provide a probable solution and for a large problem it requires many quadrillions of attempts to produce a solution with any accuracy.


So while speeds up are probable this "instant solve" is just nonsense.  Another complication is that Bitcoin mining by QC is novel and would require a new quantum algorithm.  Most QC problems are related to finding a specific solution however with Bitcoin we are only interested in a "good enough" solution.  For example at difficulty 2.5 million there are roughly   8,986,648,889,050,210,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 valid solutions.  Using existing Quantum Algorithms would likely not be useful as for example if a quantum algorithm was found that could break a specific 256 bit hash in polynominal times 2^128 operations is still much larger than current difficulty (2^32 * 3 million).

No just cheaper and faster ASICs.  Just like an Intel 286 and the latest Xeon CPU are both microprocessors the later is just magnitudes faster and more efficient (computing power per watt).

Well first of all this is all theoretical because Bitcoin is far too volatile for wages to be paid however hypothetically imagine a future where adoption is very high.  The BTC money supply is worth tens of billions a year and the purchasing power of 1 BTC is rising by a small but relatively consistent rate of say 5% annually.

An employer could offer an employee an annual salary of 5 BTC for the first year with a contract that the salary decrease by 5% per year with the potential of a partial offset for merit raises.  Even better would be a sort of third party CPI type number used to calculate the buying power.  The salary would be reduced by that metric instead of a fixed 5%.

In the interim I think a traditional fiat salary which is converted at payday partially or fully into BTC and paid to the employee is probably more realistic.

The one thing is Win7 likes a lot of RAM.  2GB should be considered the bare min and 4GB is going to be more enjoyable.  Then again with 4GB costing less than $25 and 8GB costing less than $50 that is less of an issue than in the past.

So greater fool's theory?

Person A has xCoin.
Person B has BTC but would prefer to not spend them.
Person B uses BTC as collateral to borrow xCoin.
When xCoin tanks Person B profits by repaying the loan in devalued coins.

This is a zero sum transaction.  For every % that Person B profits it is at the example of Person A.  Person B only profits because Person A (the greater fool) didn't realize that he could simply sell his xCoin for BTC and even if he wanted xCoin later rebuy them using the BTC which has gone up in value.

It is hardly a strong basis for a currency that it has utility because the holders of the currency are idiots who can be exploited by outsiders.

Only a fool would latch on to that sound bite.

Silver became "Gold's Silver" simply because of the constraints of physical metal.  It was not efficient to try to use Gold in transactions of modest value.  Bitcoin doesn't have that problem.  Unlike gold where a 0.1 gram coin would have huge cost overheads combined with difficulty in assaying Bitcoin works equally well in transactions of thousands of coins or less than a single Bitcoin.

"Bitcoin is Bitcoin's Silver" is a more accurate soundbite. 

That being said there is potential for alt-coins but the current crop of Bitcoin clones (including LTC) have no improved utility.

The first scenario is that Bitcoin fails and something superior replaces it.  For example after a massive 51% attack the idea of a POS coin (possible POW combined with POS) will be seen as potentially superior.

The second scenario is an alt-coin carving out a profitable niche.  Bitcoin has three major niches where it creates the potential for a superior alternative.  High speed transactions, microtransactions, improve anonymity.  However building a coin around one of these would require real research not just replacing SHA256 with another algorithm.  Also no simply changing the block target time to 60 second or 30 seconds wouldn't acheive much either.  I am talking REAL research, real out of the box thinking, coming out with a comprehensive system to bring VALUE to users.  

XP is end of life.  Mainstream support (including security fixes) has ended.  Dont' use XP for anything except supporting legacy software (normally in corporate intranets).  Period.

Windows 7 or Windows 8 are both fine.  Personally unless you need the features of Windows 8 or are developing apps for Windows 8 I would go with 7.  The GUI in 8 just irks me.

Please don't take this the wrong way but .... pretend for a second you are a scammer.  Just close your eyes and roleplay you are a scammer.  Would you:
a) say "Hey I am this untrustworthy, noob, who is unemployed, and really just looking to rip you off"
or
b) say something similar to what you said above.

As a "pretend scammer" which do you think would be more successful?

You need to keep it going two more years.  The coins start coming in after a total of 3 years online.  Don't give up you are 1/3rd of the way there.

Which is just idiotic.  Why is the standard now "at the chip".  We have been measuring MH/J since CPU days and never once has anything been measured "at the chip".  Is the miner going to pay "at the chip" electrical rates?

I mean say Avalon releases a version 3 with even WORSE DC/DC regulator which is only 70% efficient thus making the cost to operate 20%+ higher will that still be viewed as 151 MH/J.  FPGA custom boards were measured at the wall.  Why suddenly the change in metrics now?

"Profitable" or "my unrealistic expectations is to break even in 2 weeks and make 487947298721472987892472% profit per year"?

Capital Cost: $1500 + $500 (unit plus one module upgrade to improve efficiency)
Electrical cost (1 year): 800W * 24 * 365 /1000 * $0.08 = $560
Total lifecycle cost (assumming 12 month life): $2,560.64

88GH/s @ difficulty 30M (~10x current) = 538.2 BTC per year.

$2,560.64 / 538.2 BTC = $4.75 per BTC.  If you could pay me $2,560 right now and I would pay give you 538.2 BTC over the next year would you?  Of course you would.  If you think difficulty will stop at 10x current you are basically saying once it gets there people will say "hmm only 400% profit per year, nope I don't think so".  Of course difficulty will go way way beyond that.

Even at difficulty 100M (~33x current), 88GH/s = 161.4 BTC per year
$2,560.64 / 161.4 BTC = $15.80 per BTC.  I still think thousands of people will take that deal.

Note both those numbers assume difficulty jumps instantly.  In reality since difficulty will rise over time the profitability is even higher.  Granted the ASIC might not be cost effective for a year so there is the risk element but the risk has never stopped miners before.   Anyone thinking difficulty is only going to rise 2x or 5x is simply dellusional.  Even "only 10x" is likely way too optimistic. Difficulty 100M is likely the min realistic value and if BFL power efficiency is true and they can ship in volume ... 200M or higher is a very real possibility.

This is a 91% efficiency power supply. So even if that was "normal" 620W AC is ~565W DC.  565W DC > 400W DC.

Also remember the 400W number comes from the product listing for the entire unit.  It is "strange" for a company to have all the specs related to the entire unit except the power which just happens to be just the chip (not even the total DC wattage).  Now for the module only listing putting a wattage of ~180W DC would be realistic. 

Still even if you take 620W AC remove the PSU inefficiency getting 565W DC then drop out 25W for the host and 3 5W fans = 540W not 400W.  A single module by itself has to be pulling ~180W ea (3x180 = 540) not ~133W ea (3x133W=400W).   So the 400W number is dishonest, there is no way or reason to spin that.  The sad thing is first out the door @ 180W per module and 620W per unit is still impressive.  It is dishonesty that isn't even needed.

They will quit however total has rate will still go up.  As an example if 300 TH/s of asics replace 25 TH/s of GPUs then difficulty is going to increase by more than a factor of 10x. In the long run once multiple vendors start shipping in volume difficulty is going to go up a lot more.  50x current is certainly possible.  Given the break even time for a new GPU rig is 6 to 12 months trying to jump in now with obsolete tech is a bad idea

Same thing with me. I read something up thread about JAVA.  is it because I don't have java installed.  I mean JAVA? WTF? Why does a shopping cart need java