I remember that thread...shortly after I happened upon Bitcoin I had similar thoughts.  Is it possible to design a Bitcoin like currency without the mining?  My conclusion was no, but maybe I'm wrong.  

As a recipient of a transaction, the fundamental question you are asking when deciding whether to accept it is whether that transaction is marketable.  In Bitcoin, you make that decision based on the transaction history in the block chain.  And, you make an assumption that Bitcoins are fungible (see taint analysis for more debate on the importance of fungibility).  If the fungibility aspect of a Bitcoin ever broke down, then you would be checking in with this or that miner or merchant to decide whether you'd accept a transaction.  If they don't accept the transaction, then you wouldn't.  So, if a powerful entity like Amazon.com decided to accept Bitcoin and then started employing some kind of analysis to selectively accept or reject a Bitcoin transaction, it's conceivable that it could destroy the decentralized nature of Bitcoin because so many people would want to check with Amazon.com before accepting a transaction...thus morphing Bitcoin into AmazonCoin.  Mining helps ensure this doesn't happen because there is a clear and simple protocol that people can use to validate a transaction that ultimately works better than a single entity, no matter how influential, from dominating Bitcoin.  Holders of Bitcoin, interested in preserving their wealth, would actively work to foil any taint analysis...they could spread tiny amounts of bitcoin around to random addresses...they could employ and encourage others to use mixers...etc.  And miners, seeing that the threat of AmazonCoin would render themselves irrelevant (why do you need mining if you just need to clear transactions through AmazonCoin?) would also take active measures to counteract AmazonCoin.  Amazon would be left with a choice, go off on a fork, or follow the Bitcoin protocol rules.

In the absence of mining, all you can do is check in with others as to the marketability of a transaction.  I don't see how that ends up being anything other than a completely centralized system or a balkanization with many different coins in different jurisdictions (AmazonCoin, AlipayCoin, UncleSamCoin, etc).

People also shouldn't worry about the energy consumption associated with mining.  I believe as the reward tapers off, we'll enter into a phase where many entities buy mining hardware for the express purpose of sitting idle until and unless needed to thwart an attempted attack on the network.  There will also be miners that get paid a subsidy from other businesses to ensure Bitcoin transactions remain free or very cheap (ensuring that mining without subsidy is a money losing endeavor).  There may even be treaties involved to negotiate how much mining power different entities apply and keep in reserve in order to simultaneously protect the integrity of the network and not needlessly waste energy.

If it's all open source, then like a fine wine you can create a wonderful blend.

Agreed.  I would add that ripple (and I'm speaking of the original ripplepay.com concept...I'm not entirely sure what this new thing is yet) is two things:

a) a payment network
b) a method for keeping track of debt

Bitcoin does (a) very well already, but what is needed is (b) (as well as a "ripple like" peer to peer trading network).  If the method of keeping track of debt incorporated some of the concepts from Open Transactions (the way it uses signatures to prove balances without needing to maintain history), it would be super awesome.

Yes, they are reasonable questions, it's just that from their perspective they can't distinguish Bitcoin from any of the dozen other virtual currency schemes.  (all the points you make about ease of use are valid, but I don't see any of them as any great challenge...just work)

The same things that bother you are what get me excited.  I love the fact that the big money is going to be late to this party.  I would much rather see it come to pass that many people of modest means build their own economy without their participation.  When we talk to potential investors in BitPay, many of them ask what were doing about consumer adoption.  They've heard pitches for all kinds of digital currency "schemes" (to quote the ECB) over the last ~15 years.  They always cite the problems getting end users to adopt Bitcoin (they don't grasp what makes Bitcoin fundamentally different than the many prior attempts at virtual currencies).  We usually say that we're doing little to nothing about end user adoption.  In reality, as much as people deride speculation and day trading, the candlestick chart of the Bitcoin exchange price will do more to drive end user adoption than any brow beating of this or that company (that will only make them more resentful).  Jeff Bezos was asked the very same questions about end user adoption of the Internet in the early days of Amazon.com.  Jeff Bezos never worried about signing people up for the Internet.  I once heard Bitcoin described as the most asymmetrical trade of a lifetime, and I agree.  

Very nice!  looking forward to playing around with it.

Many merchants start out converting everything to USD (or other local currency), but then after some period of time start increasing the percentage they keep in BTC.  Merchants will probably need to convert some of their receivables into local currency for quite a while (until more of their supply chain accepts BTC), but this is a very good sign.  We also caution them about wallet security, etc (it's still far too easy to make a mistake and have bitcoins lost or stolen...for that reason, I think it's too early for the average person to keep any significant savings in BTC).

I think most people pay their monthly bills using electronic bill pay from their bank's website.

New Hampshire's motto is perfect for it!

It's Tony, he does all the PR posting.  I gave him a good beat down over that pre-announcement thing.    BlackLotus is not what he was referring to, but it's also not anything on the scale of the WordPress news.

My favorite comment: "This is fantastic! With a place to spend Bitcoins, we can now begin accepting them from our readers. Thanks, WordPress!"

Here's a write up of how cupsandcakesbakery in San Francisco does it using BitPay:
http://cupsandcakesbakery.com/blog/

I don't think they intend to pay you for Bitcoin mining in the long run…GPUs can do a lot more than just Bitcoin mining.  I believe they plan to make this GPU network available for rent for people that need to use to a large computational network.  Bitcoin mining is just a good way to bootstrap this network (while Bitcoin mining on GPUs is still profitable).  It's also a convenient method of payment.  Assuming there's a good market for such services, it's a great idea.  It could be a great way for gamers to subsidize the cost of their graphics cards (much like they've done with Bitcoin mining).  I don't think donated resources are viable for anything but a few projects of broad, general interest (folding@home, seri@home, etc).  And, a rented network of GPUs is likely to be far more cost effective than buying cards themselves or even renting supercomputer time. 

My favorite comment:

"There will be 21million bitcoins one day.  There are ~5 billions ounces of above ground gold.  Make the calculation.  

ONE bitcoin's scarcity is higher than 230 ounces of gold.

This is nothing short of the asymmetric bet of the decade."

Bitcoin is on ZeroHedge…
http://www.zerohedge.com/news/2012-11-02/friday-humor-ecb-explains-what-ponzi-scheme-awkward-silence-follows

Yes, that's all true, but if it's not adding anything to the security or usability, then why introduce this additional bit of counter party risk?  A prudent user of your service would need to factor in the odds that you might screw up a coin as well as the likelihood of recovering the lost funds.  And you would need to place some caps on the liability (what if someone loaded $10 million worth of bitcoins onto a faulty coin?  would you cover that loss?).

But that doesn't prove that the private address under the sticker is the correct one.  For that, you have to place trust in the manufacturing process. 

I would almost say that the codes on the coin should all be viewable such that the person buying them can verify that all of the codes are readable and correct before loading them with funds.  The objective of these coins is that you can secure the coin and the second private key separately (such that it would be worthless for someone possessing one without the other), so I don't think concealing the private key on the coin is important for this use case.  The possessor of the coins would presumably secure these coins themselves (concealing all the information on them) since they aren't really designed for commerce.

Can the second private key be one derived from a memorized password and the public key (or hash of it) on a coin?  You want to mix the password with something from the coin such that the second private key is unique for every coin.  That would make this a true two factor coin where you need a secret that you possess (the private key on the coin) and a secret that you know (the memorized password that can be used with codes on the coin to generate the second private key).

Lastly, I think you may want to consider making these in a different form factor…instead of a coin, use thick card stock where you can print instructions on it.  You could deliver the pre-printed cards with the address and private keys printed on them and easily readable and verifiable by the buyer.  Once verified, the buyer could fold the card, hiding the private key and affix some kind of tamper evident seal.  From that point forward, the buyer has confidence that the codes on the card are correct and that any funds sent to the address can be successfully redeemed.  People might even want to buy multiple copies of each card such that they can store them in multiple locations to mitigate the risk of theft or damage.

I don't think it's a hack at all.  It's simple and elegant.  It would allow a Bitcoin client to expose a simple API to "addTxFee" to an existing transaction…which would send coins to itself with the given transaction as an input and including a miner fee.  This makes it very easy on the sender of the original transaction…they don't have to worry about what fee to include (the only concern for the sender would be whether the transaction has a high enough priority to be propagated in the p2p network).  This eliminates any complicated URI interaction between the merchant and the buyer, which may or not not even work (making it an unreliable tool for the merchant).

It's not bookkeeping software, however for our merchants that require it, we provide them with CSV exports of their account activity, including the equivalent value of each transaction in USD or other fiat currencies.

I should also mention, that as far as my kids are aware, their balance is 100% backed.