The more I read reddit and the speculation forum, the more convinced I am that the logic of the OP needs to be internalized as part of every newbie's education. The Paradox of the Rake, to rename a point made by rpietila, is that performing proper rakes prevents panic selling.

"To hold onto your bitcoins through thick and thin, you must sell."

I think wide diffusion of this rake concept would significantly reduce volatility. This post or a similar one should be in the sticky at /r/Bitcoin, speculation forum stickies, youtube video (short visual one and longer, detailed one - James D'Angelo?), etc. It is critical investor knowledge and can be considered part of Bitcoin's educational infrastructure, in the sense of being a component that enables Bitcoin to take over the world faster (and happens to make Bitcoin investors richer vs. the Wall Street money that will pour in in 2014 and less stressed as a bonus).

Additionally, Risto's savings plan is not only a plan, but also solid grounds for analysis. Despite being only dimly aware of the rake concept, if at all, most early adopters have likely followed it to some (suboptimal*) degree simply because of the psychological factors at work when one is faced with the Bitcoin "binary bet." This provides the ultimate answer to those who worry of wealth concentration, as well as an underpinning for speculative analysis.

*Either taking on excessive risk or losing an excessive number of coins, or alternating between the two, and ending up much poorer than was possible, due to lack of conscious application of the rake.

Why would people accept paper BTC? People accepted paper gold because they didn't want to lug around gold bars. Bitcoin has a weight of zero and is even easier to hide than paper bills.

He can only be a central bank if he uses his BTC to pay off government officials to get him special privileges. In a Bitcoin world, there is no central government, or only very weak ones.

Patents are patently retarded. Let's just a grant MONOPOLY to a single company as, like, a reward for being innovative. You'd have to have the most comic-book notion of how innovation actually happens to go along with this.

http://www.youtube.com/watch?v=C_PVI6V6o-4

How long until this happens? Days? Weeks? Months?

^ One too many zeroes there.

But anyway, we've been doubling like every ten days. If the trend continues we'll be near 10K by the end of this year. Doubtful, but very much a possibility, especially as part of a final blow-off that ends up crashing into the low thousands.

It's a long story if you're not familiar with Austrian economics, but as far as one person or group amassing too many coins, it can't happen for very long. Even if one guy magically had 90% of all coins, he could only enjoy this situation to the extent that he spends them. 

There's every reason to believe offshore account figures are hugely inflated for political reasons. "Look at all those fatcats cheating you out of your tax dollars! This is why we need AML/KYC and more tax laws and FBAR and FATCA." Still makes for good advertizing though.

However, it doesn't matter because if 1% goes to Bitcoin, 90% will follow soon after. Who in their right mind would stake BILLIONS on trust and jurisdictional stability (with extremely limited ability to access it, compared to Bitcoin). You don't get to be rich by taking unnecessary risks. Once the word gets out, this thing is gonna blow.

There's not much to be impressed by from the altcoins so far except theoretical possible little advantages or hedges. If a good one comes that revolutionizes what Bitcoin can do, I say bring it on! But it would take a few years to establish a track record, and by that time Bitcoin will be so far ahead that it likely won't matter.

A few alt-ledgers will always exist because there are things you can do with two ledgers that you can't do with one. But total inflation will be very, very limited. Just look at http://coinmarketcap.com - all the other coins COMBINED scarcely make up 10% of Bitcoin's market cap.

The logic is laid out step by step. Stop on the page where you either start disagreeing or don't understand. That would enable a productive dialog.

revans,

There's several more basic confusions to clear up.

Try this: http://freedom-school.com/money/how-an-economy-grows.pdf

In that case, the government didn't really restructure the USD, just renamed the denominations. (Keep in mind a dollar (or a trillion-dollar bundle) is already infinitely divisible. There's just no practical way to pay less then a penny. But exchamges and such have been known to deal in smaller subdivisions internally.)

You have a piece of pie. Dice it, mince it, or liquefy it. It's still the same amount of pie.

Since the scenario is that the USD has been restructured, there is no "dollar" anymore, just megadollars, so I assume you mean that each megadollar has the same purchasing power as $1 trillion in today's dollars (note this is something that can't be decreed but only decided by the market). If that's what you mean, then yes, it is entirely sound given the government is somehow guaranteed not to issue more than 21 million megadollars. You could buy Google for 0.1 megadollars, a mansion for 0.00001 megadollars, a decent house or Lambo for 0.0000001 megadollars, a nice TV for 0.000000001 megadollars, lunch for 0.00000000001 megadollars, and a gumball for 0.0000000000001 megadollars.

Assuming their promise was credible (which is an insane assumption but for the sake of argument), yes! It would be as good as sound money. Divisibility makes absolutely no difference. Your 0.008 megadollars still represent a certain slice of the pie, no matter how finely you subdivide that slice.

@OP

As someone mentioned, there is no reason for a rational user to risk dealing with a fractional reserve bank with Bitcoin, unlike with gold. All it takes is one bank publishing 100% transparent blockchain data about accounts in custody. Then who is going to put up with fractional reserve?

Central bank? Inflation via derivatives? No, Bitcoin can't be centralized and dissolves the government power necessary to enforce the perverse incentives that created the present fiat money derivative situation.

Historic moment, historic thread. Congratulations, cypherdoc!

Yes but there's a limited number of dimensions to be the best in. Reliability, first confirmation time, anonymity, monitoring, mining power, etc. One might choose to spend a few minutes in a more anonymous altchain for tumbling purposes but leave ASAP because reliability and monitoring are low. That will give such an altcoin a nominal value. But then any additional altcoin will have to provide something more than better anonymity.

Therefore any inflation due to altcoins is very limited in the grand scheme of things.

This argument is self-contradictory. If the tweaks are trivial, there's only trivial value (and unknown risk of harm) in using them. If they aren't trivial, dev team and track record matter. If the tweaks are useless or of unknown value/harm, there is no reason to switch no matter how easy it is (just puts your wealth at risk needlessly). If the tweaks are useful, known to be harmless, and can be effortlessly kept in sync with Bitcoin, they will soon be incorporated into Bitcoin. Also scrutiny and stress-testing and overall moment-to-moment monitoring will naturally gravitate toward the main blockchain.  

If it were not the case, why not just re-release Bitcoin 2 - exactly the same as Bitcoin, but launched today? Then you could really instantly incorporate all development changes from Bitcoin. And people would have a chance to be an early adopter all over again. That's all most of the altcoins are. They just offer a trivial tweak as a gimmick to get people to switch, since "there's a chance!" it might prove superior and become king.

In the end, when switching costs are trivial, even invisible to the end user like in the case of fully incorporated decentralized exchanges, it comes down to who's maintaining your blockchain. If Bitcoin 2 has fewer people watching for slow orphan blocks and it's exactly the same as Bitcoin, only an idiot would have their money there (or speculators preying on idiots). And the more an altcoin gets away from being an exact clone of Bitcoin, incentivizing a possible switch, the less automatic dev support it can get.

The economics of blockchain maintenance/monitoring dictate that talent will gravitate toward the most important one with the largest market cap, as that has the most people's money on the line. Everything else follows from there.

Yes, ultimately it's about store of value. You only store with the best, unless your risk appetite is quite high.

China ATH coming up and only 3% to gold parity!

That site has gotten quite good, it seems.