... spend your bitcoins you need to convert them into some recognizable currency, which means you need a bank to do so, which can and will be shut down by the feds ... you must convert to dollars to pay for electric and hardware. ...A solution to this could be a Sun Powered Data center ... The future of mining is sun powered.
This is a highly valuable topic.
Thank you, Anderxander, for thinking about it and posting.
As a "thank you" tip for doing that, I have just sent 1.14 Bitcoins to the address in your signature line.
Now to dig into the topic more.
I'm a newcomer to Bitcoin, but I have half a century of experience with computers and networks.
Forgive me, and please correct me, if, in what follows, I make some conceptual mistakes about the structure of Bitcoin.
1.) The word "downfall" introduces confusion to a very important subject.
The main worry here is "risk".
Bitcoin may or may not "fall down", but there are always risks.
If we analyze risk, then we have a chance of mitigating it.
Not eliminating it, but reducing the probabilities.
A solar powered data center is very trendy concept.
But, no, a solar-powered data center is not a good idea.
It doesn't mitigate any risk other than lack of power-line electricity.
And it adds the risk that a data center could be destroyed by accident, by weather, or by deliberate attack.
2.) To spend Bitcoin, there is no requirement to convert to any national government currency.
It may be easier to spend by converting first, but it's not required.
And, if Bitcoin grows as many here expect it will, there will be even less need to convert in the future.
I'll offer you 5,000 Bitcoin for your 1957 Corvette.
Or, you offer me 1 Bitcoin for a cheese and sausage pizza from my pizza shop.
Deals, big or small, can be done without any currency, without any banks at all.
And without any "Feds" at all.
3.) Yes, operation of Bitcoin does require the Internet, or some network than can transfer data.
So one risk factor is that all data networks disappear.
An asteroid striking earth could do that.
Or electromagnetic pulse attack at key points around the world.
But if an event destroys all of the Internet, then our problems are much greater than could be solved with solar-powered data centers.
So I'm not going to try to lay-off the risk that the Internet will suddenly disappear.
4.) The biggest risk in the Bitcoin system is the risk of market manipulation.
Market manipulation would be easy to do, quick, and cheap.
Let's put ourselves in the place of the "dark side" and think this through.
The central banking powers will hate Bitcoin, guaranteed.
They will want to destroy it, and plow salt into the concept so nothing like it ever grows again.
It would not take any laws at all to completely destroy Bitcoin.
The dark side would simply take advantage of Bitcoin's single point of vulnerability: it's small market size.
What could they do?
Simple: The dark side will buy Bitcoins.
Bitcoin's small market can be "cornered" easily, for only a few millions of US Dollars.
The dark side could simply allocate those millions from their petty cash fund.
Then place orders on every exchange and every forum to buy up every Bitcoin offered for sale.
The price of Bitcoin would shoot up to the sky.
Wouldn't take much.
Countless people would try to catch the trend and pour their life savings into Bitcoin.
Many others would run up their personal credit card debt to buy mining rigs.
Some might quit their normal jobs to be "day miners", trying to make a living digging for Bitcoin.
The price would go parabolic, due to dark-side money pouring in week after week.
Then what?
The dark side would sell.
And sell, and sell, without stopping until they had sold every last Bitcoin they had.
They would overwhelm every exchanger and every forum, with sell orders.
Bitcoin would plummet to the depths.
Countless Bitcoin faithful, who had invested their money and dreams in Bitcoin ventures, would be destroyed.
And all Bitcoin miners would suffocate.
It could be accomplished in a month or two.
Maybe it has already started with the recent jump in the price of Bitcoin.
And the final chapter would be written by the mainstream news media.
They would relentlessly attack the foolishness and risks of Bitcoin.
And that would bury the concept for at least one generation, maybe more.
The only way to mitigate the risk of small market size, is to grow big quickly.
Personally, I think Bitcoin can get big enough, fast enough, to stay ahead of the risk of an attack from big money.
So I'm buying Bitcoin.
But I'm not sure about this.
It's a gamble: for me and for all who are investing in Bitcoin.
Only time will tell if Bitcoin can survive the attack which is sure to come.
At this stage, Bitcoin's biggest risk is the small size of its market.
It is vulnerable to deliberate attack by those who wish to destroy it.
I wonder what are other risks inherent in Bitcoin, both now and in the near future.
And, please, what are the shortcomings in my risk analysis here?
