invest in bitcoin a good idea with ASICs around the corner?

[Luno]

It's a feedback loop; increasing price drives difficulty up and increasing difficulty drives up price.

In the early days difficulty drove price up. You can consider difficulty as a measure of people wanting to buy Bitcoin.

Ofcourse, ASIC's is a technology jump, so do not consider a 20 fold increase in difficulty to be followed by a 20 fold increase in price, but there will be some effect.

Latest you saw the same thing with Litecoin: Miners switching to Litecoin mining, as difficulty had become to high for GPU Bitcoin mining, which pushed Litecoin difficulty up sending a signal that Litecoin was getting harder to make sending it's price up a little.

People claiming that Price drives up difficulty up are also right, especially when the market gets bigger and fewer and fewer of Bitcoin holders will be miners.

[Cubic Earth]

You might argue that it makes an attack cost more, and that is true, but if it raises the value of Bitcoins, it also increases the value of an attack. So again, it would cancel out.

An attack would ruin the value of bitcoins, so you cannot count on fraudulent coins to offset the cost of the attack.

The point you are missing though, is that ASIC's technology has been around since before bitcoin got going, and it has been know from the early days of mining that ASIC's would be the final word on efficiency (in both watts and $$ per GH/s).  If an strong adversary, lets just call him 'Uncle Sam', had decided to attack the network previous to ASIC development and adoption, they would only need to invest in their own ASIC research and manufacture.  A few thousands of chips later, they would own the network.

This doesn't change that. They just also buy half the ASICs on the commercial market. You might argue that it makes an attack cost more, and that is true, but if it raises the value of Bitcoins, it also increases the value of an attack. So again, it would cancel out.

One could equally well argue that Bitcoins are more of a threat now than ever and an attacker might see the deployment of ASICs as closing their attack window and therefore, now would be the time for them to buy up ASICs to attack.

Yes, that is my point.  I shouldn't have spoken as if bitcoin is out of the woods yet.  ASICs are in their infancy and the network is much more vulnerable now that it will be in a month or two, if it has not been attacked by then.  But the concept of the attack window closing, that was my original point about why the network is more secure with ASICs than before, and why the price of bitcoins will rise along with the increased resistance to attack.

[Cubic Earth]

Damn I need to learn to use the quote boxes correctly!

[toz]

An attack would ruin the value of bitcoins, so you cannot count on fraudulent coins to offset the cost of the attack.

I'm assuming that's the attacker's objective since that's about the only reason someone would attempt a 51% attack. The more value Bitcoin has (the system as a whole) the more of a threat it is to our attacker and thus the greater the incentive they would have to destroy it.