Are miners holding too much of the Bitcoin economy? Some inferences made:
1) Miners control the majority of Bitcoins
2) The large majority of people involved in the Bitcoin community are strictly Miners looking to exchange Bitcoins into $
3) As difficulty goes up Miners lose incentive to mine as costs catch up with profits
As I see it now, the infrastructural growth of Bitcoin is a lot slower than the growth based on the number of people attracted to Bitcoin through mining. In this case, the value of the Bitcoin is substantially inflated since it isn't backed by stability or businesses but instead by the mining community size. As mining difficulty increases, and speculation inflated prices only temporarily keeping mining attractive, when the increase in difficulty exceeds profitability and miners cash-out, the value of Bitcoin is going to substantially drop to meet the infrastructural value, which is considerably less.
A further issue that I see occurring is *if* this miner cash-out does occur, the high number, low value of Bitcoins congregate towards smaller groups of people, i.e., optimistic speculators, thereby further reducing the usability and value of Bitcoins. This makes rebounding considerably harder since the influx of new users will end up with a disproportionately less amount of currency compared to the people left from previous crashes.
Right now there are way too many people and not enough businesses to justify 6.6 million Bitcoins being at an exchange rate $16-17 per. Right now the great majority of value in Bitcoin resides in the ability to exchange it for $s.
I think we need angel investors and entrepreneurs, i.e., the people with lots of Bitcoins/Money/Connections to start up more Bitcoin related businesses so that infrastructural growth somewhat keeps up with popular exchange inflation. If the disparity between the two reaches some critical point where the people start moving away from Bitcoin, i.e. mining costs exceed profits, we will see more large crashes, such as the $30->$10 which occurred in just a few days, to come. If the parity increases to such a point where the difference in growth is in orders of magnitude, the proceeding crash may just set the entire market back.
What we need right now is developers to make some very very user friendly sites, i.e. something in the likeness of Ebay in combination with escrow that provides both buyer and seller protection (since Bitcoin makes punishing scammers considerably harder). Once people have concrete and reasonably safe place to sell and exchange individual goods, we will see more large legitimate businesses spring up, where escrows will not be necessary for them and quality control will prevent scamming.