rpietila Wall Observer - the Quality TA Thread ;)

[bitcoinsrus]

Risto (and all),

Where do you think we will find the 100GW of electricity that we will need in order to sustain a 100k$ bitcoin ?

Part of that can be found from saving other energy resources. Mining equipment can also be used as heating equipment for the winter where the energy expended is simultaneously giving heat to a certain space. Thus the money, in this scenario, can be found from the money that were saved in burning gas, diesel etc.

Thing is, mining must then rotate around the globe as the mining-heater boxes are plugged in alternate sequence between the two hemispheres.

It is a way that can actually provide free heat for the masses, as they work to secure the network.

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[hdbuck]

imho, in the future, mining will stand as the way to get free energy: everybody that mine will be able to at least pay its overall energy bills with the minted bitcoins, and thats quite a fair deal

[bclcjunkie]

free energy is not a myth: it's been proven and it works however as long as we are tied to petrodollar ecosystem to feed fed's debt binge tesla will be ridiculed till then...

imho, in the future, mining will stand as the way to get free energy: everybody that mine will be able to at least pay its overall energy bills with the minted bitcoins, and thats quite a fair deal

[MahaRamana]

i think millionnaires are buying bitcoin. they just do so by other channels than public exchanges and/or if they deal with the latest, they probably paid someone to sneak in at a greater profit, which could then explain such volatility: with weak hands actually selling their coins to huge whales/funds/banks/greedymillionaires without noticing it.

There are millionnaires and millionnaires. Someone with a net worth of USD 5 million is something very different than someone with a net worth of 500 million.
Whatever the channel, someone looking to invest say 10 millions would have difficulties to do it using something else than exchanges. I think there should be more websites for private deals (limits on localbitcoins are a joke, it takes too many time consuming transactions to trade  amounts larger than 5-10k) Why to affect the price on exchanges when a transaction can be done directly ? I think the crash of GOX is putting lots of transactions off-exchanges which could explain lower volumes on exchanges. That would mean higher demand would take more time to impact the prices that are always based on exchanges.

I also have difficulties to understand why the people controlling very large sums of fiat are not converting at least 0.5 to 1% to BTC.

We also have to remember that since quite recently, lots of investment money is going to angel investment rather than bitcoin itself directly. Big investors see the possibility of getting higher returns than bitcoin in launching a successful bitcoin service. This was not the case in the first years where all money went to bitcoin only. Arguably, this is money that is invested in the network but it is not immediately creating higher bids for the BTC itself while increasing the NPV of BTC nonetheless.

Still it does not explain why we don't see the big numbers pouring into BTC yet.

[Zarathustra]

Everything past is definite, everything future is probabilistic.  

No, there is no difference between the past and the future. Causality is not probabilistic, neither in the past nor in the future.

Einstein:

 "I do not believe in free will. Schopenhauer's words: 'Man can do what he wants, but he cannot will what he wants,[Der Mensch kann wohl tun, was er will, aber er kann nicht wollen, was er will]' accompany me in all situations throughout my life and reconcile me with the actions of others, even if they are rather painful to me. This awareness of the lack of free will keeps me from taking myself and my fellow men too seriously as acting and deciding individuals, and from losing my temper." Schopenhauer's clearer, actual words were: "You can do what you will, but in any given moment of your life you can will only one definite thing and absolutely nothing other than that one thing." [Du kannst tun was du willst: aber du kannst in jedem gegebenen Augenblick deines Lebens nur ein Bestimmtes wollen und schlechterdings nichts anderes als dieses eine.]

I dunno why you brought causality into it. I'm 100% with nagarjan on that one, its his most fundamental thought...

Neither from itself nor from another,
Nor from both,
Nor without a cause,
Does anything whatever, anywhere arise.

This is nirwana, the non-world.

You ask why I brought causality? As soon as you ask 'why?', you want to know the cause of the effect.
And I answer: I brought causality because the world is either deterministic (causal) or it is probabilistic (noncausal).
In my opinion (as well as Diodorus, Spinoza, Hume, Schopenhauer et al.) the world is fully deterministic. The MWI QM interpretation is deterministic as well.

[aminorex]

I like my TA with a dose of empiricism or at least plausible structural theory.  The *only* justification for treating the cross-over on bitcoinwisdom as a signal, as opposed to any other pair of moving averages, is the mere fact that it is the default on the 1 week chart on bitcoinwisdom.  Well, I'm sorry, but that's not a rational basis for a trading strategy.  We should ask the proprietor to randomly perturb the default periods on the moving averages.

What should we set the EMA to?
Sunny?
Optimistic?

I suggested randomization precisely to avoid goal-seeking.

How can it be unempirical.  It is two settings to judge a period.
Fine, change the settings until it draws a story that fits your point of view.  Highly scientific.

Exactly what I seek to avoid.  Fixed crossings are fine if you understand the limitations and are able to consistently maintain a suitable time-scale for all trading activity.  Whether  you would be profitable in a fixed EMA trading strategy in this particular instance, I cannot say, but it seems likely.  One can easily calibrate that likelihood empirically.  The scale of the opportunity costs implied by a strategy sufficiently disciplined to optimize that particular trade is quite vast, however.  The trading public will be bimodally distributed:  A small cohort will benefit more by paying relatively little heed to that weekly signal, without disregarding it; a much larger cohort will not be able to exercise the discipline to profit by it; the residual population is relatively smaller.

It's sad because people will trade on such a pathetic excuse for a rationalization, thinking it is driven by some deep and compelling model, when in fact they are just hanging their emotions on a scary picture.  It's sad because most of them will lose bitcoin as a result (perhaps not as a result of selling at that specific time, but almost certainly as a result of selling low and buying high), contributing to the concentration of wealth in the hands of a few skilled but, in all too many cases, sociopathic persons.

Yes, it's really sad that people use the tools at their disposable to inform their decision making.  

It is a blunt tool, and ineptly used.  Hence my sadness.  Sharp tools, aptly used generally cheer me up.

Pretty much every indicator that shows we are having a bad time you dismiss --- each that predicts optimism you embrace: this seems highly unscientific.

But hey, I need strong medication

I don't dismiss the relationship between ATH and the market - after all, it is only lows which create long opportunities.  I see little advantage in moaning about it.  Indeed, I have mostly foresworn shorting, not because it is unprofitable -- anything but!  Rather, because I cannot bear to profit from the criminal acts of my enemies.  I may still short a strong market, but only if there is no DDOS or other, more directly observable, massive embezzlement in progress.  Sadly this means that most of my historical short gains will no longer be available, and any future shorts will be taken at much higher risk.  If the market is sufficiently mature, I may short the next bear from top to bottom, because then it would not correlate with the designs of criminal actors, or contribute materially to their enrichment.

Trading gets more complicated when you stop ignoring the moral elements.

[AnonyMint]

Risto (and all),

Where do you think we will find the 100GW of electricity that we will need in order to sustain a 100k$ bitcoin ?

1. The price of electricity would rise long before we reached 100GW, thus no problem. Price always solves the problem.

2. That article assumes the genre and capital cost of the mining equipment is irrelevant. Thus with cpu-only mining, this problem will be much improved, as the both the home electricity cost per KWH and the cost of the equipment per Watt consumed are higher than for Bitcoin's specialized ASIC mining. For example, Butterfly lab's shipping 10GH/s consumes 50W and costs $349. The Intel i7 costs $329 and consumes 87W, but to build an entire system costs about double that. Also Intel has just begun focusing on power consumption reduction so this will improve at a faster rate than ASICs will.

Trading gets more complicated when you stop ignoring the moral elements.

Controlling or compensating for the morals of others is a waste of time. Masses are supposed to lose on speculation, otherwise valuation wouldn't ever converge and the masses would starve to death.

Moralists accomplish exactly the opposite of their intended result.

If you really want to help the masses, go produce some technological innovation. That is the ONLY thing that sticks.

(if you can't figure out the logic in between the lines, ask)

[aminorex]

[...philosophy of causality...]

Now bring that back to quality TA please.  My breath is bated.

[jmw74]

This is what baffles me.  Waiting makes no logical sense at all.  Let's say I'm a big shot with $500 million to invest.  I can take 0.1% of that and buy BTC1000.  If bitcoin gets huge ($100k each), then I've increased my assets to $600 million (significant gain), and risked basically nothing.  And the reason I don't do this is, ostensibly, because it's small potatoes?  It makes no sense.  If their reason was they believe that bitcoin will go to zero at odds of 99.5% or greater, ok, that at least makes logical sense.  But I don't think any of them believe it will go to zero with that much certainty.

I think the main reason the big millionaires aren't buying bitcoins:

- Not what they usually buy. They listen to people like Buffet and so they invest in stocks and bonds. Products out of their comfort zone aren't even considered.
- They listen to financial advisors and no advisor is going to be recommending bitcoin today.
- They don't know nearly enough about it to even consider buying it.
- They think it's some kind of geek fad that will never get big.
- Even if they are some what interested they have no idea how to buy it, at least not in the quantities that would mater for them.

I think the last point is the most important, especially for average people but also for rich investors.

The difficulty of acquiring bitcoin will probably stay roughly proportional to its desirability.  If everyone wants bitcoin, the reasons they want it are exactly the reasons the government and banks don't want you to have it.

At bitcoin's inception, there were already barriers to entry that any competing currency would face.  But now we are seeing bitcoin-specific (or at least, cryptocurrency-specific) barriers.  If you ask me, that's a dead giveaway that you should suck it up and do what it takes to get past those barriers.  Whoever gets over those barriers first will be rewarded the most.

This is also the reason that these nutcase theories that bitcoin was invented by government to track people, is just that, a nutcase conspiracy theory.  The government is cracking down on exchanges and arresting people like Charlie Shrem, that is not the behavior of someone who wants it to be widely adopted.  They want to limit it.  They don't want you to have it because it hurts them and benefits you.

[aminorex]

If there's not enough power, there's not enough power..... but it will still be worth while to mine if you can. machines may become more efficient, and the cost of electricity may rise to make the market more competitive.

The more competitive it becomes, the more miners will use renewable sources.  Bitcoin mining might actually save the world by creating funding incentives for advances in renewable technologies.  Or we might all die of cadmium poisoning because of renewable manufacturers despoiling the commons.  Reducing consumption is one useful tool in reducing the ancillary impact of consumption.  A more fundamental approach, which does not rely upon fascism or create inefficiencies of corruption, is to innovate, such that consumption is decoupled from adverse ancillary consequences.  The latter is much more effective, because you reduce the consequences by order of magnitude at one blow, instead of imposing a death of a thousand cuts on your neighbors.

And here I am despoiling the qTA commons with my own effluent.

[AnonyMint]

On the subject of why $500 millionaires should not buy Bitcoin and why I disagree with Risto's claim that the only thing that matters is how many BTC you own...

1. A bitcoin is not an heirloom. The chances that it will hold its value long-term are very slim. Gold is a much better heirloom.

2. The 21 million supply limit is a lie. This WILL be violated and there are numerous ways it can happen. The most likely way is Bitcoin is obviously moving towards offchain storage and services. In fact, Bitcoin can't have instant transactions without offchain fractional reserves (technically the exchange has to be fractional for it to happen instantly). Also the government could today regulate the few pools who have 51% and the few ASIC miners who have large datacenters, and produce as many coins per coinbase as they wanted. Later when the masses are all using government regulated offchain Coinbase.com and Bitpay.com, etc, then government can do what ever it wants to the mining and the masses won't care.

3. For the reason I stated in #2, the government can easily confiscate your coins by blacklisting them in the future. They can surely make you pay any tax they want. And they could simply blacklist every onchain coin that can't present a certificate of tax compliance from the G20. And worse you can't hide your onchain coin from the government control. Gold is much better for that. So the government can replace your onchain coins with offchain and give them to the masses to pay for this upcoming financial crisis. And I think that is a very likely outcome.

4. Altcoins will proliferate the # of coins in the ecosystem.

5. There are zillions of other investments in the world. The audacious claim that BTC is the only good investment in the world is unadulterated delirium or snake oil salesmanship.

6. There are many more reasons I can give, but I am growing tired of typing.... for now...

[jmw74]

We also have to remember that since quite recently, lots of investment money is going to angel investment rather than bitcoin itself directly. Big investors see the possibility of getting higher returns than bitcoin in launching a successful bitcoin service.

This is because investors just don't get it.

The future is software, not some rent-seeking paid service.  People will increasingly do business directly, with the help of software they control.  Middlemen are increasingly being cut out.  And yet these investors continue to invest in middlemen.

The way to get to this future is not through investment in making bitcoin exactly like the existing financial world.  A corporation's service cannot compete with an community-produced autonomous service.  You know why?  Because autonomous software doesn't need to profit.  It works for cost.

The way to this future is to buy bitcoin, and then after a few years use some of the proceeds to develop software that serves people, not some corporation.  That makes bitcoin even more desirable, and that's how get paid for your effort.

The fact that this has not happened at all yet is one of my greatest disappointments.  Stop thinking that corporations and VC funding are the answer to everything.  We already have enough bitcoin millionaires to begin this revolution but I don't know of any who are going this route.

[aminorex]

Allowing myself one more OT comment, simply because I participated in a discussion of this topic earlier in this thread:

This is also the reason that these nutcase theories that bitcoin was invented by government to track people, is just that, a nutcase conspiracy theory.  The government is cracking down on exchanges and arresting people like Charlie Shrem, that is not the behavior of someone who wants it to be widely adopted.  They want to limit it.  They don't want you to have it because it hurts them and benefits you.

Smearing those with whom you disagree as nutcases is deeply pernicious.  At least give them the decent respect of calling them stupid.  The former is defamatory and irrefutable.  The latter is defamatory but refutable.

Yours is a conspiracy theory beyond credibility:  The idea that "the government" is the expression of some malign, monolithic will.  It's a demon of imagination.  The evils of government stem from other, more fundamental, sources.

Clearly, some prosecutors are motivated to prosecute.  They are generally more motivated to prosecute interlopers than to prosecute their power base.  Do you honestly believe that James Clapper would call up Preet Bharja and tell him to drop a case because bitcoin?

I don't personally think that bitcoin was designed by deep state factions, although I allow the distinct possibility.  The scale of the foresight required to craft that strategy beggars belief, but when enough plans are made, some will be surprisingly successful, in all likelihood.  The reason for my skepticism is not dissimilar from your own:  Such a project would almost certainly involve a committee, and that would essentially doom it.  My allowance is the converse:  A genius actor could be sponsored by a well-heeled patron (or in the most unlikely case, be capable of successful self-sponsorship) within the deep state to play the Nakamoto role no less (or little less) than could one outside the deep state.  The reason that the allowance is small is that the population from which the deep state selects is smaller than the population which is denied it.

[AlexGR]

This is what baffles me.  Waiting makes no logical sense at all.  Let's say I'm a big shot with $500 million to invest.  I can take 0.1% of that and buy BTC1000.  If bitcoin gets huge ($100k each), then I've increased my assets to $600 million (significant gain), and risked basically nothing.  And the reason I don't do this is, ostensibly, because it's small potatoes?  It makes no sense.  If their reason was they believe that bitcoin will go to zero at odds of 99.5% or greater, ok, that at least makes logical sense.  But I don't think any of them believe it will go to zero with that much certainty.

I think the main reason the big millionaires aren't buying bitcoins:

- Not what they usually buy. They listen to people like Buffet and so they invest in stocks and bonds. Products out of their comfort zone aren't even considered.
- They listen to financial advisors and no advisor is going to be recommending bitcoin today.
- They don't know nearly enough about it to even consider buying it.
- They think it's some kind of geek fad that will never get big.
- Even if they are some what interested they have no idea how to buy it, at least not in the quantities that would mater for them.

I think the last point is the most important, especially for average people but also for rich investors.

The difficulty of acquiring bitcoin will probably stay roughly proportional to its desirability.  If everyone wants bitcoin, the reasons they want it are exactly the reasons the government and banks don't want you to have it.

Even if some rich people don't know what bitcoin is, there are plenty of Silicon Valley billionaires that do. What about them? Surely they are not waiting for some investment expert to explain the whys and hows - they can make an informed decision themselves because they know the field. But then again having computer knowledge doesn't make you a financial expert - and it has been recorded that many geeks were laughing at the idea that they can sell their bitcoins for fiat, thinking they got the better end of the bargain when they sold their stash.

The more competitive it becomes, the more miners will use renewable sources.  Bitcoin mining might actually save the world by creating funding incentives for advances in renewable technologies.  Or we might all die of cadmium poisoning because of renewable manufacturers despoiling the commons.  Reducing consumption is one useful tool in reducing the ancillary impact of consumption.  A more fundamental approach, which does not rely upon fascism or create inefficiencies of corruption, is to innovate, such that consumption is decoupled from adverse ancillary consequences.  The latter is much more effective, because you reduce the consequences by order of magnitude at one blow, instead of imposing a death of a thousand cuts on your neighbors.

I think by 2030 -possibly far earlier- a new solution will be applied on how to run a cryptocurrency network. Neither proof of stake or proof of work that eats up energy resources. Rather it'll be an artificial intelligence entity with intelligence levels that exceed human intelligence, which will be the objective and neutral trusted party to conduct every transaction of the network. Thus no mining will be necessary, nor a 51% attack will be possible. It will all be conducted by the AI which will be fair and neutral, uninfluenced by politics just like an if-then-else code, yet intelligent in handling things like spam transactions, transaction queuing/speed etc. It may also be able to eliminate the need for a massive blockchain or even distribute it over the network/cloud, thus requiring minimal size. The pros are many for intelligent networks compared to if-then-else mechanisms. The only problem worthy of consideration is how to run such an intelligence in a decentralized manner.

[MahaRamana]

On the subject of why $500 millionaires should not buy Bitcoin and why I disagree with Risto's claim that the only thing that matters is how many BTC you own...

1. A bitcoin is not an heirloom. The chances that it will hold its value long-term are very slim. Gold is a much better heirloom.

2. The 21 million supply limit is a lie. This WILL be violated and there are numerous ways it can happen. The most likely way is Bitcoin is obviously moving towards offchain storage and services. In fact, Bitcoin can't have instant transactions without offchain fractional reserves (technically the exchange has to be fractional for it to happen instantly). Also the government could today regulate the few pools who have 51% and the few ASIC miners who have large datacenters, and produce as many coins per coinbase as they wanted. Later when the masses are all using government regulated offchain Coinbase.com and Bitpay.com, etc, then government can do what ever it wants to the mining and the masses won't care.

3. For the reason I stated in #2, the government can easily confiscate your coins by blacklisting them in the future. They can surely make you pay any tax they want. And they could simply blacklist every onchain coin that can't present a certificate of tax compliance from the G20. And worse you can't hide your onchain coin from the government control. Gold is much better for that. So the government can replace your onchain coins with offchain and give them to the masses to pay for this upcoming financial crisis. And I think that is a very likely outcome.

4. Altcoins will proliferate the # of coins in the ecosystem.

5. There are zillions of other investments in the world. The audacious claim that BTC is the only good investment in the world is unadulterated delirium or snake oil salesmanship.

6. There are many more reasons I can give, but I am growing tired of typing.... for now...

These are probably all valid points. But does it mean a 500 millionnaire should not invest anything at all in BTC ? Sure it comes with many risks, but investing at least 0.x% of their net worth should be tempting - maybe not as a very long term investment but short-medium term diversification.

[AnonyMint]

On the subject of why $500 millionaires should not buy Bitcoin and why I disagree with Risto's claim that the only thing that matters is how many BTC you own...

1. A bitcoin is not an heirloom. The chances that it will hold its value long-term are very slim. Gold is a much better heirloom.

2. The 21 million supply limit is a lie. This WILL be violated and there are numerous ways it can happen. The most likely way is Bitcoin is obviously moving towards offchain storage and services. In fact, Bitcoin can't have instant transactions without offchain fractional reserves (technically the exchange has to be fractional for it to happen instantly). Also the government could today regulate the few pools who have 51% and the few ASIC miners who have large datacenters, and produce as many coins per coinbase as they wanted. Later when the masses are all using government regulated offchain Coinbase.com and Bitpay.com, etc, then government can do what ever it wants to the mining and the masses won't care.

3. For the reason I stated in #2, the government can easily confiscate your coins by blacklisting them in the future. They can surely make you pay any tax they want. And they could simply blacklist every onchain coin that can't present a certificate of tax compliance from the G20. And worse you can't hide your onchain coin from the government control. Gold is much better for that. So the government can replace your onchain coins with offchain and give them to the masses to pay for this upcoming financial crisis. And I think that is a very likely outcome.

4. Altcoins will proliferate the # of coins in the ecosystem.

5. There are zillions of other investments in the world. The audacious claim that BTC is the only good investment in the world is unadulterated delirium or snake oil salesmanship.

6. There are many more reasons I can give, but I am growing tired of typing.... for now...

These are probably all valid points. But does it mean a 500 millionnaire should not invest anything at all in BTC ? Sure it comes with many risks, but investing at least 0.x% of their net worth should be tempting - maybe not as a very long term investment but short-medium term diversification.

The $500 millionaire doesn't need to grow his capital very fast. He needs to manage his capital safely. Getting involved in "anti-government" activities or anything not mainstream is risking his entire fortune.

Much safer to buy the NYSE and watch his capital double between now and end of 2015. That is a sanctioned activity.

If he wants to invest in Bitcoin, do like Peter Thiel and reverse buyout the Bitcoin ecosystem. The super rich understand not to step outside their sphere of expertise. They understand someone like Thiel will end up owning Bitcoin, just as he did with Facebook.

They don't believe our decentralization delusions.

[jmw74]

Allowing myself one more OT comment, simply because I participated in a discussion of this topic earlier in this thread:

This is also the reason that these nutcase theories that bitcoin was invented by government to track people, is just that, a nutcase conspiracy theory.  The government is cracking down on exchanges and arresting people like Charlie Shrem, that is not the behavior of someone who wants it to be widely adopted.  They want to limit it.  They don't want you to have it because it hurts them and benefits you.

Smearing those with whom you disagree as nutcases is deeply pernicious.  At least give them the decent respect of calling them stupid.  The former is defamatory and irrefutable.  The latter is defamatory but refutable.

Yours is a conspiracy theory beyond credibility:  The idea that "the government" is the expression of some malign, monolithic will.  It's a demon of imagination.  The evils of government stem from other, more fundamental, sources.

Sorry, but I stand by "nutcase".  These people are clearly not stupid.  They just have some areas of important belief, where they cannot think clearly.

I don't give this label to everyone I disagree with, just the conspiracy theory folks who, no matter how much evidence you present to the contrary, respond by increasing the size of the conspiracy to include that evidence.

Ok, I am guilty of personifying "the government", it is a gross oversimplification.  Yes, the IRS and FinCEN are separate entities who don't apparently agree on what bitcoin is.  But I there is still an overall trend of the response to bitcoin, that can be attributed to "the government".  (in this case the US government).

[Asrael999]

We also have to remember that since quite recently, lots of investment money is going to angel investment rather than bitcoin itself directly. Big investors see the possibility of getting higher returns than bitcoin in launching a successful bitcoin service.

The future is software, not some rent-seeking paid service.  People will increasingly do business directly, with the help of software they control.  Middlemen are increasingly being cut out.  And yet these investors continue to invest in middlemen.

The investors continue to invest in the middlemen because at the moment they see the ability expressed by Anonymint above to build the centralized offchain "banks" or clearing houses that will enable the transaction levels and the instantaneous "risk free" transactions necessary for widespread adoption.

Coinbase/bitpay/circle will become offchain repositories which offer instantaneous btc transfer between their members and their members fiat accounts.  They will make bitcoin easy to buy and easy to use, ideally managing to reduce the cost of acquiring bitcoin to below the benefits gained by transacting online with bitcoin, and thus being able to offer an incentive to their users (both consumers and merchants) to transact online in bitcoin rather than fiat, ie:  enabling merchants to offer goods online for bitcoin at a discount to fiat currency prices (including the cost of bitcoin acquisition).
This is a necessary requirement to push mass adoption of bitcoin, the price for it will be off chain transactions, centralisation, the potential for government control and hence the ability to recreate the fiat system using bitcoin.

The software solution is to address these issues within bitcoin's code or through the creation of an alt-coin which addresses these issues. The financing for this will not come from venture capital, as there is no return in it -much easier to free-ride.

[MahaRamana]

Allowing myself one more OT comment, simply because I participated in a discussion of this topic earlier in this thread:

This is also the reason that these nutcase theories that bitcoin was invented by government to track people, is just that, a nutcase conspiracy theory.  The government is cracking down on exchanges and arresting people like Charlie Shrem, that is not the behavior of someone who wants it to be widely adopted.  They want to limit it.  They don't want you to have it because it hurts them and benefits you.

Smearing those with whom you disagree as nutcases is deeply pernicious.  At least give them the decent respect of calling them stupid.  The former is defamatory and irrefutable.  The latter is defamatory but refutable.

Yours is a conspiracy theory beyond credibility:  The idea that "the government" is the expression of some malign, monolithic will.  It's a demon of imagination.  The evils of government stem from other, more fundamental, sources.

Sorry, but I stand by "nutcase".  These people are clearly not stupid.  They just have some areas of important belief, where they cannot think clearly.

I don't give this label to everyone I disagree with, just the conspiracy theory folks who, no matter how much evidence you present to the contrary, respond by increasing the size of the conspiracy to include that evidence.

Ok, I am guilty of personifying "the government", it is a gross oversimplification.  Yes, the IRS and FinCEN are separate entities who don't apparently agree on what bitcoin is.  But I there is still an overall trend of the response to bitcoin, that can be attributed to "the government".  (in this case the US government).

Clearly the government and its agencies is too dumb to invent bitcoin. But what about the "entity" that controls the government ? Do you think that entity reveals all its plans to the government which is only one of its tools ?
The government is not an expression of some malign will but its main tool. The true masters are 100% in the shadows. It is well known that most western high rank politicians are part of one or another satanist "secret society".

It is obvious that straight government support would create a revolution against such system that would be seen as abusing privacy etc... The malign power above governments is smarter than that. I don't say it is behind the launch of bitcoin, I don't know. But if I wanted to launch it in an intelligent way so that people see it as good and actually choose to adopt it, I would have launched it exactly as it has been done - and not with outright initial government support.

[jmw74]

The investors continue to invest in the middlemen because at the moment they see the ability expressed by Anonymint above to build the centralized offchain "banks" or clearing houses that will enable the transaction levels and the instantaneous "risk free" transactions necessary for widespread adoption.

Coinbase/bitpay/circle will become offchain repositories which offer instantaneous btc transfer between their members and their members fiat accounts.  They will make bitcoin easy to buy and easy to use, ideally managing to reduce the cost of acquiring bitcoin to below the benefits gained by transacting online with bitcoin, and thus being able to offer an incentive to their users (both consumers and merchants) to transact online in bitcoin rather than fiat, ie:  enabling merchants to offer goods online for bitcoin at a discount to fiat currency prices (including the cost of bitcoin acquisition).
This is a necessary requirement to push mass adoption of bitcoin, the price for it will be off chain transactions, centralisation, the potential for government control and hence the ability to recreate the fiat system using bitcoin.

The software solution is to address these issues within bitcoin's code or through the creation of an alt-coin which addresses these issues. The financing for this will not come from venture capital, as there is no return in it -much easier to free-ride.

What you are saying *may* happen, I'm not saying it won't.  I'm saying it doesn't need to happen, and that there's a much better alternative outcome.

There is return in making free software that helps people do business, it makes bitcoin more valuable, and since you already hold some, you profit.

It may take decades for people to realize that trusting their money to third parties is no longer necessary and ill advised.  The implosions and thefts by third parties may not continue at the scale of mtgox, but they will continue.  If that's what we end up with, then bitcoin is just paypal reloaded.  It doesn't have to be that way.

I hope that bitcoin millionaires will start investing in things like Open Transactions, hardware wallets, autonomous services, etc so that people don't *have* to trust their money and business to third parties who ultimately have no direct interest in them.  That's the problem I thought we were trying to solve here.

Silicon Valley I'm sure will continue to do what they do, they can't do anything else.  What I'm talking about is a competitor to SV (at least in trust models).