Technically, you'll never have 21,000, but you'll never have more than that. It's like walking halfway to the wall in front of you. You'll never reach it. But we'll get close to the number at some point. But a lot of gold is silly as you mention, but that silliness is necessary compared to alternatives. Look also at the island of Yap. Huge stones from an island 200 miles away is very similar to gold. They are hard to get, impossible to counterfeit, etc... But to go 200 miles to get some random stone to bring back and use as money is silly. But far less silly then using an easily counterfeit-able money supply.

The first currencies existed under these terms.

Again, why is gold valuable to have? It's not because of its industrial uses. It's not from jewelry. Sure, some of the value is from that, but a very small percentage of gold is in those forms. It's valuable only because people think it is. It's also valuable because of its ability to be a currency.

Getting initial use is going to be the biggest obstacle of bitcoin. I agree here, and wonder what can be done. There are some reasons that a vendor may want to use bitcoins over gold or cash. Anonymity, low transaction costs, and funding illicit activities all have advantages with bitcoins.

Another potential obstacle I thought of was although bitcoins are in finite supply, the concept could be duplicated to create another competing money supply equally as good, thus increasing the money supply. Call them steelcoins instead. You could take the source code to bitcoin, duplicate it and just change the name to steelcoin. You have 21 million steelcoins now. Then someone else comes along and makes more. So even though the individual types of bitcoins are limited, the bitcoin concept is just as expandable as anything else.

But one way to encourage early adopters is to make the currency in a way such that getting in early gives you great benefits if it takes off. The deflationary nature along with making it so you can get coins easier early on might be enough for this, but I'm not sure.

1. The first currencies existed under these terms.

I think you will see a government mandate there or single vendor.

Bitcoin does have inflation; the money supply is expanded by people who spend computertime generating new bit coins.

A country that limited supply to say 21,000,000 dollars is different than bitcoin, because the government demands that it be used. The more I think about it the gold standard was a really bad idea, because it allowed people to increase the supply of gold based on finding more gold. So you have all these people doing unproductive job of looking for gold, when the government could have just limited the supply creating massive deflation benefiting dollar holders instead of gold miners. (1) But, after the 21,000,000 dollars are created by jogging around a mile track the government would eliminate the exchange stopping new dollars from being created, similar to bitcoin, limiting dollars to 21,000,000. So you have 21 MM pieces of paper backed by nothing with the government iron fist that it be used. bitcoin you will 21,000,000 bitcoin backed by nothing with no demand that it be used.

(2)Yes, gold is just a fancy rock or element. But, there is something materialist or wealth there and it took a lot of work to make that wealth. If bitcoin users panic there is nothing there. If a bitcoin was backed by one ounce of gold, at least you could exchange the bitcoin for an ounce of gold. That would take the panic away. The exchange medium could be steel, copper, zinc.

Bitcoins don't have an advantage over gold because gold has had value for 5000 years. Bitcoins only 1 year. If a small country switched to bitcoins and mandated it, then there would be vendors for it and bitcoin would flourish. But there is no mandates.

So the question I have is, if bitcoin is not backed by exchangable wealth and not mandated by fiat (government regulation or law) has there ever been a currency on earth that has existed under these terms? if not is it possible?

You think when random people traded stuff with gold back 5000 years ago there was a government mandate? I'm more likely to believe things evolved naturally, but I could be wrong.

Yes, but it is a set controlled inflation over time up to a certain point. The inflation decreases every year. The amount of CPU time generating blocks increases every time one is created until it will be nearly impossible to create one. Any new currency needs initial inflation or distribution. Having it spread out over time gives a chance for people who are a bit late in the game to get on and not give all of the spoils to the first people in. But there is an absolute limit, and there will never be more than 21 million. Far more than any fiat currency, and very similar to gold, where there is a fixed (but unknown) amount of gold. There always is that risk with gold where someone will find a huge supply of gold somewhere that devalues everyones gold, or that alchemy will exist and we can convert lead to gold (maybe not so much with the 2nd one).

The expansion is at a constant rate that will continue to half periodically as time goes on until it's basically zero. It's meant to mimic-ish the mining of gold. For now, that's the motivation that 'miners' have to encode the bitcoins which keeps the network alive, much like 'seeders' keep a bit torrent file alive.

Again, casual observer so I could be wrong that's what their wiki indicates though.

I'm always interested in side projects, and this has taken my interest. Trying to think of interesting ideas that are doable and could make some money off this.

A couple of ideas that interest me:
trading/arb opportunities
futures exchange
sports betting

Not interested in mining.

Spread betting would be cool. The value charts look really volatile so I think there's money to be made.

I think you could create a public key-private key money where each unit is backed by 100 pennies before 1981. Or nickles that all fit in a small usps box. You have everyone ship the coins to you. You keep a camera on the coins to show they are there, in trashcans. Then you use the $0.01 transaction cost as the fee to use the service. With about 1/2 penny going to buy more penny. It would be far cheaper than ebay and I think it might be legal. At any time you can ship a box full of pennies to someone that wants out of their currency -the merchant of last resort.

From what I read, it is legal to make your own currency in the united states. The guy who did the liberty dollar got in trouble since it said dollar on the coin thus he might go to jail for counterfeiting.

There are some cities that have a 1:1 dollar currency. However, if you put the money in the bank you can earn interest off it.

I think I saw a sports betting bitcoin site.

A lot of the sports betting already existed.

I'm not interested in creating my own competing currency, way too much effort for what I have time for.

Having something physical is nice in some sense, but a real hassle in another. It's expensive to ship stuff, expensive to store it.

TC,

I think the trick here is to figure out when the annual bitcoin inflation drops below the user growth rate. It may have already. Then buy in assuming that vendors are really using it. Here is the annual inflation.
2010: 100%
2011: 50%
2012: 33%
2013: 13% (Why so low? Because generation drops from 50 BTC to 25 BTC.)

Bitcoin is falling now. I think part of that is because it shot up to $1 too quickly based on a huge surge in interest. If the demand for using the currency is growing less than 50% right now, the value should be falling. However the inflation in supply is always dropping. Buying in at the right time, and then seeing usage growth increase could net a lot of cash.

All transactions in bitcoin are broadcast. There should be a way to monitor the velocity or turnover in the bitcoin economy. I think you could remove the fiat to bitcoin transactions and get a pretty accurate picture of how much the coins are actually being used.

There's some interesting data here:
http://bitcoincharts.com/charts/mtgo...gSzm1g10zm2g25

You can also use the block explorer to look for transactions. Keep in mind however many of the transactions can be simply people moving their own money around consolidating addresses they control and so forth.

If you can trade sucessfully you could setup your own bitcoin bank. Give interest to bit coin users who deposit into your account for you to trade with. If you had enough bitcoins as your disposal I wonder how easy it would be to control the market.

Well a lot of the traders of coins go off of the mtGox market. I imagine someone could buy a lot of coins outside of mtGox and then sell on MtGox to depress the price.

So far I've been disappointed. It seems very hard to get started, and even then there isn't that much to do.

I got .05 free from the faucet. To test it out, went to the double or nothing game, sent .01. It was refreshing for a long time, I never got anything back. So I guess I lost. Today I sent another .01 to it, and 2 hours later, the network has 0 confirmations of the payment. I tried again with my last .03, using .01 as a transaction fee to see if it sped up the process. 0 confirmations after hours.

I was looking to fund a small amount for screwing around with trading and making a trading bot, but the best I could find was 7% fees through PayPal. No thanks. The forums seem to be overrun by people trying to sell stuff for bitcoins, and no one buying them. It looks like a ton of people are hoarding the coins hoping they'll be worth more later, so it's tough for people who are interested to get any. I was hoping to just start small and test it out, but so far it's been a bust.

People hoarding it might be good for the currency up to a point. At least it'll make it less likely it's going to 0.

Yeah, I am having a similar experience. Transferring money into Bitcoin is not going to be cheap for a long time. Paypal charges 3%, so a company that gives Bitcoin for this amount has to at least charge that much. It would be nice if someone worked on a decentralized funding scheme to match buyers and sellers. For one it removes the single point of failure that the bitcoin exchangers represent. Second it would be much cheaper if the buyer and seller could just split the 3% paypal fee.

Turns out I had to click something on that double or nothing game once they got my money confirmed. I lost the first link, but played with the last two, won once. I also used the URL to play on my lost penny, and won that, so back to 6 cents! Still, until I get a few BTCs it's going to be hard to do much of anything.

Probably best thread I've read on BYI ever...
P2P + Cryptology = Decentralization is the future...
Once BTC or other digital currency takes off...
P2P rake-free gambling/poker is an obvious application.

All the code for poker servers is out there for years...
Poker is relatively simple ...
Just need one genius to tie it all together...
And release complete package like BitCoin = BitPoker.

I can imagine 90% of online low stakes poker...
Migrating to rake-free P2P network over several years.

http://www.liquidpoker.net/poker-for...m_session.html

AFAIK there are some small scale bitcoin poker sites out there.

Not sure it's going to be a huge thing. Marketing and advertising are absolutely huge parts of getting people to play. Marketing and advertising isn't free.

I'm more interested...
In the general concept of this mathematically...
The mind expanding powers of studying the IDEA BitCoin...
And how these concepts might transfer to trading.

Poker SHOULD be a logical first adopter of this model...
But look at the Poker World...
Has a single meaningful thing changed since 2005??
Could you even tell it's not 2005 by logging into PP?
Or looking at WSOP? Anything?

That's what happens when you have an effective monopoly...
Catering, primarily, to low-end degenerate gamblers...
Just Bugsy invents Vegas for the Losers all over again.

Meanwhile, the trading world advances at lightspeed...
> 90% of all prop shops and click traders are out of business...
It's hard to view online poker as a serious business niche.

The dude below wrote the Open Poker server...
Which could support 10,000 players on one Mac...
If he merged his code with BitCoin = BitPoker...
And included various Shill Bots (labeled as such)...
To start and keep games full...
One could imagine exponential growth at LOW STAKES...
The entire financial infrastructure exists = BitCoin...
I would switch on principle... Casinos creep me out.

http://wagerlabs.com/

The lottery nature of the payoff, IMO, is a mistake...
It's aimed at getting Botnets to run BitCoin mining farms...
Mine BitCoins instead of sending spam...
But these people are always thinking ONLY CRIME...
Only crime is fun for some people.

There are a lot of places people live on $50-100/month...
If you could make $0.25-0.50/day STEADY...
(Which buys a LOT of bread/potatos in Eurasia)...
I can see 100s of millions adopting this...
Then it goes viral bottom up... not top down.

This is a good post and discourages me from mining. If I could get a consistent small pay vs. hit or miss large payments, I'd be more likely to do it.

You can join a mining pool that will give you your 'EV' of mining, minus a small fee of course.