I looked into bitcoin mining before as a possible hackish investment, but there seemed to be anniversary where they made mining twice as hard. As it stood when I checked it out (few months ago) you would only make a buck or two a day with a top of the line graphics card, counting in cheap electricity but NOT the price of the hardware. I cant imagine what happens if they continue doing that (making it more difficult)
How do we determine 'popular', though? According to http://bitcoincharts.com/bitcoin/ there were 3.5M Bitcoins sent in the last 24 hours. MtGox has them at $6.50 each at the moment.
I wouldn't consider $22M worth of transactions in the last 24 hours 'unpopular'...
So, if i move my funds between bank accounts a few times a day i can create a popular multi million euro economy? I don't think 3,5m * $6,50 is the correct measurement of popularity.
I guess if you think that people are just moving Bitcoins around to bump up those numbers, then maybe it's not really measuring anything...
I honestly don't know the best way to measure popularity, but I'd love to hear a good way to do so. Until then, well, for me at least, that seems to be the best way to try and work it out. How else do you judge popularity of a currency other than by how much it's being used?
Popularity relates to total value so ~9million coins * 6$ a coin = 54 million in total value which is minuscule in therms of global finance. But, number of places you can spend it also counts and there is just not many places selling bit-coins. Even though it would seem like an easy way to launder drug money it's still just a toy.
I don't want to sound as though I'm arguing for arguments sake, and I really have no dog in this fight. But using the argument of 'size in terms of global finance' would surely render most currencies other than say USD, the Euro and a couple of Asian currencies as 'not popular', wouldn't it?
To be honest, I look at the total above of $54M and think "transactions over 24 hours worth $22M for a currency whose entire value is $54M... that seems liquid at least" (for my pathetic understanding of economics). To me, it seems as though there is a lot of activity within the currency itself, which to me says its popular in the circles that use it. Arguing that it's not popular because of its size, despite the activity, would probably mean that something like the New Zealand dollar would be unpopular. But again, I bet that most NZers would disagree.
So then it just comes full circle and again, I just don't know if I believe it's not popular... just maybe, it's 'nichey'?
Their M3 is also over 200 billion. I am not sure if that's in NZD or USD but 1 NZD = 0.7901 USD so the difference is not that important. http://en.wikipedia.org/wiki/Money_supply
Fair point. To be honest, I just picked the first smallish country I could think of with a stable economy.
Thanks for that data. I guess I still just see tens of millions of dollars movement everyday and think "hey, it's obviously popular somewhere". C'est la vie.
And it won't become popular, because it attracts the wrong kind of people - speculative investors and bitcoin miners dreaming of becoming rich. It does not attract real buyers or sellers...
Nope, there are cliffs where the total number of bit-coins produced per day drop off a cliff. It's a silly idea designed to make early 'investors' lot's of money at the cost of making the entire system be less stable, and worth less money.
You realise there is no central control, right? The system can lag though, and if someone build a large rig and turned it on, that might have had an effect.
Why was it setup like that? Well it was decided rather than having a fixed rate of supply though time there would be a target number of total bitcoins and early miners would get a free pass: https://en.bitcoin.it/wiki/Controlled_Currency_Supply
A more rational setup would be a fixed rate of supply though time, so in 2750 the % increase in supply is a tiny fraction of overall supply but the absolute number would be the same as 2012. Instead they picked a fixed target number of bit-coins which eventually creates deflation as bitcoins can be lost which destroys them.
Every 210,000 blocks the mining reward is cut in half. At current rates, the mining reward will drop from 50 to 25 btc around December 2012. This is separate from the difficulty updates that occur every couple weeks.
Yea, and what protects the bitcoin network is not how much effort it took to create them in the past but how much computing power is being used to create them now. As the rate of creation drops the incentive to mine them also drops, eventually the number of miners drops off until it becomes cost effective to rent enough computing power to own the network and give yourself 100x the amount of bit-coins in existence. Cash out and well game over.
As I understand it, the goal of this feature is to drive miners to begin charging transaction fees to mint blocks rather than rely on the reward built into the protocol. The reward was designed as a carrot, but eventually it'll give way to transaction fees. If you study the protocol, transaction fees are built in; early on, however, they weren't used (i.e. spending BTC was free).
However, there is a more interesting question about transaction processing rates and competitiveness. VISA claims processing rates of 10000 transactions/second. BTC is at around ~700 transactions/second.
The problem boils down to this, suppose total bitcoins where worth 1 billion dollars, an average day exchanged 1/10th of that or 100 million dollars worth of transactions. Now suppose a 1% fee per transaction that's 1 million dollars worth of computing power per day or ~41k per hour (assuming mostly rational actors). Now suppose it costs 10x that or 410k per hour to take over the network. Well the 'pot' is worth 1 billion so that's a clear win and someone would do that.
