Bitcoin has hit 12 USD | Hacker News Reader

Bitcoin has hit 12 USD

bitcoincharts.com

16 pointsjasonlingx16 comments

Where will it stop?

Am i right in thinking the majority of bitcoins that will enter circulation are now accounted for?

My understanding of bitcoins is that there is some maximum limit of 21million and that there are currently 9.7million mined. So there are a little less than half of the bitcoins mined.

http://blockexplorer.com/q/totalbc

That's one thing I really like about bitcoin: it can't be printed on a whim. Also, possibly a reason why its price is rising.. that the currencies purchasing it are losing purchasing power.

> That's one thing I really like about bitcoin: it can't be printed on a whim

However, someone can start Bitcoin2, which would have substantially the same effect.

how are you going to get people to use bitcoin2? I've thought about it.. unless you're the founder, there's no straight answer (and even if you are the founder, you'll end up with little incentive by the time you can convince people to)

It depends on who you are. If you are a government, for example, you can allow people to use bitcoin2 to pay taxes, and you can use it to pay government contractors.

I suspect some large companies could also do something like this. Amazon or Walmart, for instance. They could give discounts to people who use a digital currency they are trying to push, and that could be enough to bootstrap things.

I had those same thoughts when bitcoin first came out (or rather hit mainstream) and put them on my Bitrific blog, which I subsequently shut down.

A new government backed currency being disconnected from paper is one thing, but being disconnected from fractional reserve banking is another and likely to be met with very violent opposition if a target can be found.

There'd a have to be a total change in government policy for a modern day digital Lincoln greenback. I don't think the Corporatocracy would allow it to happen at this point. So bitcoin is the closest we can get to it - money for the people by the people (instead of money for the corporations by the banks with the help of government.)

Bitcoin is open source and anybody can create a bitcoin clone and many already have. There is little value in that alone though...

To be a proof-of-work based cryptocurrency, it would need to make it through the phase where it is vulnerable to external attack.

Bitcoin made it through because nobody knew that a proof-of-work based cryptocurrency would ever end up being worth several hundred million dollars or more.

Now that bitcoin exists, any competitor risks getting spanked down. Even bitcoin is at risk of getting spanked due to a 51% attack, except that it will cost more than $10 million in hardware to do that.

One alternative is using scrypt instead of sha256(), and thus GPUs aren't as effective and the one crypto currency doing that has avoided attack thus far. That currency is worth under half a million dollars of valuation at the current exchange rate and there are hardly any exchanges where it is traded so there's little financial gain from attacking it sooner rather than later. But it is still very vulnerable, in comparison to bitcoin.

A bitcoin2 should be a swap currency. 21 million coins pre-issued, and sold for 1 btc each. Like when a fiat note is upgraded, the old note is eventually taken out of circulation and destroyed. But how do you trust the issuer of bitcoin2 to destroy the bitcoins they receive, and that they won't issue more bitcoin2s for themselves later secretly?

(or they can just lock the bitcoins they receive for guaranteed swap-back at any point later - the bitcoin2 issuer is a bitcoin bank too: how do you trust they can effectively lock them up with the possibility of return later?)

It is why its price is rising. But it's not because the currencies purchasing it are losing purchasing power. The size of the economies associated with those other currencies are just too enormous; from their perspective the amount of money sloshing toward Bitcoin is a drop in the bucket.

A much closer analogue might be what happened to Iceland's currency. The value of BTC (and, by association, its purchasing power) is going way up because supply isn't keeping up with demand. But unless there's some strong real growth to anchor that expansion, it's just a balloon economy. And what balloon economies tend to do is keep rising until the pressure differential causes them to pop.

The rate will slow though, to 25 BTC per block (down from the current 50 BTC per block).

So it took 4 years from 0 - 10.5 million, then the next 4 years sees 5.25 milion minted, then 2.125 million in the 4 years after that, and so on for decades until all 21 million have been minted.

from what I understand, the rate will keep halving and the 21 million will never be reached, it is just a theoretical maximum

Up 155% in 2012.

Up 80% in the third quarter so far.

Up nearly 30% in two weeks.

Ya, crazy stuff.

Even though the exchange rate is just slightly up versus a year ago on this day, it is way down from the 2011 high yet ($32.40). That is more than 60% below the June 2011 high.

if there's one thing I've learnt from bitcoin trading, and a good life lesson in general, is just before buying (or selling) I think "hey wait a minute, should I actually be selling (or buying.)"

And finding this power has helped me find myself.

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