The economic and military might of the largest and most powerful nation the world has ever known.
So the military might of the United States is why someone can walk down the street and purchase something in USD? It doesn't have anything to do with the fact that if you take those USD and walk into any most of the stores in the world and purchase things with it?
That's an interesting way of looking at things...
Maybe you are right, I certainly am not an economist.
__________________
"Wake up, Luigi! The only time plumbers sleep on the job is when we're working by the hour."
Difficulty was around 6,000,000 the other day. I suspect it won't go up much higher until Butterfly Labs releases their ACSI machines. If that ever happens.
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Although it is possible with the price skyrocketing, that another huge mining operation might come online in the near future further driving the difficulty even higher.
If you're serious about it, there are ways to make money.
Difficulty was around 6,000,000 the other day. I suspect it won't go up much higher until Butterfly Labs releases their ACSI machines. If that ever happens.
For sure.
Expensive ASICs and FPGA machines have been around awhile and the difficutly has stabilized from their introduction, but the affordable nature of the Butterfly labs units would change the landscape.
For someone who doesn't really know anything about bitcoins, these couple videos show some typical/possible GPU bitcoin miner setups.
As a tech, the ridiculousness of the situation is really quite amusing to me.
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"Wake up, Luigi! The only time plumbers sleep on the job is when we're working by the hour."
The only thing that gives currency value is the belief that the person accepting it can then spend it on something else.
If you can buy and sell a currency, and spend that currency on things, that is what gives it value. Since all of these things seem to me happening with bitcoins, I think that means they do have value.
I don't think the current value is realistic long term, but if it is, then it will likely be partially the result of things like money laundering, like Scott said.
That's not exactly true. What gives money value is the belief that the issuer (usually a nation) has the value to back it up. In the past this was often tied to gold reserves but as economies got more complex and money got more digital it's tied to other factors.
Which makes the question 'what backs bitcoins?', a very valid question. Now obviously, you are correct in the assertion that the belief these coins have value and they will be able to be spent does give them value, but just as they are rising because of euro crisis (according to the links) one could ask what happens to them if some uncertainty happened the other way around. With much less 'backing' them than other more traditional currencies, it's a nervous situation.
Unless, there is something in reserve backing them, which was the original question.
What is going to make it collapse? The price might come up, but I fail to see how the bottom falls out.
Probably a large Bitcoin Exchange getting hacked will cause people to panic sell. There have been thefts of millions of dollars in Bitcoins in the past.
So if I'm a company that's going to sell hardware that can be used to make money mining bitcoins, why am I selling them? Shouldn't I just make them and use them?
__________________ Uncertainty is an uncomfortable position.
But certainty is an absurd one.
So if I'm a company that's going to sell hardware that can be used to make money mining bitcoins, why am I selling them? Shouldn't I just make them and use them?
I'm sure that factors into the equation but you will also need the power infrastructure and HVAC to run it all. Low power/low heat ASICs will certainly have much lower demands but Bitcoins are always unstable and there have been bubbles in the past.
As long as you can profit from selling your ASICs to both profit & recoup your R&D costs for a present value sum of money versus banking on having a huge stockpile of single-purpose hardware that becomes instant junk if the market falls out in the future, I'd sell as much hardware as I could while mining at the same time.
Mining took off in many respects because it used consumer level hardware that was both obtainable and held it's own value because it served a separate purpose if Bitcoin turned out to be a fad. You can't use or sell custom ASICs as graphics cards.
