Quote from: tsvekric on June 20, 2011, 10:41:28 PM

It is true that price determines difficulty, not the other way around.

I still disagree with that (if I have a cost to overcome, I won't sell a BTC under cost, thus however long and costly the BTC was to produce, this is how high I need to let price go up before selling).

But the major issue with BTC isn't this whole value etc logic, it's how much wealth transfer is sustainable within the system.

IMHO a single BTC holder can completely overload/-burden the market at the moment, and thus we don't have a lot of reserves.
If more and more people keep piling into mining, but put no other "real" money into BTC, yet keep cashing out, _SOMEONE_ has to pay them out. So that money reservoir is not unending.
So, if
Sum of (value of btc selling people wanting to get cashed out) > (people willing to put forward real world cash for BTC they do not have yet)
then it all goes to shit, because you will end up with oversupply.

Some will argue this is wonderful, because then they can buy BTC cheaply.
Yes, up until the point that you run out of whatever savings you have. Then even at 1$ you can't buy anymore BTC.

And now what happens? Now the last people who would have put out money for BTC, the bargain buyers and speculators, too, have run out of money. This now creates a huge pile of one sided potential supply vs the odd drug consumer wanting to buy illegal drugs via silk road and friends, likely a hugely outlevered and outnumbered relationship.
And the guy could not care less whether he needs to purchase 1 BTC at 20$ or 20 BTC at 1$ to get the equivalent amount of dimebag from it, because the drug price will still correspond to the _real_ world currency prices, not a fixed BTC price.

So, now what you have is a dried up market with an oil tanker worth of BTC, and basically a straw sized siphon for anyone trying to get his oil or rather BTC out..

What I am saying is this is what you should really ask yourself about in terms of future and economy.
I am sure a good amount of "rig investors" will be off well, they will always have at least a machine with which to play the next "Crysis"; but the people who put actual money into the system, well...they will have bitcoins.
And that's about it. And yes, I know THEIR argument is "Hah, but BTC is everything, and I can get everything(read: cheese and crackers at BTC munchies or whatever), plus it's better than the guvvurmints n awl", but let's see them explain that to their dentist when their tooth hurts or the lawyer when their car gets crashed and they only have BTC to foot the bill etc.

It's a nice experiment though while it lasts.