Quote from: DerKorb on December 09, 2013, 07:55:12 AM

Quote from: Light on December 09, 2013, 07:40:26 AM

Quote from: DerKorb on December 09, 2013, 07:25:17 AM

While i generally think this is an interesting point of view, there seems to be one huge flaw with this logic.
To mine gold you need a somehow fixed amount of effort.
The effort to mine bitcoin instead is dependent from the amount of people trying to mine bitcoin.
Higher price of bitcoin -> more people mining -> higher difficulty -> higher cost of hardware -> higher price of bitcoin -> repeat
It is more likely it's the other way around: price of bitcoin dictates how much effort and money people put into it.

For nearly everything the price dictates the amount producers are willing to make and sell, not only for Bitcoin. Using your example of gold, if gold was to fall to $1 overnight for some reason (highly unlikely but this is theoretical) I would guarantee you that all the gold mines would at least temporarily stop production as it is no longer viable and profitable for them to do so. So basically it holds true for nearly everything that the price will affect how much "effort" producers are going to go to.

well you are right there, but the difference is, with gold this would lead to less gold mined - with bitcoin there would be the same amount mined. It's not like you necessarily need 7 Petahashes to mine 25 bitcoins every now and then.

I actually think you are missing the point here. There is an economic incentive to mine gold. There is an economic incentive to mine bitcoins. Remove the economic incentive (aka drop the price to $1 or even $0) And both will see significant decline in producing power.

The upper limit of bitcoin, and thus the fixed amount being mined, have a different reason, and should not be included in this. (The reason being political, we can't trust our central banks/politicians, to not print more money)

I wish everybody would stop attempting to negate an point in economics with an argument in IT or politics. These 3 are distinct and have been very cleverly combined into bitcoin. When analyzing bitcoin, it should be pulled apart and each studied on its own.