Ok finally something useful, THANK YOU. It took a while but finally a useful piece of information. Really proves how useless a majority of people posting online is. Lets just hope that it gains widespread use. But I still reckon unless some countries seriously goes south, then it still be a speculators game. More people are involved for speculative purposes than actual trade. It's impossible for companies to accept bitcoins if the price is highly speculative and can drop any second. The risk is too high and then it becomes a chicken and egg problem. Will people stop speculating so that companies can accept and hold onto bitcoins, or will companies accept bitcoins first so that widespread use can be achieved, discouraging speculation. I know companies like Dell are accepting bitcoins but its a completely different to what you would think. Dell accepts BTC but cashes it straight away. This does not help the Bitcoin economy as purchases through the currency are immediately dumped.

Yes, these things are all speculative bubbles that if applied to a currency will cause a lot of financial damage to people. People use money day to day and can easily be caught out whilst not even speculating.

Ok, I think people are still missing my point. That bitcoin has a finite supply like a natural resource, but can't really be used for anything else except for 'storage of wealth." I get that it takes computer energy to mine a bitcoin, and it will take more and more energy, but that doesn't take away from the fact that you can't do anything else with the bitcoin made, except for the market dictated value that people believe in. This market value, will inherently increase as there is a finite supply of Bitcoins. Isn't this a economical problem for the currency, as its purpose is trade and not speculation.

I'm finding that people who think they know really don't know how an economy works.

Ok people, I'm talking about a man made resource with a finite supply being supposedly used as a currency. I admit I have phrased some things incorrectly, I don't have a degree in economics, only journalism. I'm addressing a problem that I see with using something like bitcoin as a currency and no one, in this 4 page thread has really given me a solution, just run arounds like 'read up on it yourself.' So far there has not really been a stable price, which is essential for a currency of trade. From the useful posts, people seems to be denying that Bitcoin is a Ponzi (fair enough, I agree) but haven't denied its speculative nature, that there is a finite supply and obtaining it raw will get increasingly more difficult. Doesn't having such highly speculative features render its primary objective - being a self-regulating currency - useless? I think this resonates even in the current trend where more people are using it for price speculation rather than trade and sustaining an mobile economy.

Can someone please explain to me how this problem might untangle. That somehow these speculative features will balance out over time and a stable price could be achieved. Because otherwise there really is no financial revolution and it is just like every other speculative bubble like the Dutch tulips.

I draw a distinction between Bitcoin and natural resources because I believe there is a inherent value in natural resources. You can use it to do something else. Silicon was traded because people found a use for it, otherwise it would just lie on the ground worthless! People only traded for natural resources, not traded in.

Would be great if someone can actually help me because I am trying to write as accurately as possible and I haven't found any online resources that discuss this issue.

Ok maybe using the term Ponzi is a bit too much. Certainly saying Ponzi like might imply a lot more. But no one's disagreeing that bitcoin, with its finite supply is a speculative goldmine, just like oil, housing and other natural resources, except for that it does not have any inherent value - that it can't really be used for anything other than trade with someone else who also deems it valuable. Doesn't its speculative properties render it obsolete as an viable form of currency for trade, which is it's supposed primary purpose. Or is bitcoin made for speculative purposes? Satoshi made something else for people to speculate on, just like those dutch tulips. Forget Ponzi, think man made speculative bubble

And for clarification, I'm not saying that it is a Ponzi, I know what a Ponzi is. But that doesn't distract from the Ponzi like speculative features that Bitcoin has to offer, all under a self-regulatory and non-institutional package. I think having a limited supply will inevitably cause the speculators to come in and destroy it for any other purposes except for speculation. As we have seen with many other things in the US, land, oil and gold. People bought land to speculate and not live in

Ok I'm looking to write an article for an Australian publication, so if anyone would want to use their real names for quotes, than please let me know. I'm not against Bitcoin or anything but one final query I have. How is it viable to use a currency that is in limited supply. Remember, this isn't land, or oil or gold where there is an inherent value in those resources i.e. you can use those resources for a wide variety of purposes, breeding cattle, running cars and what not. The problem with bitcoin is that you can only trade it with someone who also thinks it is valuable. Wouldn't it be Ponzi like, instead of an charismatic individual, we have an integrated system for a currency that never stops rising. Like if something is in limited supply, then it is highly likely the price will never stop rising, i.e. oil and land. As such, it can also be easily speculated as there will always be a limited supply and it takes one marketing campaign to drive up demand. We have seen that happen many times with land, gold and oil. For a currency, isn't that quite troublesome if people are touting bitcoin as the next financial revolution, where international trade will be facilitated, but its value highly subject to speculation.

Well yeah, it's not exactly a Ponzi scheme per se, but it is a lot like oil and other natural resources, but they're a resource and not a currency. It is quite a lot like a natural occurring Ponzi scheme though. I don't anyone has actually explained this yet, the core point I'm getting at is if the supply is inherently built to continually diminish, then wouldn't the price continually increase, and that in itself is can't sustain a stable currency and the people who invested early will never be at risk because their asset will be guaranteed to continually appreciate in value

After figuring out how the mining works, that it becomes increasingly more difficult obtain, wouldn't that just cause the price to keep on increasing, like it will never stabilize and outside of the speculative fluctuations, the price will always continue to rise and the guys who set it up and invested early sit on an asset that will continually appreciate in value. The distribution won't ever be even and prices will never stabilize for it to be an viable currency for trade. So the guys who created bitcoin really made a Ponzi scheme for themselves as the price is always set to rise due to the increasing mining difficulty