I am using the estimates of governments.  They use educated estimates based on things like how much they bust, the size of grow fields in South America, spies in the drug cartels, etc.  Even if they are off by a factor of 4 and the drug economy is 20% of the world economy (A very high number), it still won't allow for increases like the ones we have seen since the beginning of Bitcoin.

You are correct that most of the wealth is not tied up in paper.  But that isn't relevant to the discussion.  What matters is the amount of economic activity measured in existing currency and extrapolating that to bitcoins.  The results are very unlikely to be off by more than a factor of 10, so they are still relevant to fact that bitcoins will  almost certainly never grow larger than 10,000 times their current value.

I'm not being negative, I'm just saying that it isn't going to be like the beginning.  I bought a bunch of bitcoins over the last month, so I do believe that they have a bright future.  But this is tempered with a knowledge on the limits of growth and the size of the whole economy.

As I said before, idiots like Schumer need to be silenced about shutting down Bitcoin.

Maybe instead of assasination markets, we could have a prediction market on the day that Schumer pledges to never touch Bitcoin.  What means are used to convince him to do so, is left to the persuaders that get the bitcoins. 

I didn't take it into account because it is so small compared to the very rough order-of-magnitude estimates.  Bitcoin can't inflate to more than 2x more than what is currently in circulation since 1/3 of it has already been mined.  Mr. Bernanke can inflate to infinity, but I am comparing in terms of current dollar value.

Anyway, I hope that someday Bitcoin takes over a large part of the economy and not just the underground part.  It would be great to see the central bankers neutered by something like this.  And the economy would benefit as well since wealth would no longer get redistributed to politically connected businesses.

Of course, my main reason for hoping the bitcoin economy takes off is for simple greed

I think his problem is that some weeks nothing will come in, other weeks, 6 blocks will come in.
The variance freaks some people out.

Plus with difficulty increases, variance actually costs you because you sometimes don't get anything before the next diff increase.  Over a long period this doesn't matter, but in the short term, it can decrease your earnings.

6970's are not anywhere near the best hashrate per $.  Trust me, I have some so I know.

Right now the best hashrate/$ is the 5830's at newegg.  286 MH/S for $130.  Around 2.2 MH/S per $.  6970's do around 380 MH/S for $320, so they are only 1.19 MH/S per $.  Of course, you have to consider the price of the motherboard, power supply, etc because you will need more of them per MH on account of the lower powered 5830's.

Check out https://en.bitcoin.it/wiki/Mining_hardware_comparison  The price/MH column is wrong because people don't update it when they update the card prices, so you have to calculate on your own.

Anyway, as I have said in other threads, right now the ROI on mining is the lowest it has ever been, less than $.01/MH/S/Day.  If diff increases grow at less than 1% a day, you may be able to get more bitcoins over the course of a year than just purchasing them outright now.  But based on historical data, you will get more bitcoins from simply purchasing from the market.

Good luck.

Wouldn't it be more useful for Bitcoin to rid the US of Chuck Schumer?

Very long view indeed.  You may be correct that we are still early adopters, but I very much doubt that Bitcoin will ever see the kind of proportional increase that it has already seen.  Just for some numbers to put in perspective:

The total US M2 money supply this year is around 2 trillion dollars.  There is some controversy over M3, which is much higher but no longer used.  So let's just double M2 and say 4 trillion dollars.  The US is about 1/4 of the world economy so multiply by 4.  That gives a worldwide money base of around 16 trillion dollars.

Now divide that by the total market capitalization of bitcoin at around 90 million dollars, and you get a ratio of around 200,000.  In other words, even if bitcoin replaced every currency in every country in the world and was used for every single transaction, a uBTC would still only be worth around $2.80.  I realize that you can't just derive value from the money supply.  But this is useful for a rough estimate.

For a more realistic number assume bitcoin is used for around 5% of all transactions eventually (which is about the size of the underground drug economy).  That means that the ratio is now around 10,000.  Which just happens to be the original ratio of increase (from 1/4 cent per bitcoin to $25 around the peak)

The time it took the original ratio of 10,000 to take place was around one year.  I find it difficult to believe that bitcoin can take over 5% of the world economy in one year.


So basically, the original early adopters have it better than anyone now can ever hope to get.  Not that we can't do well, but the gravy train has already pulled way out of the station.

Angelus Design has some good points about the feasability of mining right now, although I haven't seen a lot of his posts.  I don't think that he deserves to be offed for expressing them.

Anyone that wants to reset simply has to start their own blockchain.  If you can get a bunch of people over to your chain, then you can distribute however you want.

I admit I'm a bit annoyed that I didn't buy in when I first found out about bitcoins 2 years ago.  I was going to download the client, but since it was peer-to-peer I thought it would clog up my network like BearShare.  Now that I know more about it (too late) I realize that it takes almost no bandwidth at all.  I was going to buy some bitcoins on the market at 1/4 of a cent each instead, but I never got around to it.

That being said, I would be against resetting the bitcoins.  It would be the ultimate moral hazard, and would make you no better than Mr. Bernanke and Co.

I can change to GH/S, but you can't put 0 on a logarithmic chart.

The chart uses only difficulty and pricing data.  How powerful each miner's machine was doesn't change the chart.

I think what you are saying is that the cost of buying hardware in the begining was much higher in terms of $/MH/S performance because they were only CPUs.  So your ROI was closer to the same because it cost around $400/MH/S for CPU power rather than $1/MH/S for GPUs.  I can make another chart showing ROI with those considerations in the future.

750 MH/S on my computer.  So 750*.01 = $7.50/day.

It combines difficulty and bitcoin pricing over time.

Since MtGox pricing data doesn't exist before Sept 2010, I had to fake it with some rough data from bitmarket.
The data from the exchanges isn't in a clean one row per day format, so the graph will be a little bit off, but it shows the general trend well.

Hopefully, Sipa will add a chart like this to his site in the near future with code that can clean up the data a bit and combine pricing data from mtgox and bitmarket.

http://i.imgur.com/TU0fm.jpg

Since MtGox pricing data doesn't exist before Sept 2010, I had to fake it with some rough data from bitmarket.
The data from the exchanges isn't in a clean one row per day format, so the graph will be a little bit off, but it shows the general trend well.

Hopefully, Sipa will add a chart like this to his site in the near future with code that can clean up the data a bit and combine pricing data from mtgox and bitmarket.

http://i.imgur.com/TU0fm.jpg

Where would be a good place to put the jpeg?

Thanks a bunch, that is exactly what I needed.

Ok, I figure out how to get the difficulty data from blockexplorer.com.  Now I just need to get historical pricing data.

Right you are.  I forgot about that.

Is there an easy way to extract the blockchain data from the file that is downloaded from the bitcoin client?  Or is there an easier way to get that from blockexplorer.com?

And where would one get historical pricing data?

And does anyone know how to get historical pricing data from somewhere like bitcoincharts.com?

Does Sipa just keep his difficulty data in his own database?  See bitcoin.sipa.be

I would like to make a graph showing price/difficulty over the history of bitcoin, but sipa doesn't provide that.