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[Bauglir]

The idea is that as it becomes impractical to mine bitcoins, people will quit bothering, and instead purchase them, thereby raising the price because the demand that was previously satisfied by mining shifts to the market. Personally, I doubt it - one of the major psychological draws of bitcoin is the "You can use your computer to literally make money!" aspect. Even though it earns you negative real money, it doesn't feel that way. I expect that when the gap does grow wide enough to actually influence behavior, people will either migrate to another cryptocurrency, or abandon the concept altogether, and the price will plummet as the incompetent speculators leave for emotional reasons, and the competent ones leave for want of viable scam targets.

[mainiac]

I'd say that's more likely too, I'm just reflecting on what would lie in store if bitcoin actually worked as planned.

[Sheb]

What is supposed to happen is that people will keep mining for commissions from transactions.

[Reelya]

Currently, mining something else then exchanging it with bitcoins via an exchange gets you about 50 times the bitcoins as mining them directly . That's what anyone with a regular PC mining with CPU or GPU should look at if you want to. My rent includes electricity costs which is the only reason I'm mining Doge, even still, I probably use less electricity than my flatmates who have a sizeable electric heater and a huge plasma TV in their room, so I don't feel guilty about this.

The scrypt algorithm is used in all Litecoin derivatives (i.e. dogecoin) as an alternative to the SHA256 algorithm used by bitcoin. Scrypt is most efficiently mined by regular GPUs, at least for the foreseeable future, it has technical features which apparently make creating custom hardware for it difficult. Since regular people can't get ahead mining bitcoin, but scrypt-based coins are much more profitable, this has lead to a shortage of mid-range graphics cards, which give the most performance per electricity used.

Bitcoin mining has completely moved over to ASICs (Application Specific Integrated Circuits), which are custom hardware designed to mine SHA256-based coins. Basically, the people with custom rigs with the latests ASIC hardware are able to produce more bitcoins than the electricity costs plus hardware costs, people with regular PCs are not.

[10ebbor10]

MtGox finds 200,000 missing bitcoins in old wallet

[alway]

MtGox finds 200,000 missing bitcoins in old wallet

"Oh hey, there's that $100 million I thought I lost in the wash!"

But seriously, this, to me, is one of the biggest problems with bitcoin. Electronics die extremely easily, and as they go, so too go any copies of encryption keys, 2 factor authentication, ect. Even if the absurdly terrible economics don't do it in, the absurdity of how difficult it is to access will (assuming you're using a system which can reasonably keep them secure; if not, you'll probably lose them even sooner).
This thread on the bitcoin circlejerking subreddit, for example.

Or imagine it isn't electronics, but the person who deals with the money. Inheritance? Forget about it. If you didn't literally tell them the equivalent of your bank password, those bitcoins died with you. No possible means of recovery, either legal or technical.

[10ebbor10]

Also, it significantly worsens the deflation aspect of the currency as well.

[LeoLeonardoIII]

I know it's been brought up before, but I love that every news story has a picture of the same physical bitcoin thingies. I bet they think they're clever.

As for losing bitcoins to obscurity, I guess it's the same problem with people who stick gold coins in a tin can and bury it on their property, die alone, and nobody ever finds it. It removes from circulation and banking a small amount of a finite money. As fas as I understand, a bitcoin saved on a hard drive or printed out in some physical way can be used if anyone finds it; if not, it can't. Right?

[Leafsnail]

That's part of why we don't use gold as a currency, yeah.

[lemon10]

I know it's been brought up before, but I love that every news story has a picture of the same physical bitcoin thingies. I bet they think they're clever.

As for losing bitcoins to obscurity, I guess it's the same problem with people who stick gold coins in a tin can and bury it on their property, die alone, and nobody ever finds it. It removes from circulation and banking a small amount of a finite money. As fas as I understand, a bitcoin saved on a hard drive or printed out in some physical way can be used if anyone finds it; if not, it can't. Right?

Except that if you find a can with 50 year old gold you can turn it into money.
If you find a 10 year old hard drive filled with bitcoins then you will have no clue that it has anything in it, and will almost certainly throw it away.
Plus, I suspect that many of the bitcoins are encrypted, so even if you did find the computer with them on it in working condition, you probably wouldn't even be able to tell that they are on it much less be able to get through the encryption.

Bitcoin honestly has too many problems to be a long term viable currency (deflationary nature, 51% attack, vulnerability to hacking, losing irreplaceable coins, requiring technical skill to use), and I suspect its failure will end up hurting other viable digital currencies.

[LeoLeonardoIII]

That's part of why we don't use gold as a currency, yeah.

Paper money has the same vulnerability though. You can lose it by stuffing it in the walls of your house because you're a Depression-era bank mistruster and after you're gone nobody knows you did it. I think the chance to lose money by misplacing it is inherent in any money that isn't just accounts in an organization like a bank.

[Helgoland]

But then the central bank can print more money, keeping the amount in circulation constant.

[LeoLeonardoIII]

Oh I didn't catch that was his concern. There's two issues I can spot off the top of my head related to currency being lost: the owner loses his wealth, and the currency leaves the economy. I was thinking about the first one and not the second one.

Bitcoin could always do a currency audit, requiring validation of all bitcoins within say a 2-year period, and any bitcoins not validated in that time revert in ownership and are reallocated somehow. Governments do that kind of thing sometimes to reform their currency.

[Leafsnail]

Except it won't ever do that because that would weaken its power as a Ponzi scheme.

[Putnam]

A ponzi scheme kind of relies on it actually being, you know, a scheme. This is more just plain bad currency design.