Quote from: peach on November 05, 2011, 10:51 pmanarcho47We are not talking about the fiat currency and the free market we have in our current economy.We are talking about a programmed feature in the bitcoin economy where there will be a fixed total amount of currency in circulation. It will definitely force a hyper-deflation in the next couple of decades, and it probably will become gradual as the challenge to mine these coins increases.I'm not arguing about fiat currencies and free markets (although to be honest those two terms should not be included in the same sentence as synonymous entities).What I'm saying is that, despite all of the arguments of "tangible value" in bitcoins because of processor cycles and blah blah, the only thing that gives bitcoins its value is the overall market's willingness to accept it to act in the capacity of money - namely, to be a unit of account, a unit of savings, to be hard/impossible to counterfeit, to be portable, and to be divisible. The world COULD wake up tomorrow and nobody would want gold. Gold's price was fixed for 28 years and the monetary base inflated over 1000% from 1933, yet markets outside of the central bank discount window (i.e. jewelry bulk purchases, mine sales, etc) didn't push the value of gold any high and they could have. All you are doing when you buy gold is making a probability play based on a pretty outstanding track record that humankind will at some point treat it as money again. Which means it will retain at least some modicum of value.The same goes for bitcoins. Mining difficulty doesn't matter in irrational markets, only how market participants FEEL. We will probably see bitcoins drop off agin as the US dollar strengthens, because we are in a bear market, where people flee for cash and cash equivalents (this also makes credit near-worthless). This will not bode well for BTC, not for the mid-term anyway. Once we see a return to buillishness we will see a willingness for alternative assets, BTC among them. There may be a time when BTC appreciate to over $100 USD/coin, but it will not be soon. The real litmus test is if bitcoin can last. So many great ideas have been quashed by the state as they are true competition to fiat currency and expose the inherent theft and violence of a legal tender monopoly (see Liberty Dollar founder - specifically that he is labelled as a "domestic terroriest" and rotting in jail for offering a competing alternative to the USD). if bitcion can somehow manage to survive the state, and I don't mean the state actually being able to kill bitcoin itself because that's virtually impossible, but instead survive the persecution of its users, we might be talking.Until then, I treat it as a hot potato.....