1 bitcoin worth more than dollar

Second, how else do you bring coins into the market? Be forced to buy them from the system's founder? I doubt that would catch on. Reserve a set number for each person onthe planet and give it to them when they ask for them? I don't think I could count all of the problems with that idea. Hand them out some arbitrary number of some supply in a first come first serve manner? I don't see how that would be an improvement.

The system needs people to generate blocks in order to provide the security of the system, but generating blocks has costs associated with it (hardware, electricity). Why not reward those block generators that are providing the system's security with new coins for each block they generate, at least until the number of transactions per block grow to a point that block generators can charge transaction fees?

Block generators aren't just generating blocks for the fun of it...they want bitcoins so they can spend them, which means those bitcoins will go to others, who can then further spend them, etc. Anyone can do it. GPU mining is profitable for most who wish to make the investment. There's no central authority choosing who gets to generate new blocks. Each person chooses whether they want to generate blocks or not.

If you don't want to generate blocks, but still want bitcoins, then you offer goods/services for bitcoins.

So far no one has thought of any less arbitrary way to introduce bitcoins into the network while continuing to support the security of the network at the same time.

And the term "proof-of-work" is misleading. They're generating blocks in such a way to deliberately make it difficult for someone else to attack the network by generating replacement blocks in an attempt to double-spend their bitcoins. They're not doing these calculations as an attempt to prove they're not some malicious node. Block generators do the work of creating a block, and if someone wants to double-spend their money, they have to generate that block and every single block that's been generated afterwards with at least the same total difficulty of the other blocks. This can only theoretically be accomplished if they have more processing power than the entire bitcoin network, and even then it would take a long time to do unless they had a lot more. Otherwise they just fall further and further behind as the bitcoin network block generators increase in power and the difficulty increases. Contrary to the opinions of some, these calculations are not wasteful, but are a necessary part of the system's security.

http://www.thisamericanlife.org/radio-archives/episode/423/t...

In particular, the section from about 10:30 discusses how Brazil combatted inflation by essentially replacing their currency with something that everyone agreed was valuable.

In prisons, cigarettes are often used as a form of accepted currency. Weird but, as you said, cigarettes have functional value before and beyond their arbitrary assigned role as currency. Now take these little pieces of green-ish papers in my wallet, with the funny markings on it. I heard a rumor that others will take it as a unit of payment, even though in reality, it's just a little piece of paper with some markings on it. It's actual functional value could maybe be that of a piece of tissue paper to wipe my ass. Except it's not very good at it. So I wouldn't even use it for that. The US government says, "Forsooth and yeah verily, these pieces of paper shall be the currency we use!" and couple that with a promise to accept it themselves as a unit of payment, and therefore, poof, it now has value.

Last point, if you parachute onto a tiny uncharted Pacific island and contact a lost tribe there, and offer them $20 USD for their food, they will most likely say, "Sorry, we only take melons and womenfolk as currency. We don't take US dollars, and we don't take American Express." Lesson: what is accepted as currency varies by individual and culture and time period. It's totally arbitrary.

This isn't the result of free markets, but a result of the actions of violent institutions.

The "durable value" it had in the decoration field is gone. The durability isn't a matter of decoration. The durability matters most in that it's not going to rot/rust away, so that an ounce of gold remains and ounce of gold rather than turning into half an ounce of gold.

If it were ever actually put to the test it would collapse to a much lower value reflecting its actual industrial and decorative values which are nothing like what they used to be.

You're forgetting it's value for trading and as a good store of value, which are most like among the biggest reasons it is valued by most people.

The subjectivity of value is why backing is so important if your currency isn't to collapse. Something's got to stop the subjective system from just deciding the value is 0, aka, hyperinflation. Or, more accurately, realizing the value is zero.

The "backing" is also subjectively valued...everything that is valued is valued subjectively. The universe doesn't set some standard value for things that humans are supposed to agree with.

but call me when you've actually got a functional currency that corresponds to what you claim is possible and even remotely resembles the real world market size of even Microsoft Points or Eve Online's currency. BitCoin is not it, and it won't ever be it.

Bitcoin just started as a grassroots project that is growing and growing quickly. You'll be hearing more news about it's further successes, I'm sure. Maybe after a few years of watching it grow, you'll decide you're ready for it.