Why Bitcoin Will Fail As A Currency

Thank you, you've put it more succinctly than I did. As for "plenty of debated evidence" it just means no evidence. Evidence should be evident, I'd say.

when you're talking about a currency that will deflate by orders of magnitude

How about you (or TAOTFA) have a look at a) Bitcoin Monitor b) The "Buying" section on bitcoin forums c) this:

*You may be right, but I have some anecdotal evidence to the contrary. Since the $10+ spike in bitcoin prices we've sold considerably more shirts in our store.

http://forum.bitcoin.org/index.php?topic=13087.msg181094#msg...

In reality, there is a chance the bitcoin market will reach 1 trillion. There is also a chance it will crash. Most likely it will fluctuate. If I were told there was a 100% chance my 1.5 coins I have mined today would be worth hundreds of thousands of dollars, then of course I would hoard. But since I have no such guarantee, I am more likely to cash out when I think the market has peaked and/or the fad has faded.

There are die hards who will hoard and have hoarded from day one. It's the same with all investments. I have a friend who bought his new car with 11 ounces of gold - He walked in, set it down on the table, sign some paperwork and walked away with a new car. But I think the average bitcoin user won't be able to pass up the idea of "I didn't really have to do anything for this, so why not buy a pizza with a few (micro)bitcoins."

Please check your facts. For the majority of human history, money was not backed by a scarce resource, but by government power.

For example, there was no guarantee in the Roman empire of exchanging coins to a certain amount of gold or silver, and the value of the coins in the Roman empire was largely unrelated to their material value.

To make that more precise, the reason that precious metals were used in coins was to prevent forgeries. If C is the cost to produce a coin or piece of paper money, then its value will (with very few degeneracies) always be in the range between C and f*C, where f > 1 is a factor that depends on the level of anti-forgery technology, and on the efficiency of law enforcement for tracking down forgers.

After all, no government in their right mind would produce coins whose value is lower than or equal to the cost to produce them - that would just be a nonsensical work. Therefore, the value is larger than C.

However, the higher the ratio between value and cost of production, the more attractive the coin or paper money becomes as a target for forgers. So raising the cost C of production makes it less attractive to forgers.

Interesting side note: If you actually look at the (unfortunately scarce) data concerning inflation in the Roman empire, you will see that as inflation pushes the real value of coins down, and the nominal cost of production of the coins up, the government eventually reacted by minting new coins with adjusted production costs (by reducing the amount of precious metals in the coins, or by creating new coins with the same amount of precious metals, but higher nominal value).

It is quite unfortunate that folklore has the causality between minting coins and inflation exactly the wrong way around.

Everyone I know that's even aware of (much less involved with) bitcoin atm falls under the following demographic: young technophiles. A small minority of these are buying up more GPU's and giggling about the "free money" they're making.

It's a mistake to confuse speculation on the part of some early adopters with actual broad public demand. Expect popular demand for bitcoin about the time that credit cards stop working on Amazon.com.

In the mean time the IRS has every reason to stomp on this before it gets any bigger and all the excuses legislators need have been laid out on a silver platter.