Quote Originally Posted by tamiller866 View Post
Quote Originally Posted by donkdowndonedied View Post

The "market cap" is solely determined by the value/demand of BTC, and nothing to do with the underlying system. 1 BTC or .1 BTC, it is all relative. The type of analysis above is just not valid. It is a pool of resources and there was a system made to distribute them in such a manner to create some level of fairness. If 1 BTC costs too much, then you trade in .1 BTC. There is no way to specify the market cap as it depends on the market demand and very little to do with how many BTC have been created.

As far as holding money.. it is in general preferred to have it in a bank, but a bank has downsides too.

You are also wrong about bitcoins being frozen etc. It is not possible due to the protocol. You own your account in a mathematical sense, not in a 'the government says you do' sense.

The market cap could and should have begun at a much higher level, rather than the inventor simply mining the first few coins and releasing the software to the public, he could have sold the idea to private investors so the system could have initiated with a baseline value.

E.g., if he/they had mined the first million coins and found investors (crowd funding?) to buy them at $1 each, with a contractual pledge that they could be bought back any time for a small (say $.02 profit) not only would the market cap had begun at $1M rather than $5, there would have been a 'reserve bank' of 1M coins available at a set price to prevent artificial inflation caused by speculative investors, bitcoin could have held a steady value and had a reasonable chance of becoming a legitimate currency.

As it was released, the only opportunity for that to occur now would be for some government or billionaire to buy up $50M or so worth of coins and set up a reserve type exchange, with no profit motive and essentially defeating the purpose of a peer-to-peer encrypted currency, otherwise the price of bitcoin will continue to rise and occasionally fall like a kite in the wind (until the government shuts it down).



As to seizures, the fact that it's encrypted on your computer doesn't prevent the government from seizing your computer, sure if you make all your illicit transactions on an anonymous TOR network that is unlikely, but if they do find probably cause to search your computer (setting up a sting silkroad seller account themselves, e.g.), the process for getting a seizure order would be no different than seizing your bank account.
You don't grasp the incentive system that has made the whole thing grow. If someone just like made bitcoins in a vacuum I don't think there would be any reason for anyone to buy them. The way they were released lets the market cap be determined by the actual market and not some artificial means. Originally you said something different, now you are saying bitcoin's approach is wrong. An individual bitcoin's value is not meant to be pegged by anything. That is why your original argument didn't make sense, as the 'market cap' will be whatever the market demands. If you think 1 bitcoin costs too much, then you can use a small fraction of one in a transaction. I don't understand why having a a million dollar cap at the very start would make any difference down the road....

You talk of 'selling the system' but that is not what bitcoins are about, as they are decentralized. I'm not sure what you are proposing, but it seems to be something radically different from what BTCs are. This system let the btc's be seeded to those who were interested, and those people made a market for them which has continued to grow.

It doesn't have to be encrypted on your computer. It can be on a piece of paper. Anything can be seized by the government, but some things are obviously more difficult than others. A piece of paper can be in my hand, like a handgun. That is not easily seized. If someone steals my computer with my bitcoin wallet, they do not have access to my bitcoins. Infact, I can go to another computer and access them. Contrast this to a bank account which is never in my hands. The account is always in the bank's hands at a known location. The procedures wouldn't be similar at all except they would likely have the word 'seizure' in the title. No offense, but you're quite clueless about this whole concept.