Miners are receiving nearly $100K USD per day but the share to the smaller operators is often just small amounts, oftentimes $20 or so per month. The cost for them to cash out using the bank system is often expensive. This provides an economic method to cash out small amounts without incurring high fees.
More to the point, they won't actually have to cash out until they're ready to make a purchase with their proceeds. This means more money kept in Bitcoin for longer instead of being cashed out to sit in a USD/EUR/GBP bank account somewhere.
Let's say it takes a week between when a person buys bitcoin and when those coins are spent.
That mean about half a million dollars of currency is tied up for these users. That's about 50K BTC. That's less than one week's production from mining.
This marketplace has almost no impact on the exchange rate directly. What it might be doing is introducing a number of people to bitcoin. They might then speculate on the exchange rate (simply by buying more than they plan to use for purchases, in anticipation of the exchange rate rising), or use bitcoins for purchases or for person-to-person payments.
To be a proof-of-work based cryptocurrency, it would need to make it through the phase where it is vulnerable to external attack.
Bitcoin made it through because nobody knew that a proof-of-work based cryptocurrency would ever end up being worth several hundred million dollars or more.
Now that bitcoin exists, any competitor risks getting spanked down. Even bitcoin is at risk of getting spanked due to a 51% attack, except that it will cost more than $10 million in hardware to do that.
One alternative is using scrypt instead of sha256(), and thus GPUs aren't as effective and the one crypto currency doing that has avoided attack thus far. That currency is worth under half a million dollars of valuation at the current exchange rate and there are hardly any exchanges where it is traded so there's little financial gain from attacking it sooner rather than later. But it is still very vulnerable, in comparison to bitcoin.
A bitcoin2 should be a swap currency. 21 million coins pre-issued, and sold for 1 btc each. Like when a fiat note is upgraded, the old note is eventually taken out of circulation and destroyed. But how do you trust the issuer of bitcoin2 to destroy the bitcoins they receive, and that they won't issue more bitcoin2s for themselves later secretly?
(or they can just lock the bitcoins they receive for guaranteed swap-back at any point later - the bitcoin2 issuer is a bitcoin bank too: how do you trust they can effectively lock them up with the possibility of return later?)
Even though the exchange rate is just slightly up versus a year ago on this day, it is way down from the 2011 high yet ($32.40). That is more than 60% below the June 2011 high.
The rate will slow though, to 25 BTC per block (down from the current 50 BTC per block).
So it took 4 years from 0 - 10.5 million, then the next 4 years sees 5.25 milion minted, then 2.125 million in the 4 years after that, and so on for decades until all 21 million have been minted.
Tell that to the people who bought at $15 or $32 even.
The thing is, the first users didn't get all the first ones.
Bitcoin was in Slashdot more than two years ago. It is open source, anyone could download the software and mine on their CPU.
Mt. Gox has been open for even longer. Anyone, anywhere in the world could and still can buy on the exchanges. There's no members-only trading.
If you bought after Slashdot you would have paid around a dime or less. But Slashdot readers called it a ponzi scam and didn't take it seriously.
You could have bought thousands of bitcoins at a dollar when Steve Gibson talked about it in February 2011. But Leo poo-pooh'd it "Not government issued" he balked.
Then again, you could have bought bitcoins at $30 after the July 2011 bubble, and today be down by 66% yet and still be bitter.
That's the nature of speculation. Nobody knows if bitcoin will increase or decrease in value. But it definitely isn't a ponzi. Ponzi means paying dividends to early investors, using funds from later investors. Everyone who held bitcoins yesterday when they were $9.20 could have sold today at $11. Everyone, not just the early miners.
Today, just like a year ago, mining will generate bitcoins at a little more than the cost of electricity to generate them. If you want bitcoins, then mine, buy, or stand on the sidelines.
Mt. Gox offers two-factor authentication methods (Yubikey and Google Authenticator). Neither was used. Lastpass offers two-factor authentication methods (Yubikey and Google Authenticator). Neither was used.
