I think the point "as the traffic will bear" got a little buried.

Businesses charge fees based on a lot more than how many they can get paid. The core of any business is to get paying customers and if they lose them due to fees or even a perception that they're greedy, then a wise business will avoid the fees that cause the problem.

People decide all the time to switch who they are doing business with due to a perception of unfairness. Businesses absolutely do have to raise the prices they charge due to regulation... sometimes.... because it is a choice between that or dying. And sometimes they die because their customers won't tolerate it regardless of the reasons.

Note that I'm not actually disagreeing with most of the statements you've made. I'm just trying to highlight the point you made that people are likely to miss due to the obvious irritation you feel toward the far right wing commentators.

I wouldn't disagree that more malware exists in web content, but then I'm not suggesting the ecosystem is perfectly safe. The security difference between installing an independant application for each thing and running them all through a single application is significant.

Is IE10 safe? Is FF safe? Is Opera safe? Is Safari safe? Is Chrome safe? Is Flash safe? Is Silverlight safe? Is Java safe?

You can have a discussion about the strengths and weaknesses of the security models of each. You can say "No" to every one or mix your answers but the point is that you can make the decision. If you were to have to do the same thing for all the applications you can run in them, you'd never be able to complete the process.

I understand why you'd want to avoid that, but a walled garden is really where you can't choose to install software outside the specific vendor and that's obviously not what I was talking about. Considering the positive and negative aspects of security for the system in TFA is relevant isn't it?

Good points, but another key attribute of applications executed in the browser is security. The browser has a consistant security footprint that I trust a lot more than I trust new applications. I may visit hundreds of pages in a day from vendors I have never heard of before, but I'd never be comfortable installing hundreds of applications even if they were more efficient for the same tasks. Most of the time, I trust my browser not to do something bad to my computer regardless of the content and am placing my trust in a single application. Doing the same thing with an equivilant number of applications would be terrifying.

This is the single thing that makes Linux better than any other system for me. I can get practically all the software I want by investigating and trusting a single entity rather than dealing with dozens of different relationships with different levels of investigation and unpredictable levels of trustworthiness. If a browser based system can offer the same wealth of applications at a reasonable speed without serious security issues, then I find the idea quite interesting.

I don't disagree with your point, but I think the analogy is flawed.

If you can stare at weather statistics with sufficient data to see what circumstances resulted in lightening strikes, then you can accurately predict where extra effort needs to be taken to avoid them. In fact that sounds really useful and much like what we do with tornados for example. The statistics don't tell you that there will be a tornado at a certain place at a certain time, but the do tell you when they are likely enough to sound the warnings.

This is the crux of the argument: Can statistics gathered in great detail as we do for weather be as useful in the case of terrorist acts as it is for predicting the danger of a tornado.

I think you or Schneier would say that people are not as predictable as weather and think that the personal freedoms lost in the search outweigh the gains. He says "Millions of people behave strangely enough to warrant the FBI's notice, and almost all of them are harmless. It is simply not possible to find every plot beforehand, especially when the perpetrators act alone and on impulse."

The unanswered question for me is whether analysis performed differently can be effective regardless of the level of data analyzed. If you can reliably prove that it cannot be effective, then you have created a compelling argument. If you can state that the level of data that is effective is unreasonable, then you have a compelling argument. I didn't see either successfully presented in the argument or discussion so far. Without a compelling argument, I'm left with a vague sense of dissatisfaction and disgruntled feeling that I've spent far too long considering an opinion piece.

Speaking of traditonal currency, it is not solely electronic at any point, every electronic dollar has to have a physical equivalent, at least in the U.S. Banks periodically move big stacks of cash, bank notes, securities, etc around. Whether it is physically in the possession of the owner or not, each digital dollar has a single specific owner, excepting only the Federal Reserve. When people (at banks or anywhere else) get caught trying to spend dollars they don't have a legitimate ownership of, people go to jail. It is an even bigger deal for banks because they can't even claim ownership falsely without incuring big trouble, where individuals have to make very big claims (Madoff style) to get similar trouble.

"Banks can actually create more money by simply changing a few rows in a database." is true only if you ignore that when caught by the Feds, people go to jail and made up money gets taken away along with hefty fines. The Feds are very, very touchy about that sort of thing. What banks can do is borrow money from the Fed, transfer through the Fed, or transfer to the Fed, but they have to send the money in some physical form to the Fed when they are settling up and can't claim to own money they owe to some other institution when they've allowed the other institution to claim the same ownership.

That may be changing though. Canada is working on it: http://www.thestar.com/business/personal_finance/spending_saving/2013/04/30/digital_cash_replacement_from_royal_canadian_mint_in_the_works.html

You said: Bitcoin production is exponential, not linear.
Um, yeah, it gets exponentially more costly to produce a new one, but it doesn't get exponentially more difficult to trade them. Trading cost is linear, creation cost is exponentially more expensive. That's the built in scarcity that makes them valuable as a means of exchange. It doesn't give them inheirent value, it just gives the system value.

If there were no more possible bitcoins that could be produced today, it would take a couple minutes to conclude a trade now, or a year from now or ten years from now. If you're talking about the growth of the records, where each bitcoin fragment is traceable to its origin, that's linear and insignificant in cost, particularly compared to the cost of traditional currency.

Right now I can purchase real goods in exchange for bitcoin, not all from private, criminal nor insignificant parties. The links are not hard to find and it's far more pursuasive to let people find them for themselves than to list them, but for a starter, check https://www.spendbitcoins.com/places/. Many businesses such as Paypal (so says Chief Executive John Donahoe said in an interview with The Wall Street Journal) are starting to work on methods of using them which is what is driving the speculation.

See: http://blogs.wsj.com/digits/2013/04/30/could-paypal-be-on-horizon-for-bitcoin/

I said: The value of bitcoin has nothing to do with the ability to generate a bitcoin.
You said: For every other product; If you increase supply and demand remains constant, the price of said item goes down. For your statement to be true, the laws of supply and demand wouldn't apply to bitcoins. Extraordinary claims demand extraordinary proof.

Fair enough. I'll concede that the value of a bitcoin is related to the ability to generate a bitcoin. The easier they are to come by, the lower the value will be as supply increases once demand reaches equilibrium with supply. However, reaching that equilibrium takes time and the desire to aquire bitcoin is still driving the value more than the supply. That's not what I was talking about though and why I said "bitcoin" (meaning the system) rather than "a bitcoin." The value of the system is about the use, not the individual coin. If 1000 bitcoins have the value of $0.01, it is just as useful as a system as if 1 bitcoin has a value of $1,000. This goes to many of your other arguments as well. Counterfeiting is a problem that isn't as simple for banks to get away with as you suggest, and various countries do engage in it and it does cause problems, potentially very big ones. (I work in the industry, I know whereof I speak but was indeed surprised to see your flat assertion that Iran has such a thing. I read http://en.wikipedia.org/wiki/Superdollar and http://articles.latimes.com/1992-07-02/news/mn-1906_1_counterfeit-bills to see but didn't see conclusive information despite dire concerns about the impact on the value of the dollar, perhaps you have a better source?)

Sorry about my tone, you're right, it was condescending and I can be an asshole. If I'd realized I was replying to you I would have worked harder to be civil. I have seen your posts before and generally find them thoughtful enough to be worth considering whether I agree or not. I should have been paying attention to the person posting, you deserve more respectful responses than that.

I'll try to be more respectful in my replies, which I'll be breaking down into smaller bites to make it easier on other readers.

Who has been lying to you? I can't believe you're capable of making the arguments you've presented and yet incapable of understanding why they're based on lies or at the most charitable, misinformation. I'll try to sum up where you have been so grossly misinformed rather than write a book worth of responses. Please feel free to break the arguments down one by one in separate posts and I'll do my best to respond if you like.

The value of bitcoin is as a medium of exchange, not as a medium of creating wealth. The whole point is to be able to have something that can be reliably exchanged like traditional money. The value of bitcoin has nothing to do with the ability to generate a bitcoin.

Let me say that again because it seems to be the most fundamental point that you've missed: Bitcoin has value because it is a medium of exchange, not because you can mine them.

If you think that bitcoins only have value because they can be created, you're missing the point. If you think that bitcoins only have value as an investment strategy, you're missing the point. It would be silly to say that dollars only have value because they can be minted. It would be silly to say that dollars only have value because you can invest in them. Dollars have value because they can be used to purchase stuff. Bitcoins have value because they can be used to purchase stuff.

Dollars would lose their value if people didn't trust them. They're only trustworthy because they can't be easily created. In fact dollars are easier to counterfeit than bitcoins. It is the scarcity (like dollars, only more so) and the convenience for exchange (like dollars, but more so in some instances) that makes bitcoin a valuable method of exchange.

Bitcoins have value because they are a scarce resource that is easily exchanged and are accepted as a way to temporarily store the value of your efforts in order to be exchanged for something you want. That's what money is.

The cost of electrictity is certainly present, but it's nothing compared to the cost of armored cars, banks, ATMs, driving deposits to the bank, law enforcement hours spent fighting counterfeiting and minting. Even the cost of managing the exchange of dollars when measured in electrictity is wasteful compared to doing the same with bitcoins. You seem very concerned about the way people are using resources on a planatery scale. Traditional physically produced currencies are tremendously wasteful. How can you be so against something that cuts down on the waste?

This is a really interesting and good point. I wonder if Google could get much of the same desired result by offering a bounty on images/video/wifi to people with Google+ and Android phones. They could offer the legal protection of Google's legal team to each person who captures a legitimate data area. If this kind of event came up, Google's legal team could handle it in stride and there'd be no profit to be had by attacking the big bad Google.

Who'd be foolish to do that you might ask? Millions and millions of us. Imagine if Android users got a pop up message saying "Google is offering a 30 GB expansion to Google drive space to anyone who captures video and radio signal info for your current area, are you interested?" The thing is that I could do the exact same thing as Google is getting fined for and nobody would ever know or care. Nor should they.

I get it. Netflix relies letting me put something on my computer that I don't know how to keep on my computer and they only way to do that is to keep people from knowing how things are working. Open source browsers rely on people being able to tell how things are working.

I understand both issues, but is there a way to resolve the conflict?

I should have been more clear with the math. If you have a bitcoin and the choice of selling it to Bob or on the market, you'll make more money selling it on the open market since a bitcoin at this particular moment is worth $95.29 and 2g gold is worth $90.82. I suggested the idea since it would not encourage people to take Bob's offer but rather offer a little more stability. (People wouldn't be in such a hurry to trade if they knew that the value wasn't going to drop beyond 2.0g gold even though it is worth more than that.)

I don't know what the cost of mining a bitcoin is, and I don't care since it's higher for most people than the value it generates and it is expected to continue to rise. The cost of mining is supposed to continue to rise so that the value of mining decreases to the point that nobody can make money doing it.

The point of bitcoins isn't as a mining opportunity, the point of them is for use as a medium of exchange. I think we're on the same page for that use. It has useful potential and risk due to the volatility.

You seem to be under the impression that mining is supposed to be profitible, but the opposite is true. Mining is intentionally designed to become less and less profitible over time.

Then we're on the same page, since I recognize the risk and am primarily interested in bitcoin as a convenient medium of exchange. I'm not interesed in treating mining as a source of income or bitcoins as a long term investment. Pretty much all the world currencies have some volitality, but bitcoin is the only one that bypasses the banks for exchange. Right now it's pretty volitale, but I'd still trust it to retain some value so long as my risk wasn't to big.