Like many others, I find myself fascinated by bitcoin. Not only is it a wonderful example of the real world catching up with science fiction, but it also shows off the incredible power of the Internet to disrupt existing institutions (there are already some lobbying efforts to have it banned).
As I am wondering about the implications of bitcoin, including possible investment opportunities that it may create, I am wrestling with quite a few questions. I will pay some nominal amounts in bitcoin to people whose answers I find helpful – a totally subjective criterion. If you are interested, please include a bitcoin address in your answer.
1. How do I estimate how many peers are out there today and what is a good estimate of the number of peers?
2. Will all peers always have to carry the entire block chain from the origin block? If so, how do I estimate how much storage that will require over time? If not, what is the alternative?
3. How do peers get updated over time? How many independent peer developers are there or do most (all?) of the peers leverage a common core? Have there been any meaningful changes so far that required most people to upgrade?
4. For the bitcoin protocol to change (e.g., to keep adding new bitcoins forever into the future) what percentage of peers have to adopt the new protocol? Is this a majority by number or by compute power in hashes/second?
5. Has any one taken a credible stab at estimating the potential value of bitcoins over time based on total number of coins, assumed velocity and level of economic activity in bitcoins? I can’t help but think that it would be some pretty high number. For reference, the total US currency is about 1 trillion!
My excitement at the moment is significantly tempered by the fixed limit on the total number of bitcoins. I believe this to be a fairly significant design flaw as it is likely to encourage hoarding and could result in a tulip mania style bubble. I am pretty sure that the number of bitcoins that can be generated should be indexed against the amount of economic activity taking place with bitcoins to dampen speculation.
Looking forward to comments!
P.S. If anyone finds the questions themselves interesting, you can send me some bitcoin at 17skkdCh5vfuc3E4SPVHmteSeQzbS195SK
