I'm wondering: From my understanding, bitcoin is secured by people mining. Right now people mine to get bitcoin. But what happens when they reach the 21 million? Will the bitcoin still be "secure" if there is no longer incentive to mine? What is expected to happen then?
Yes, think of bitcoin as a limited piece of land that you keep dividing until you reach 21 million plots. This is what they mean by "mining" and/or "extraction" to the best of my understanding.
Currently think of it as precious metal gold/silver type investment not currency. But the hope is eventually it will be used as a global currency that can easily transact without borders or restrictions, the framework is certainly in place. For this to happen retail adoption will need to reach critical mass, which is still a long way off. The entire bitcoin model is based on the assumption it will be used as a currency with billions of transactions across the network daily, if this does not happen, bitcoin is dead, simple as that. Because by 2140(ish) all the bitcoin will be mined, no new bitcoin will be created, all the machines that support this gigantic network that are used to mine new bitcoins will need another reason to keep its power on(electricity cost), the idea is by 2140 those machines will make enough money off transaction fees alone. So if bitcoin isnt the popular global currency it is predicted to be 130 years from now, mining machines will be turned off as no new btc = no profit, then the network collapses onto itself in a snowball effect. Of course this is all after we hit the dirt, and doesnt affect the bitcoin value the next 20-30 years. But interesting to understand. As a bitcoin miner you really need to understand every nuts and bolts how the bitcoin network operates or you are guaranteed to lose money on the mining hardware investments. As a investor in bitcoin itself, the only thing you need to know is bitcoin has no protection, if you send it, someone hacks it, you lose the wallet file, it is gone forever and not recoverable. So keep those precious coins in cold storage on a usb (put the whole bitcoin client along with wallet file on the usb dongle), plug it in only when need to send coins - sync, use, unplug. I would also never,ever, keep bitcoin in online wallet run by some shady nameless website. You used to be able to buy casascius physical bitcoins as cold storage, but treasury dept shut that down as currency minting lol Yep, agreed.
yes as stated in other threads, 21mil limit is meaningless newbie always get worked up on that, if the demand requires, it can be divided further into small units, call it microbtc, picobtc, whatever. liquidity concern due to supply is never going to be an issue.
I guess another thing to consider is as less bit coins remain to be mined they become harder to mine. as anyone heard of anyone estimating how long it will take before bitcoins are completely mined? Also is there anything stopping the original creators coming back and creating new 'deposits' of bit coins to be mined?
they can never be "completely mined." It's just a matter of math. No matter how small something gets, it can be divided in half. yes, creating "new" bitcoins would destroy the whole currency that's the whole point of bitcoins, they can't be devalued by a central bank so your total bitcoin networth could some day be valued at .0000000001 bitcoin an interesting way to understand it would be to set up a paper account and convert all your non invested USD in cash to bitcoin, and see how it affects you My guess is you would have a new appreciation for the Federal Reserve Volatility is cool when you are just trading, but a real bitch when you are planning. Especially if it involves the future. (That's a paraphrased quote from my man Yogi.)
You do know that Silk Road was shut down months ago, right? http://en.wikipedia.org/wiki/Silk_Road_(marketplace)#Seizure_and_arrest