Trading slim, about a few hundred grand, Bitcoins trading 1.8-1.9 to the dollar.
Why Bitcoins will succeed?
Robots need them, simply put. The job of our internet packets is run time allocation of resources in a distributed network. Digital money is the only medium of exchange accepted in electronic transfer, the actually digital pulses that travel the network. Regulators cannot shut down the system and force the use of paper or coinage. Regulators today, especially in California, use digital exchanges to track down and collect late taxes,. They have viruses that search back accounts, they deliver monetary seizures electronically. Tax collectors and regulators use digital money for the same reason humans to, they can leverage the speed and brains of robots.
Gresham's law, the law that says we adopt a uniform monetary standard in this case, the standard has to be digital money. The advantage of Bitcoins is that they are here today and they work.
Does the government have Seigniorage in digital money?
Sure does, but with one exception. The effect of the Seigniorage is computed in run time in the distributed digital money network, hence it has less value.
Can investors find arbitrage opportunities with digital money?
They sure can, but the arbitrage opportunities are computed when investors discover real changes in human needs and wants, something the robots cannot do. The robot traders themselves always watch for price peaks, jumps in precision and they cover these. Hence, we always get the best allocation, based on what humans want, not what they neglect in their portfolios.
What about gold as a medium of exchange?
Doesn't work in the electronic world.
What is the killer app for Bitcoins?
I am pretty sure it will be allocation of transportation resources, the movement of inventory across public roads by automated and semi-automated bots.
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