In other words, is there some sort of digital central bank that controls inflation by deciding how many Bitcoins are released per area?
In other words, is there some sort of digital central bank that controls inflation by deciding how many Bitcoins are released per area?
As more BTC are mined, the difficulty of finding new ones increases and the reward decreases. Once the difficulty goes up, only those hashes that begin with 8 zeroes will be considered valid, so it will take twice as much effort to find a valid one. Currently, a successful block nets 25 BTC to the miner, down from 50 a while back. Soon, it will drop to 12.5 BTC.
Bitcoin is, by design, deflationary. All other things being equal, the value of a Bitcoin will continue to rise as the pool of unmined coins shrinks. There is no central authority, rather inherent scarcity and the effort required to mine the coins gives value. The exchange rate of BTC -> fiat is determined by the market, operating on exchanges such as Mt Gox. There is no mechanism for anything outside of market effects to alter the price or availability of Bitcoin.
No, they have a very carefully controlled (and diminishing) inflation of the money supply.
With a fixed total amount and no magic bullet to wean us off our addiction to growth. It's deflationary by design.
One would think that the leading figures of these pools know each other. One would think it's outside the realm of conspiracy to think that the designers of Bitcoin expected the mining pools to emerge once difficulty had grown sufficiently large.
No it is not outside the realm of possibility that people could conspire to perform a double spending attack, you are completely right. What you have to consider, however, it is not very likely that people conspire to undermine their own economic interest. That doesn't happen very often in this world, it is not in our nature (but it is a possibility).
There are much cheaper and easier attacks that could be pulled off right now by a single attacker, lower hanging fruit (like flooding the network with transactions with above average fees, this will effectively block most other transactions for as long as the attacker can afford).
If a double spending attack was to occur at the mining pool level, you wouldn't even need to have a conspiracy to make it possible, just a single large pool operator with a period of extraordinary luck would be able to get 6 blocks in a row (it has happened before, it will happen again).
If pool operators conspire to double spend or change the protocol there will be a mass exodus of individual miners from the pools.
Bitcoiners are savvy enough to get raised eyebrows if a major pool started encouraging and/or requiring users to use a proprietary, closed mining software that may attempt to modify the bitcoin network's behavior to do something unsavory.
Yeah, this sounds like exactly the sort of thing that people would do.
The behavior of clients does influence fees, but consumers using Bitcoin will happily switch to the client that lets them pay the fee they want to pay (talking about the excess fee not the fee described in https://en.bitcoin.it/wiki/Transaction_fees .)
Policy by economic (mining) majority could be an issue in the future when the policy directly determines the profits of that majority.
Also, as hardware gets more specialized, the cost to entry gets higher and power concentrates.