"Will the energy cost and deflationary nature of Bitcoins doom the
currency to obscurity?"
--It really depends. As it is, you can use technology like the raspberry pi hooked up to a solar panel/windturbine/water turbine/even methane from our friends the cow. This would (in my eyes) make the initial investment for renewable energy be about the only time you need to spend money directly on electricity. In fact it could not only cause the cost to mine bitcoin go down, it might even increase the availability of alternative energies which would not only lower the cost of energy but increase the popularity of bitcoin. I can see how one could just set set a weatherized miner on the roof and make some free money with the miner doing its thing, heck you probably could sell the power company some green energy while you are at it. Make bitcoin and fiat.
"what about the cost to produce the mining units" well glad you have asked, a few years ago it would be crazy to have more than 1-5 gh/s... I remember reading of one mmining company who spent something like 50 grand (i could be wrong) to buy fpga (field programmable arrays) to get i think 50 gh/s... Now that same 50 gh/s is worth much less. KNC for example has a 200 gh/s miner for ~~$3000 USD. Not only is this cheaper, this is more energy efficient too, so no upgrade to the power source should be needed on a theoretical solar miner once a design is finally published for a truly unique universal solar powered miner.
As i said before, you could do it now with a rasp pi, a few Block erupters (didn't say how fast or much money you would return)and hook it in to a solar panel for a total cost of probably about $200 usd. The only problem with this idea is the need for an internet connection. Well obviously if the pi has a wireless card and you have a connection already available you can use it. One possibility as well would be an ad hoc network where there are a large enoough base of wireless miners peering that you can get the block chain to you through one of them. wireless network i believe is the word.
Or another idea could be to do "solar hosting" where you buy up half of the state of new mexico from Walter White set up your operation and watch for problems. An outside data center almost.you could run all of these miners either wired, or through wireless networking. Not only would this business venture be unique, you could get tons of government dollars to buy the solar panels. It would also increase the GDP of the state, and add new jobs.
-If you use this idea and start a successful business, i would like to get a royalty ;)
Off-blockchain solutions are acceptable answers, but will require
centralising a large portion of the Bitcoin network. Or put another
way: Trust moves back to centralised banking facilities.
So my guess is these two problems will doom a decentralised Bitcoin,
but I open the question to the floor. :-)
--My response detailed above, while centralizing to a point, would not go as far as your system would. if you really want to go in to crazy theories. Implant a mining device on someone's right hand (or their forehead :P ), every time your hand moves the chip gets power already provided by the human body. You are almost guaranteed to have enough close p2p connections living in a city, and as you travel around the chips all update each other. That's a very decentralized way to go i think.
So the future will show us what it is...
Remember scientists believed the yetti did not exist until a few days ago when the dna of a unique species of bear was found. Nor until a few years ago did they know that any creature could ever be described as the Leviathan or sea serpent of sailor myths. Nor are scientists correct when they argue you can not do any form of time travel. We are all time traveling right now. Just unidirectional (and we all know that now).
But intriguing post... yet. i don't think this is a question though.
But thanks for allowing me to give away some ideas so others can make some free money off of my idea. It was a pleasure to discuss this concept with you.
Criticisms are welcome as long as you are not flaming.
Adding additional comments as requested by OP
Would you like fold your interesting comments into your answer? I think they would represent a complete standpoint.
Comments I attempted to answer
Thanks for your reply. So: Powering an O(N) banking system could use
currently under-utilised renewables. Would this be an accurate summary
of your answer? An interesting idea for micro-grid computing
independent of the future of Bitcoin. But what happens when a O(1)
service like SpaceMonkey or CPUsage comes along and pays micro-grid
providers more than Bitcoin ($1 vs $1/N)? Or put another way: While
O(N) networks are power hungry enough to innovate new energy sources,
O(1) services will then follow and out-compete them. – LateralFractal
O(1) and O(N) in this context means per person. If viewed as a
total network, SpaceMoney/CPUsage/Visa/Mastercard are O(N) and Bitcoin
is O(N^2) – LateralFractal
yes that is the tl;dr of my post. (someone down voted it without even expressing their opinion. So I up voted this thread in return because you actually discuss not harass) And very valid point, plus you said when and not if (smart person, because a good business plan is always stolen). I think part of the idea that bitcoiners miss right now is this: Bitcoin could be inflatable. True there will be 21 million bitcoins. But currently a satoshi (1/100,000,000 BTC) is the lowest decimal place. Who is to say that in the future the code won't be changed to allow smaller sizes...
An off shoot/fork might even take over. One example is alt coins. Some have more currency, some have less. Some use inflation (PPCoin) some use demurrage (FreiCoin). Some use more novel methods of calculation. One reason that bitcoin may be at an advantage is due to the ease of designing an application specific circuit (asic) for double sha. Where as storage and cpu usage are dynamic. mastercard and visa are companies that could exploit a double sha asic.
My random thought/question (and this actually is a criticism of bitcoin too), just like gold, there is only a finite amount of bitcoin. Yet gold is the standard.
Now, with gold being abundant on asteroids, and foreseeable asteroid mining in the near future, Gold will plummet. Nations with tons of gold will be worthless.
Bitcoin was the first cryptocurrency of its time. And IMO is BETA software. An eventual divergence among coins will happen, or another will take over (as is occurring now). Either way. Probably I'm one of the most realistic crypto fanatics. It could all go to crap tomorrow. China/america/iran/korea/mexico/canada/UN/etc could all kill the network with their computing power.
It's still a fun hobby. It has changed the world... But TBH if it would be a "worldclass" currency. There's a lot of changes to be made, and a lot of holes to fill.
Doomed to fail? well, it depends. How big will it get is the real question. Will it be profitable to mine once block rewards run out.
Best of all: will it then become a store of wealth, that is only mined to continue the storage of the wealth? Like paying a banker for vault space.
Thanks for some good chat. Feel free to comment. once gain the future will show us what it is... (aka neither of us know the future :P )