Ty Warner, the inventor of Beanie Babies, became a billionaire. Obviously they were worth a lot. But Beanie Babies can't be sent to the opposite side of the world in minutes for pennies in fees, so they are not as useful in a payment network as bitcoins are. Bitcoin derives its value purely from the fact that Western Union, PayPal, and bank wire transfers suck. Which would you choose, to pay tens of dollars in fees to send money somewhere, or to pay 8 cents?
The bitcoin code is open source. All you need to do is spin up an exact copy, let's call it bitcoin2.0, with a whole new set of coins. Aside from having a fresh block chain, it's otherwise identical, and user software can be made to handle both interchangeably. This has already somewhat happened with the collection of altcoins. They are mostly similar and use different names, but they add to the digital coin universe:
> "We" voted for her because the alternative was...well...less savory.
Less savory than Feinstein's husband, who is involved with $600 million questionable defense contracts, post office, and FDIC real estate deals? The Feinstein family sure makes a lot of money off the government.
It will be manages by a collaboration of Target, Evernote, and Adobe.
Seriously, is there anyone who doesn't think this "third party", whoever it is, won't become a giant "Target" (pun intended) for data hackers? At least the NSA's data centers are on military bases, and they have half a clue about security, Snowden notwithstanding.
> How can we reduce the amount of fossil fuels we burn without socialists running the planet? I don't think this is a hard question.
That's easy. Make non-fossil energy sources that are cheaper than fossil energy sources. This is already happening, but it will take time for the new sources to displace the old ones (you don't replace a grid's worth of power in a day or a decade).
When I say "it's already happening", I mean the newest utility-scale solar PV plants are coming in considerably cheaper than nuclear, and wind turbines have been competitive for several years. The only reason they are not dominating new installations is Natural Gas is just ridiculously cheap these days.
AdBlock and similar tools might be defeated, but nothing can defeat me not visiting the site again if the ads are too annoying. I'll put up with some tasteful ads, but too many annoyances and I just will block the site entirely.
Pools issue only the "Merkle root" of the transactions in the block - effectively the header, which the individual miners then search for a sufficiently low hash for. The pool operator can insert transactions into the block and the miners would not know.
Part of the reason to use the Merkle root is that is independent of the number of transactions. Otherwise hashing would slow down as the network carried more transactions, you have a bigger block of data to pass around to the miners, and for them to crunch hash attempts on. You can see the Merkle root on the list of hashes of a recent block: https://blockchain.info/block-index/457566/000000000000000047665cb7d4db93f66bbdd969f42578588363e8e77e22e31f
I actually first heard about bitcoin in mid-2011, during the first big price spike, right here on Slashdot. I started mining it back then with my wimpy graphics card. Then that got too hard, so I just started buying them directly. Then I did a crowdfunding campaign with bitcoin that raised 200% of the goal. It's been an amazing experience.
The crowdfunding is to support a project for self-expanding automation ( https://en.wikibooks.org/wiki/User:Danielravennest/SFP/Intro ), where the automated machines make parts to expand the collection of machines. If you set up a distributed network of such machines, doing different tasks, you can use something like bitcoin to automatically pay each other when things are done.
Machines like 3D printers are useful, but they can't do everything. You need a bunch of different ones that between them cover all the different processes for a finished item.
> at what point people will realize that a bitcoin is worth more than a promise by somebody to give you a bitcoin.
How is that any different than taking out a loan and promising to pay it back in the future? The risk of non-payment is embodied in the interest rate, along with the risk of you the lender not being around to enjoy the gains. Part of the reason for interest is the lender, being human, has a finite lifespan. When you make a loan you are giving up present use of the money for a larger amount in the future. Since you may not live to enjoy that future, you demand a higher amount of interest to compensate.
Bitcoin futures and savings accounts will also come with interest rates to cover the risks of non-payment, plus a rate based on time.
Near Earth Asteroids are just for getting things started. Once you can produce propellant from an asteroid, your range is only limited by how many extraction plants you want to set up for re-fueling
Followed by the slightly more accurate SWAG (scientific wild-assed guess).
We used to have actual ranges for these in aerospace design. WAG = factor of 10 standard error, SWAG = factor of 3 standard error. 15-50% variance was "preliminary estimates", below 15% was detailed estimates. Normally you plan with a 15% allowance at the start of detailed design for "stuff you haven't thought of yet".
If you think like a geologist or mining engineer, you look at the ore value of the various things you can get out of the asteroid rock. This is % extracted by weight x value/kg.
Platinum might be 1 ppm vs the total mass of the asteroid, and has a value of $46/gram. Since a gram is 1 ppm of a ton, the ore value is $46/ton of raw asteroid.
Launching *anything* on a Falcon 9 rocket costs $4.3 million/ton. Lets assume you can extract 20% of your raw asteroid in propellants, water, and metals. Their ore value is then $860,000 per ton, way more than the platinum. Precious metals are a nifty bonus if you can extract them, but the big money is basic commodities you can get in large volume.
> Right now we have absolutely no business case we can make that says, we can go get something from an asteroid more cheaply than we can get the material from earth.
Right now there are about 1000 functioning satellites in Earth orbit, with a procurement cost of around $150 million each, thus $150 billion in value. When they break or run out of fuel, they need to be replaced. If you had an orbital service station that could refuel and repair them, you are talking billions of dollars per year of value there. Comparing it to a terrestrial service station, you need a gas pump, service bay for repairs, and a "tow truck" to haul the satellite in for repairs and put it back afterwards.
The gas pump would have it's tanks filled by the asteroid mining if you can do that cheaper than sending fuel from Earth. Since many of the satellites are in Geosynchronous Orbit, they are very close in energy terms to the orbit you end up with after a "slingshot" gravity assist past the Moon on the return trip.
Whether the service station has people aboard, or is remote controlled from the ground I will leave to the mission designers. My guess is a few humans for the hard jobs, and a lot remote controlled (like fetching the satellite). Shipping new hardware to GEO costs about it's weight in gold to buy and launch, so if you can avoid doing that, it is extremely valuable.
We will always have a use for orbital mining as long as the amount of solar energy passing inside the Moon's orbit equals the world's known fossil fuel reserves *every minute*. It's not the metals or water that are important, it is access to that enormous energy flow, which lets us do most anything we want.
The assumption made by Elvis in his paper is wrong, though. 4.5 km/s from Low Earth Orbit only accesses 4% of the asteroids, but you don't want to mine from Low Orbit. You want to mine from the vicinity of the Moon, where you can get a free 1-2 km/s gravity slingshot from the Moon in both directions. Using the Moon plus 4.5 km/s propulsive velocity gives you 8.75 km/s relative to Low Orbit, and that accesses 60% of Near Earth asteroids. So right there you have a factor of 15 larger sample.
4.5 km/s is derived from the Tsiolkovsky Rocket Equation, and implies your propellant burn is 172% of your payload mass. However that equation assumes you start with all the propellant at the start of the mission. If you are mining for propellant, you can do that at several locations in Near Earth space, not just near the Moon. Refueling changes the propellant needs from exponential to linear with delta-V. Let's say you can refuel twice during the trip, for a total of three propulsive intervals. if you are allowed 172%/3 = 57.33% propellant each time, you can travel 2.04 km/s x 3 = 6.12 km/s velocity change for the same amount of propellant. Doing the same calculation relative to LEO, we get 10.4 km/s above LEO as our reach, which lets us access over 70% of Near Earth Asteroids.
Finally, let us assume electric propulsion, which has an exhaust velocity of 50 km/s, and that we can extract 20% of the mass of our vehicle as propellant. That gives us a range of 9 km/s per fueling stop. With 3 stops we can reach 27 km/s, which lets us not only access 100% of Near Earth Asteroids, but is beyond Solar System escape velocity. That means we can mine anywhere in the Solar System - Main belt asteroids, Jupiter Trojans, Kuiper Belt. The ability to refuel plus use of electric thrusters is a complete game changer.
> The Moon may simply not have the particular stuff an asteroid has.
Oh, it has it, but it sank to the core like for every other large body. Every large body developed heat from radioactive decay, tidal flexing, or impacts. In the case of the Moon it was likely the original impact with Earth that formed it, then collisional impact as it gravitationally accumulated, followed by radioactive decay and tides, which were much stronger when the Moon was new, because it was closer to Earth.
Large bodies separate into layers by density: Iron core, dense rock mantle, light rock crust, and water or ices if there enough of them, topped off by atmosphere. So whatever platinum group metals are present, sank to the middle. The Moon *does* have a little iron and platinum group elements on the surface. That came from metallic asteroids obliterating themselves and making new craters (along with every other kind of asteroid making craters). The little bit of metallic asteroid is mixed in with the other asteroid debris and the native rock thrown around by impacts. Mining an asteroid directly would be much higher grade ore.
> This is considered bad because people will hoard money rather than spend it,
No, hoarding is a fallacy. People still need to eat, buy fuel for their car, etc. If the utility of spending for immediate needs > gain in value of the asset, people will spend. Also, any investment that grows faster than the inflation rate is "deflationary", it's worth more in the future. Do people hoard stocks and starve themselves? Nope. They put some money aside for the future, and live on the rest.
Bitcoin doesn't earn interest and is not a productive asset, so once adoption stabilizes, it will only grow in value with the economy as a whole. Other investments that *do* earn interest or pay dividends will be more attractive, which puts money back into productive use.
I disagree. I think self-expanding automation will have a larger impact, but that is barely getting started. Something like bitcoin can be the payment mechanism for a distributed automated production network. Bitcoin is *already* a distributed automated network, it just needs physical production added.
> And all so some lucky fucks (who aren't me) can get rich on the Bitcoin bubble. What's not to hate?
Don't hate me because I paid attention to the first story I read on Slashdot about bitcoin, 2.5 years ago. I was paying attention, and you weren't. I didn't pay attention when one of my co-workers told me about this software company that was going public - Microsoft. Well, I have learned since then. I made money on some dotcom boom stocks, I lost on some others, but on the whole came out ahead. The common thread is looking for game-changing potential, and bitcoin (and other new currencies) are in that category. These days I am *working* (not investing) in self-expanding automation. That's a future game-changer. You might want to look into it. Or you can ignore it and hate me again in 5-10 years, your choice.
We have run plenty of experiments with government-run fiat currencies. Every single one, without exception, has become totally worthless, or worth a lot less than when it originally started. In the 100 years since the formation of the Federal Reserve, the US dollar has fallen in value by a factor of 23 as measured by the consumer price index ( ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt ) , an average rate of -3.2% per year. Many nations do worse. For example India has had an average inflation rate of 7.5% over the last 50 years, Argentina has varied from zero to 40% per year over the last 20 years. If bitcoin can improve on this record, it would be a good thing.
You are conflating the "medium of exchange" function (payment network), and "store of value" function of money. Traditional money had to serve both functions because nations only had a single currency to do both jobs. Bitcoin was only designed to do the first function (medium of exchange), which it does very well, because it is all electronic. For a store of value currency, you can use your traditional fiat money, which is exactly what most merchants do. They use a payment processor that accepts bitcoins on their behalf, and gives them local currency deposited to their bank account. The merchant never touches the bitcoins, they just use it as an alternate way to get paid. The payment processor then turn around and resells the coins they accumulate to individual users (CoinBase), or on exchanges (BitPay) to recycle them for the next purchase.
If you want to get all modern, you can use the "chained hash data verification" technology at the core of bitcoin to record property data instead of financial transactions. Hashes don't care about what kind of data you are hashing, so you can put in any kind of data whatsoever. So you can record ownership of stock shares or real estate, and then trade them around in fractions. This would be a separate "Block Chain" than the one in bitcoin which would represent a stable store of value, the other function of money. Let's call those "AssetCoins" because they are based on an ownership record of real assets. The ratio of bitcoins to Assetcoins may vary, but user software can do the conversion for you in real time.
Miners also get transaction fees included in the block, so they still have incentive to search for block hashes.
> how do you set fee levels such that people will validate little transactions as well as big ones?
Fees are *user defined*. If you are in a hurry, slap a big fee on it. If you can wait, put a small fee on it. The bitcoin software allows zero-fee transactions if you meet some conditions, and some miners will include zero fee transactions in a block if there is room. In the long run, many small transactions will move "off chain". For example, Coinbase processes bitcoin transactions for merchants, accepting BTC payments on their behalf and depositing local currency to their bank account. Conversely they sell BTC to individuals and pull money from bank accounts to pay for it. When a Coinbase user uses their online wallet to pay a Coinbase merchant, that can be all internal to Coinbase, and never reach the Block Chain. Eventually such processors will arrange to settle with each other in bulk transactions, gathering up many little ones and posting it as one big transaction on the block chain. That both avoids bloating the block chain, and makes small transactions easier to process.
> the value over which some country's national labs or universities turn on their supercomputers and mine almost everything
Custom chips (ASICs) that do nothing but the particular calculation for bitcoin mining are 100 times more efficient than GPU's, and 1000's of times more efficient than general CPUs. Supercomputers are useless for bitcoin mining. The world's top 500 supercomputers combined process 250 million GFLOPS ( http://www.top500.org/statistics/perfdevel/ ). The Bitcoin Network at the moment is running at 78 billion GFLOPs, which is over 300 times faster. Custom hardware and monetary incentive wins big time. The downside is the ASICs are absolutely useless for any other calculation, because it is hardwired into the chip.
Slashdot Mirror
Ty Warner, the inventor of Beanie Babies, became a billionaire. Obviously they were worth a lot. But Beanie Babies can't be sent to the opposite side of the world in minutes for pennies in fees, so they are not as useful in a payment network as bitcoins are. Bitcoin derives its value purely from the fact that Western Union, PayPal, and bank wire transfers suck. Which would you choose, to pay tens of dollars in fees to send money somewhere, or to pay 8 cents?
The bitcoin code is open source. All you need to do is spin up an exact copy, let's call it bitcoin2.0, with a whole new set of coins. Aside from having a fresh block chain, it's otherwise identical, and user software can be made to handle both interchangeably. This has already somewhat happened with the collection of altcoins. They are mostly similar and use different names, but they add to the digital coin universe:
http://coinmarketcap.com/
We just go full metric. 1 Satoshi = 10 nanocoins = 10,000 picocoins
The *idea* of bitcoin can't be lost, and the *code* for bitcoin is open source. Therefore people can and do make other digital currencies:
http://coinmarketcap.com/
Some of them may be silly, copycats, or scams, but we will never run out of coins. That Cat is out of the bag.
> "We" voted for her because the alternative was...well...less savory.
Less savory than Feinstein's husband, who is involved with $600 million questionable defense contracts, post office, and FDIC real estate deals? The Feinstein family sure makes a lot of money off the government.
It will be manages by a collaboration of Target, Evernote, and Adobe.
Seriously, is there anyone who doesn't think this "third party", whoever it is, won't become a giant "Target" (pun intended) for data hackers? At least the NSA's data centers are on military bases, and they have half a clue about security, Snowden notwithstanding.
> How can we reduce the amount of fossil fuels we burn without socialists running the planet? I don't think this is a hard question.
That's easy. Make non-fossil energy sources that are cheaper than fossil energy sources. This is already happening, but it will take time for the new sources to displace the old ones (you don't replace a grid's worth of power in a day or a decade).
When I say "it's already happening", I mean the newest utility-scale solar PV plants are coming in considerably cheaper than nuclear, and wind turbines have been competitive for several years. The only reason they are not dominating new installations is Natural Gas is just ridiculously cheap these days.
Here you go:
https://www.sparkfun.com/products/retired/287
http://content.luxology.com/gallery/565fc4f98dd0a8d41c8f7ab8bf52457d.jpg
AdBlock and similar tools might be defeated, but nothing can defeat me not visiting the site again if the ads are too annoying. I'll put up with some tasteful ads, but too many annoyances and I just will block the site entirely.
> How would they pull off such an attack
Pools issue only the "Merkle root" of the transactions in the block - effectively the header, which the individual miners then search for a sufficiently low hash for. The pool operator can insert transactions into the block and the miners would not know.
Part of the reason to use the Merkle root is that is independent of the number of transactions. Otherwise hashing would slow down as the network carried more transactions, you have a bigger block of data to pass around to the miners, and for them to crunch hash attempts on. You can see the Merkle root on the list of hashes of a recent block: https://blockchain.info/block-index/457566/000000000000000047665cb7d4db93f66bbdd969f42578588363e8e77e22e31f
http://bitcoin.stackexchange.com/questions/10479/what-is-the-merkle-root
I actually first heard about bitcoin in mid-2011, during the first big price spike, right here on Slashdot. I started mining it back then with my wimpy graphics card. Then that got too hard, so I just started buying them directly. Then I did a crowdfunding campaign with bitcoin that raised 200% of the goal. It's been an amazing experience.
The crowdfunding is to support a project for self-expanding automation ( https://en.wikibooks.org/wiki/User:Danielravennest/SFP/Intro ), where the automated machines make parts to expand the collection of machines. If you set up a distributed network of such machines, doing different tasks, you can use something like bitcoin to automatically pay each other when things are done.
Machines like 3D printers are useful, but they can't do everything. You need a bunch of different ones that between them cover all the different processes for a finished item.
> at what point people will realize that a bitcoin is worth more than a promise by somebody to give you a bitcoin.
How is that any different than taking out a loan and promising to pay it back in the future? The risk of non-payment is embodied in the interest rate, along with the risk of you the lender not being around to enjoy the gains. Part of the reason for interest is the lender, being human, has a finite lifespan. When you make a loan you are giving up present use of the money for a larger amount in the future. Since you may not live to enjoy that future, you demand a higher amount of interest to compensate.
Bitcoin futures and savings accounts will also come with interest rates to cover the risks of non-payment, plus a rate based on time.
Near Earth Asteroids are just for getting things started. Once you can produce propellant from an asteroid, your range is only limited by how many extraction plants you want to set up for re-fueling
Followed by the slightly more accurate SWAG (scientific wild-assed guess).
We used to have actual ranges for these in aerospace design. WAG = factor of 10 standard error, SWAG = factor of 3 standard error. 15-50% variance was "preliminary estimates", below 15% was detailed estimates. Normally you plan with a 15% allowance at the start of detailed design for "stuff you haven't thought of yet".
If you think like a geologist or mining engineer, you look at the ore value of the various things you can get out of the asteroid rock. This is % extracted by weight x value/kg.
Platinum might be 1 ppm vs the total mass of the asteroid, and has a value of $46/gram. Since a gram is 1 ppm of a ton, the ore value is $46/ton of raw asteroid.
Launching *anything* on a Falcon 9 rocket costs $4.3 million/ton. Lets assume you can extract 20% of your raw asteroid in propellants, water, and metals. Their ore value is then $860,000 per ton, way more than the platinum. Precious metals are a nifty bonus if you can extract them, but the big money is basic commodities you can get in large volume.
There is no sound in space.
> Right now we have absolutely no business case we can make that says, we can go get something from an asteroid more cheaply than we can get the material from earth.
Right now there are about 1000 functioning satellites in Earth orbit, with a procurement cost of around $150 million each, thus $150 billion in value. When they break or run out of fuel, they need to be replaced. If you had an orbital service station that could refuel and repair them, you are talking billions of dollars per year of value there. Comparing it to a terrestrial service station, you need a gas pump, service bay for repairs, and a "tow truck" to haul the satellite in for repairs and put it back afterwards.
The gas pump would have it's tanks filled by the asteroid mining if you can do that cheaper than sending fuel from Earth. Since many of the satellites are in Geosynchronous Orbit, they are very close in energy terms to the orbit you end up with after a "slingshot" gravity assist past the Moon on the return trip.
Whether the service station has people aboard, or is remote controlled from the ground I will leave to the mission designers. My guess is a few humans for the hard jobs, and a lot remote controlled (like fetching the satellite). Shipping new hardware to GEO costs about it's weight in gold to buy and launch, so if you can avoid doing that, it is extremely valuable.
We will always have a use for orbital mining as long as the amount of solar energy passing inside the Moon's orbit equals the world's known fossil fuel reserves *every minute*. It's not the metals or water that are important, it is access to that enormous energy flow, which lets us do most anything we want.
The assumption made by Elvis in his paper is wrong, though. 4.5 km/s from Low Earth Orbit only accesses 4% of the asteroids, but you don't want to mine from Low Orbit. You want to mine from the vicinity of the Moon, where you can get a free 1-2 km/s gravity slingshot from the Moon in both directions. Using the Moon plus 4.5 km/s propulsive velocity gives you 8.75 km/s relative to Low Orbit, and that accesses 60% of Near Earth asteroids. So right there you have a factor of 15 larger sample.
4.5 km/s is derived from the Tsiolkovsky Rocket Equation, and implies your propellant burn is 172% of your payload mass. However that equation assumes you start with all the propellant at the start of the mission. If you are mining for propellant, you can do that at several locations in Near Earth space, not just near the Moon. Refueling changes the propellant needs from exponential to linear with delta-V. Let's say you can refuel twice during the trip, for a total of three propulsive intervals. if you are allowed 172%/3 = 57.33% propellant each time, you can travel 2.04 km/s x 3 = 6.12 km/s velocity change for the same amount of propellant. Doing the same calculation relative to LEO, we get 10.4 km/s above LEO as our reach, which lets us access over 70% of Near Earth Asteroids.
Finally, let us assume electric propulsion, which has an exhaust velocity of 50 km/s, and that we can extract 20% of the mass of our vehicle as propellant. That gives us a range of 9 km/s per fueling stop. With 3 stops we can reach 27 km/s, which lets us not only access 100% of Near Earth Asteroids, but is beyond Solar System escape velocity. That means we can mine anywhere in the Solar System - Main belt asteroids, Jupiter Trojans, Kuiper Belt. The ability to refuel plus use of electric thrusters is a complete game changer.
> The Moon may simply not have the particular stuff an asteroid has.
Oh, it has it, but it sank to the core like for every other large body. Every large body developed heat from radioactive decay, tidal flexing, or impacts. In the case of the Moon it was likely the original impact with Earth that formed it, then collisional impact as it gravitationally accumulated, followed by radioactive decay and tides, which were much stronger when the Moon was new, because it was closer to Earth.
Large bodies separate into layers by density: Iron core, dense rock mantle, light rock crust, and water or ices if there enough of them, topped off by atmosphere. So whatever platinum group metals are present, sank to the middle. The Moon *does* have a little iron and platinum group elements on the surface. That came from metallic asteroids obliterating themselves and making new craters (along with every other kind of asteroid making craters). The little bit of metallic asteroid is mixed in with the other asteroid debris and the native rock thrown around by impacts. Mining an asteroid directly would be much higher grade ore.
> This is considered bad because people will hoard money rather than spend it,
No, hoarding is a fallacy. People still need to eat, buy fuel for their car, etc. If the utility of spending for immediate needs > gain in value of the asset, people will spend. Also, any investment that grows faster than the inflation rate is "deflationary", it's worth more in the future. Do people hoard stocks and starve themselves? Nope. They put some money aside for the future, and live on the rest.
Bitcoin doesn't earn interest and is not a productive asset, so once adoption stabilizes, it will only grow in value with the economy as a whole. Other investments that *do* earn interest or pay dividends will be more attractive, which puts money back into productive use.
I disagree. I think self-expanding automation will have a larger impact, but that is barely getting started. Something like bitcoin can be the payment mechanism for a distributed automated production network. Bitcoin is *already* a distributed automated network, it just needs physical production added.
> And all so some lucky fucks (who aren't me) can get rich on the Bitcoin bubble. What's not to hate?
Don't hate me because I paid attention to the first story I read on Slashdot about bitcoin, 2.5 years ago. I was paying attention, and you weren't. I didn't pay attention when one of my co-workers told me about this software company that was going public - Microsoft. Well, I have learned since then. I made money on some dotcom boom stocks, I lost on some others, but on the whole came out ahead. The common thread is looking for game-changing potential, and bitcoin (and other new currencies) are in that category. These days I am *working* (not investing) in self-expanding automation. That's a future game-changer. You might want to look into it. Or you can ignore it and hate me again in 5-10 years, your choice.
We have run plenty of experiments with government-run fiat currencies. Every single one, without exception, has become totally worthless, or worth a lot less than when it originally started. In the 100 years since the formation of the Federal Reserve, the US dollar has fallen in value by a factor of 23 as measured by the consumer price index ( ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt ) , an average rate of -3.2% per year. Many nations do worse. For example India has had an average inflation rate of 7.5% over the last 50 years, Argentina has varied from zero to 40% per year over the last 20 years. If bitcoin can improve on this record, it would be a good thing.
You are conflating the "medium of exchange" function (payment network), and "store of value" function of money. Traditional money had to serve both functions because nations only had a single currency to do both jobs. Bitcoin was only designed to do the first function (medium of exchange), which it does very well, because it is all electronic. For a store of value currency, you can use your traditional fiat money, which is exactly what most merchants do. They use a payment processor that accepts bitcoins on their behalf, and gives them local currency deposited to their bank account. The merchant never touches the bitcoins, they just use it as an alternate way to get paid. The payment processor then turn around and resells the coins they accumulate to individual users (CoinBase), or on exchanges (BitPay) to recycle them for the next purchase.
If you want to get all modern, you can use the "chained hash data verification" technology at the core of bitcoin to record property data instead of financial transactions. Hashes don't care about what kind of data you are hashing, so you can put in any kind of data whatsoever. So you can record ownership of stock shares or real estate, and then trade them around in fractions. This would be a separate "Block Chain" than the one in bitcoin which would represent a stable store of value, the other function of money. Let's call those "AssetCoins" because they are based on an ownership record of real assets. The ratio of bitcoins to Assetcoins may vary, but user software can do the conversion for you in real time.
> Once the last coins are mined, what happens?
Miners also get transaction fees included in the block, so they still have incentive to search for block hashes.
> how do you set fee levels such that people will validate little transactions as well as big ones?
Fees are *user defined*. If you are in a hurry, slap a big fee on it. If you can wait, put a small fee on it. The bitcoin software allows zero-fee transactions if you meet some conditions, and some miners will include zero fee transactions in a block if there is room. In the long run, many small transactions will move "off chain". For example, Coinbase processes bitcoin transactions for merchants, accepting BTC payments on their behalf and depositing local currency to their bank account. Conversely they sell BTC to individuals and pull money from bank accounts to pay for it. When a Coinbase user uses their online wallet to pay a Coinbase merchant, that can be all internal to Coinbase, and never reach the Block Chain. Eventually such processors will arrange to settle with each other in bulk transactions, gathering up many little ones and posting it as one big transaction on the block chain. That both avoids bloating the block chain, and makes small transactions easier to process.
> the value over which some country's national labs or universities turn on their supercomputers and mine almost everything
Custom chips (ASICs) that do nothing but the particular calculation for bitcoin mining are 100 times more efficient than GPU's, and 1000's of times more efficient than general CPUs. Supercomputers are useless for bitcoin mining. The world's top 500 supercomputers combined process 250 million GFLOPS ( http://www.top500.org/statistics/perfdevel/ ). The Bitcoin Network at the moment is running at 78 billion GFLOPs, which is over 300 times faster. Custom hardware and monetary incentive wins big time. The downside is the ASICs are absolutely useless for any other calculation, because it is hardwired into the chip.