blastomere

The economics in this regard are the same as for gold. With gold only the most efficient gold mines can make a profit, so only those profitable operate -- nobody tries to mine all the gold in the world. With bit gold, only those with the most efficient processors and most spare time will be able to make a profit, so again there will just be a handful of a few powerful computers, or many small computers but just using the spare CPU cycles (like SETI@home), solving the mathematical puzzles to generate the bit gold.

No, the bits are solutions to hard computational puzzles, and they are securely timestamped and published, so that you always know exactly what the money supply is. More on the markets and economics of bit gold here:

http://unenumerated.blogspot.com/2008/04/bit-gold-markets.ht...

Bit gold will provide a safer alternative:

http://unenumerated.blogspot.com/2005/12/bit-gold.html