[Havvy]

Mining bitcoin is a speculative lottery. The bitcoins actually be transferred around were given originally to those who won that lottery, but after that, they're just traded like money. In the future, the winnings from the lottery is a percentage of each transaction instead of bitcoins, but that's relatively a long ways away. Basically, with each transaction, a person posts what percentage of the transaction goes to the winner, and the winner chooses which transactions to honor onto the blockchain. The giving out of synthetic bitcoins is a way to bootstrap this process and to make sure that there's no single point of ownership.

[wmf]

To be clear, the speculative lottery that I was talking about is the BTC-USD daytrading on the exchanges. A significant fraction of that speculation is due to press hype that is due to rapid price spikes caused by earlier speculation.

Mining involves some speculation about future difficulty and future exchange rates (since you have to pay for electricity in real money), but at least there are some fundamentals that you can build a model around. With simple calculations (that ignored transaction fees BTW) I was able to correctly predict when mining would and would not be profitable and mine accordingly.