Bitcoin Forum

i have read a few threads on btc, i admit im still very new into this, but i read that people are hoarding the btc because of speculation that the price will skyrocket to "$1000" or something, but if everyone is saving up and buying btc as soon as it comes out and not spending it, which was what it was originally used for, then doesn't that discourage sellers to accept btc? i dont know im just basing this on Keynesian economics as i read that these btc functions like a real economy, i know i sound really new into but i would really appreciate it if someone can clarify this with me without "too" much economic jargon  :P

It's pushing me.  I want to stick around but there's no circulation.  I have a nice product.  I have plans to reinvest BTC into a bitcoin themed die.  I have no shortage of inquiries about it.  I know that demand is there but Gresham's Law keeps people paying me in USD.

Go figure.

During hyperinflations sound money is first hoarded until it reaches sufficient volume and holders to displace the unsound money. This process will eventually happen to all fiat currencies. There are very few coins and very many dollars. It may be some time before it is sufficiently hoarded to displace current economic activity. Quite serendipitous as I'm not sure even Satoshi saw this as occurring.

Yes tootdr, you are correct. Hoarding is the worst possible thing people can do for Bitcoin. It reduces the entry to the market, which may show a short term increase in value, follow by reduced interest and with it falling Bitcoin value.

the thinking is that you are right and that the anti-hoarding feedback loop will kick into place (hoarding=less economic activity=lower value of btc=less incentive to hoard). However, in the mean time it will likely be really whiplash-y as BTCs seek their stable value point. i agree it will be a rough road to get to stability because the speculative boom/bust cycles in the short term will discourage vendors, especially vendors who do not care about BTC as a project but are happy to provide another payment option to customers

Is saving good? How is saving different from hoarding?

saving is not different from hoarding, it is the same activity. it is not "bad" or "good" but an abundance of it compared to trading makes a difference in how an economy is functioning.

hi, does that mean if this keeps up, the miners will be the one to profit in the long term? like 4 years sort of long term not 10 or 20 years

True hoarding would drive down the price in the face of a viable competitor.  Fortunately the competition doesn't seem to be as good.  And there is evidence that there really isn't all that much actual hoarding taking place, as a percentage of overall holdings.

I'd pay in BTC if you had a product I particularly want ;)

Now, if you offered traders edge d20's ;)

Bitcoin is fine. We are failing. I'm innovating and so are others though. I don't mind the whiplash - I plan to spend only in bitcoins and I am a loud mouth.

Yeah USD is legal tender which means Gresham's Law applies. As long as people are forced to use fiat currencies at all they will keep trying to spend there fiat currency before they spend sound money. If it wasn't legal tender Greshamn's law wouldn't apply cause no one would accept the bad currency as payment...

The upside would be the regulation of the financial system which makes BitCoin the only sensible alternative for some types of transactions forcing them to be circulated.

Hoarding isn't decreasing value. It's limiting it. Both Keynesians and Austrians suck at separating dynamic and static principles.

Half of the G20 shares a currency symbol with one or more other members.

I looked into symbols for commodities a few years ago but it's pretty much unworkable.  Some symbols have dramatically different meanings across cultures. But you don't even have to go that far for meaning changes.

For example, one inquiry claimed that my dollar symbol was actually the Brazilian Real because it had two bars instead of one.  We straightened it out with a few wikipedia links.

There can be buyers who will unilaterally decide that every symbol on the die is a country that is decidedly not a major currency.  The only one without another country sharing the same symbol is, I believe, the rouble but with all the former Soviet satellites, I'm sure more than a few of them are using the rouble symbol.

Bottom line: It's tough making a product with international appeal.  Find a way to do a D20 in this theme without confusing the fuck out of everybody.  I will be the first to salute you.  :-)

AntiVigilante owns a set of my dice.  He had a pretty good suggestion about creating a BTC related game where the values of the fiat are the daily price changes in BTC.

It's a really good idea.  People can start on that right away.  If I am to code something to publish the current changes, I need to figure out where I can get the daily changes for each symbol.  USD, EUR, GBP and maybe the yen are available for parsing but I'm not sure where I would find the numbers for the rouble or the renminbi.

No, it doesn't discourage sellers because they can just adjust the prices, and even if it did it wouldn't matter much. The value of a bitcoin is mostly a result of how much people is willing to pay for it, and not how many trades it is involved in. Trade can make people want to pay more for it, but the reason doesn't matter.

If lots of people want to horde as much as possible of it, they'll bid up the price at the bitcoin auction the same way someone who wants to use it for trade would. Obviously the price will not decrease if there are more and more people bidding for a constant supply of coins.

You can save by entering into payment contracts for monthly services and paying in advance. As long as it's not being spent on something that's gone in minutes, spend on necessities is the same as saving. Hoarding is something else altogether.

If BTC value will go to $1000 and your seller doesn't care and only wants BTC then you lose nothing.

You can also save by stuffing dollar bills under your mattress. Would you care to explain why saving is good, hoarding is bad (I assume that's what you mean by "something else altogether") and what the objective difference is between the two?

You save to be able to buy necessities later. If you buy by contract your later necessities now then it's the same as saving.
Hoarding is saving to be able to dump later. If you buy and you hold the other sellers get squeezed then you dump.

What's really happening though is people are buying BTCs and not willing to go through paypal and others. It does matter the reason, because that is what is forcing up the prices, the scarcity of a reasonably quick exit and entry back into BTCs.

Also the rarity of stores accepting BTCs is an issue. Maybe ppl don't want to hold dollars.

someone plz explain Gresham's Law, i read the definition but what do they mean by "intrinsic value"
"The theory holding that if two kinds of money in circulation have the same denominational value but different intrinsic values, the money with higher intrinsic value will be hoarded and eventually driven out of circulation by the money with lesser intrinsic value.

Read more: http://www.answers.com/topic/gresham-s-law#ixzz1OlG78FQO"

Without reading more, I would assume that the "intrinsic value" refers to value as something besides being money. Such as, coins contain metal and are thus useful, and paper money can be used as toilet paper or fuel. Bitcoin has zero intrinsic value, but so have dollars on your bank account.

Hoarding means less available on the market = less supply = more value.

More value = more Bitcoin merchants = more demand = more hoarding. Repeat loop.

Each iteration = slower growth due to fewer people not yet using Bitcoin. More coins are spent when price increases are slower.

Equilibrium is reached, Bitcoin economy flourishes!

People hoard because they expect the value of Bitcoins to rise. So I have my theory: to fight this, Bitcoin prices should have a discount comparing to USD prices, even below production cost. You may think it doesn't calculate, but actually it does if you don't sell the Bitcoins immediately. The discount is the price you pay for getting currency that deflates by design.

You could do some calculations and predictions about deflation and how long you will keep Bitcoins, but psychologically, any discount would help - if people could trade USD to Bitcoins and buy your products cheaper.

I'm giving loans based on a similar concept. In the end the more I lend the lower fees I charge.

I like that idea.  I need to implement it in a different way from the simple mybitcoin link I currently have.  Maybe I can put up a note for now.

Buyers who mention this thread can take 30% off the current BTC price.  :-)

Bingo. It also makes consumers not using bitcoins willing to use them and increases demand for Bitcoins, driving up prices. "Hmm, I could pay you 100 USD for a product, or I could go to an exchange, spend $70 to get bitcoins and then give them to you and get the product. It's a little hassle, but I'll do it to save 30%" Afterwards, that consumer's been setup with a bitcoin account and is better able to participate in future exchanges.

You guys are looking at this all wrong.  Yes, the BTC is being used as a crypto-commodity , but the reason is very different then you imagine.  Money must do 2 things, new money needs to do one more.  First, money must be a store of perishable value.  I cannot hold radishes for for two years and still expect them to be valuable.  I can hold money.  The BTC can be easily traded, so it holds value.  Second, money must be a means of exchange.  BTCs are not fully developed as a means of exchange.  At this point, BTCs are only exchanged by a few people and businesses.  The special advantage that the BTC offers is freedom from a central monetary authority, which I think is pretty cool.  The reason that the BTC isn't acting like money, look at the businesses that exist around the BTC right now.  The exchanges are the most well developed.  MtGox may be the most used BTC business that currently exists.  So, of course people are trading BTCs like a commodity.  The number one priority for the BTC community is to bring more BTC businesses online that deal in staple goods.  Here's a free idea for ya.  Someone take the fortune you've made mining, and buy wholesale, non-perishable foods.  Sell those goods in BTCs only, advertising that, if the government knows who bought the food, they can come and take it.  To sell BTC-based businesses to non-BTC using people, the advantage of BTC over a central monetary authority needs to be played up a lot more.

Okay, I implemented the idea above.

http://forum.bitcoin.org/index.php?topic=14591.0

BTC users have a significant advantage over fiat users.

We'll see how it goes.