Wondering peoples opinions on this.. Does the deflationary nature of BTC "encourage hoarding and delay spending"?
If so, is that a huge problem? .. and can it be addressed?
I will quote one of my
favorite reddit bitcoin posts:
It's only worrisome for the bizarre theory that the very last stage of Bitcoin adoption - face to face transactions - should be pushed first, that the application where Bitcoin enables the tiniest marginal benefit should be trumpeted most loudly.
Contrast this with online purchases, where Bitcoin lets you buy from merchants who might not have sophisticated security to prevent your identity and payment data from being stolen. Then think of embarrassing purchases, purchases from unbanked countries, purchases where anonymity is an issue (VPNs), and illegal purchases. Now we are talking serious utility relative to the other options.
To anyone who still entertains this notion that Bitcoin is a currency right now, let me explain something: Currency requires currentness. Currentness means that it is generally accepted. If Bitcoin were generally accepted, the price would be at least $100,000 per coin already.
So how does Bitcoin proceed? Certainly not from brick and mortar adoption, nor even from Amazon adopting it. It starts with the applications where it can provide the highest marginal benefit: black markets, evading capital controls, hiding/"offshoring" wealth, other "store of value" applications, etc. Then as these have driven the price higher the infrastructure follows and then in myriad incremental (and sometimes sudden) ways new applications become feasible and are invented. VPNs, porn, remittances, and a mix of the familiar and radically new prospects that everyone here is familiar with. All this happens in a virtuous cycle with price, mining, venture capital investment, infrastructure rollout, increased trust, better image, better user-friendliness, the overcoming of security obstacles, more interest from coders and financial people, etc.
Eventually merchants start start finding that Bitcoin spending during bubbles is a fair size of their payment pie, and then the cost savings raise eyebrows, they offer incentives for payment in BTC, and things really start snowballing for merchant adoption. Finally, at the very end, brick-and-mortar stores accept it simply because a sizable number of people already use it daily for online purchases.
Most importantly, all through this process investors are buying BTC not to enable purchases but to capitalize on the coming stages of adoption. They are buying based on that future promise. They're using Bitcoin, not as the currency that it should one day become, but as a store of value and investment that anticipates the day that it does have currentness and is a currency.
Just because Bitcoin turned out to be better for the "store of value" function first is no reason to worry overly about the transactional function taking time to blossom - that's what investors are for. The ones that invest based on a sound assessment of Bitcoin's future potential serve as a proxy for actual present commercial adoption by boosting the price in the present to a degree commensurate with how likely commercial adoption will be to take hold in the future. To misunderstand this is to misunderstand investing itself, as well as to misconstrue much of what is happening in the Bitcoin world.
Related reading #1:
The Separation of Money and State After discussing the separation of church and state, Voorhees applied the philosophy of freedom of choice to money. The Shapeshift.io CEO claimed the freedom to choose your money is, for many people, more important than being able to choose a religion. He noted that a separation of money and state might be just as – if not more important than – freedom of religion:
“It is that narrative of human development under which I believe that we now have other fights to fight, and I would say in the realm of Bitcoin it is mainly the separation of money and state. Money is absolutely as fundamental to our lives as religion, and for many people it is far more fundamental to their lives as religion. It affects how your life unfolds. The choices that you make about money dictate the ramifications of your life and those around you. And so, to have an institution like money so controlled by a central entity — by a monopoly — is absurd. It is immoral. We should get rid of it.”
The idea of free markets is still somewhat popular in the United States, but this logic never seems to apply to money. Although many Republicans often espouse the benefits of the free market in various political speeches, essentially none of them bring up the idea of competing currencies. Most politicians in any part of the world seem rather selective when it comes to which markets are allowed to freely operate without government intervention.
Related reading #2:
Economics in One Lesson Read chapter 16: "Stabilizing" commodities - PDF pages 112-118 (book pages 97-103). Hope this helps!
Nationalism is a disease,
Bitcoin is a cure.
Yours in compassion and solidarity,
World Citizen Beliathon
