The process of displacing unreliable money

[Sjalq]

During hyperinflations sound money is first hoarded until it reaches sufficient volume and holders to displace the unsound money. During this period the sound money is only used as a store of value, it would not make too much sense to trade in it when one has little of it and quite a bit of the stuff you don't want. Get rid of the stuff you don't want first.

Once everyone has enough (doesn't need to be a lot) of the stuff they do want as money, they can stop using the stuff they don't want to use as money, hey presto, new money!

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.  :-)

[Vector]

That's not really how it works. Hoarding is the worst thing people can do for Bitcoin. If entry into the market is hard, people will lose interest and with it the Bitcoin's value will drop, causing a sell-off (a sell-off would be inevitable at that point, but to what degree is debatable).

Also, if interest is low because of hoarding, goods providers have no reason to accept Bitcoin. It needs mass distribution to become stable, and if Bitcoin isn't stable, there is no way Amazon and the likes will start accepting it. If the big providers don't accept it, then Bitcoin will never be a currency.

[lemonginger]

Bitcoin has the power to be revolutionary far far before we get to the point where places like amazon are accepting one click bitcoin payments

[Sjalq]

Hoarding of sound currency is how an economy begins to repair itself during a hyperinflation. This is not speculation or theory, it's history.. Zimbabwe, as one example, hoarded, Dollars, Rands and Pulas for years and years. Then in one months time the economy nearly completely rejected the Zim Dollar. Many other countries have dollarized since the Dollar is more stable than their local currencies.

There is undoubtedly a ceiling for bitcoin, we will over shoot that ceiling by a mile most likely before coming back down. That ceiling is much, much higher imho than anyone would like to guess at right now. Think about this for a moment, with only 6mil BTC in existence, how much would it value need to be for a company like Amazon to be able to use it for any practical purposes? What would it's value need to be for a view large companies to use it? What would it's value need to be for Amazon, a few large companies and only 20 million other people need to be to use it?

All I'm saying is that the value will most likely be reached first as adopters climb into a very scare item and then the market will become truly effective.

[MoonShadow]

That's not really how it works. Hoarding is the worst thing people can do for Bitcoin. If entry into the market is hard, people will lose interest and with it the Bitcoin's value will drop, causing a sell-off (a sell-off would be inevitable at that point, but to what degree is debatable).

"hording" is not relevant.  A liquidity trap is impossible with bitcoin, as it's infinately divisible with near-zero effort.  The market exchange price is a direct reflection on how difficult it is to aquire bitcoins.