Let's see if increase in price of btc leads to less spending and more hoarding

[niko]

Donation-accepting sites represent a nice opportunity to analyze spending and hoarding habits in relation to increasing value of bitcoins. I looked into some of the entities accepting Bitcoin donations. To date, Wikileaks has received over 1`500 transactions, the Internet Archive 500, and Bitcoin100 about 270.

Let's look at the champion: the Wikileaks. Still a small dataset, but it's the best I've found. They have been accepting donations to their public address ever since the June 2011 bubble, and there have been considerable ups and downs of btc price since then.

I took list of all incoming transactions from blockchain.info and historical daily prices of bitcoin in USD from MtGox via bitcoincharts.com. The value of each donation is then simply converted to the USD equivalent based on historical prices (based on the price on the corresponding date, not on today's prices).

Here is the outcome:


And another view:


No matter how hard I try, I see no correlation whatsoever. People just use ("spend") coins to transfer value, and don't seem to quit donating just because the price jumped 5x in few months. They don't seem to start donating more during the downward trends either. All in all, price skyrocketing doesn't seem to be a problem as it is often portrayed.

Thoughts?
 

[mcgravier]

You should make chart with donation USD volume representation similar to transaction volume on mtgox.com site, or ferroh.com


EDIT:
also, price line on second chart seems to be msiing

[Spaceman_Spiff]

Nice charts, and though the data set is small as you said, they seem to prove what I already believed: that price increase won't affect spending in a big way.

[pretendo]

What exactly was the expected correlation? Let's not pretend that donations account for a substantial part of any economy

[DarkBet]

I dont think hoarding is longterm problem at all and just something that will benefit us early adopters.

If Bitcoin grows in popularity it will be increasingly easier to buy and then for many it will be used simply as a intermediate, or what its called, people just fund their "Bitcoin internet shopping account" weekly or just prior to making a purchase and at that point the value stabilizes as the potential is pretty much mapped out

[Mike Christ]

Another interesting thing to point out: if over 21 million people adopt BTC, the average person can't have an entire BTC to their name   So yeah, hoarding is just an early adopter thing.  The more popular BTC gets, the faster it gets popular, and the less people will bother to hoard, as there won't be much to hoard by the time it gets that popular.  Of course, everyone will (hopefully) have a little bit in savings, and spend on what they want and need like they would in fiat.  After all, wealth earned and not spent is wealth wasted.

[davecoin]

Another interesting thing to point out: if over 21 million people adopt BTC, the average person can't have an entire BTC to their name

That's a disturbing thought!

[niko]

What exactly was the expected correlation? Let's not pretend that donations account for a substantial part of any economy

It doesn't matter how big part of an economy involves donations. Donations involve 100% of donations, and that is the data set we are looking at. People who did donate obviously did so regardless of price trends, proving false the hypothesis that "deflationary currency decreases willingness to spend". By "deflationary" they mean currency whose purchasing power is increasing (regardless of inflation or deflation of monetary base).

[johnyj]

The theory I heard is that if you have two currency, people tends to spend the inflation one and keep the deflation one. Since wikileak only accept bitcoin donations, this might not be a good example  

[niko]

The theory I heard is that if you have two currency, people will tends to spend the inflation one and keep the deflation one. Since wikileak only accept bitcoin donations, this might not be a good example 

Now, that's a good point, but it assumes that donating to WL is something donators must do, so they have no choice but to spend their precious coins. I'd say no way; WL donation is not food or water or urgent surgery.

Just thought of a better way to answer the original question, but it's beyond my ability at the moment: look at the age of mined coins (age of first-time spent coins vs. price or price trend). Coinbase addresses are easily available, so this is easy for solo miners, but to get more data we should look at the pool payouts, not just the block reward (coinbase) transactions. This would clearly show if people tend to hoard more when price is rallying, and are easier to spend on the way down.

Finally, the big picture: assume all the coins are mined, and they are valuable enough so rate of loss is negligible. Fixed supply. If the economy available to coins grows, the value goes up. Perhaps people start spending less because of this, so the economic growth slows down a bit, at least until people get used to the higher value of coins and start spending more easily. If the economy shrinks, the value of coins goes down, making them easier to spend, thus stimulating the economy. I see no problem, and would love to live in  a world like that.

[Timep34]

Another interesting thing to point out: if over 21 million people adopt BTC, the average person can't have an entire BTC to their name   So yeah, hoarding is just an early adopter thing.  The more popular BTC gets, the faster it gets popular, and the less people will bother to hoard, as there won't be much to hoard by the time it gets that popular.  Of course, everyone will (hopefully) have a little bit in savings, and spend on what they want and need like they would in fiat.  After all, wealth earned and not spent is wealth wasted.

Can you explain this? Why is it wasted?

[thoughtfan]

Another interesting thing to point out: if over 21 million people adopt BTC, the average person can't have an entire BTC to their name   So yeah, hoarding is just an early adopter thing.

People will still be able to hoard hundreds of thousands of satoshis!  I don't follow the assumption just because the number of bitcoin representing their their wealth is small compared today that that will influence their tendency to save or not.

[dancupid]

Whenever I see a 'donate with paypal' button I can't be bothered jumping though hoops - it's so easy to donate with bitcoin, that the trivial effort required make's me want to use bitcoin even though I'd rather dump my fiat.
It's the convenience that makes spending bitcoin attractive.

[Rygon]

Can we please stop using the Keynesian slur "hoarding" when talking about saving money? The term "hoarding" is more closely associated with the psycological disorder of collecting items to a point where it negatively affects their lives.

[thoughtfan]

Can we please stop using the Keynesian slur "hoarding" when talking about saving money? The term "hoarding" is more closely associated with the psycological disorder of collecting items to a point where it negatively affects their lives.

Yes I suppose it does have negative connotations looking at it that way.  I tend to think of squirrels stashing away their nuts and acorns for tougher times ahead.  The difference is the squirrel's time of shortage ahead (winter) is predictable and of limited duration. Ours (the consequence of decades of crazy government/central bank/private bank actions) is of unknown severity and of unknown duration therefore hoarding more is generally a good plan in my book

[dg2010]

Can you explain this? Why is it wasted?

Because you only realise the value when you spend it.

[yucca]

Can we please stop using the Keynesian slur "hoarding" when talking about saving money? The term "hoarding" is more closely associated with the psycological disorder of collecting items to a point where it negatively affects their lives.

I second that motion!

[Lethn]

Can we please stop using the Keynesian slur "hoarding" when talking about saving money? The term "hoarding" is more closely associated with the psycological disorder of collecting items to a point where it negatively affects their lives.

I second that motion!

Motion thirded? There's an awful lot of neo-keynesian propaganda on this board considering it's about a decentralised currency.

[paraipan]

Can we please stop using the Keynesian slur "hoarding" when talking about saving money? The term "hoarding" is more closely associated with the psychological disorder of collecting items to a point where it negatively affects their lives.

I second that motion!

Third-ed!

[SomeWhere]

I don't think donations have a significant correlation with spending or saving behaviours.

The motivation behind donating is very different from the motivation behind spending.