Is the value of Bitcoin rising too fast for anyone to actually spend it?

[artgoodluck]

About a year ago I purchased a small number of Bitcoins, which, in theory I could sell for several times what I paid for them,  but I don't want to because there value (relative to other currencies anyway) might go up.  At least that's what my flawed monkey brain tells me.

The question is this,  if everybody is thinking like me,  won't that mean the value will keep going up as more and more people hoard bitcoin? 

Won't this mean Bitcoin is more like gold ( a store of value ) than a genuine currency ?

[Jenger]

Yes.. but WHY do you think that the price will keep rising?

This happened in 2011 where an acct was hacked & manipulated the BTC market causing BTC to rise to from less than $1usd/1btc to $30usd/1btc.

There is btc stealing malware out there, hackers, viruses. Ive read horror stories of people losing thousands & thousands of dollars by computer error.


So the question is, is the risk worth the reward? I always prefer to have a physical asset rather than an imaginary wallet. Does that mean I dont think a LARGE amount of money is to be made with BTC? No. I think if you play it right, know the in's & out's. Know how to play the dips, when to buy, when to sell, you can make a killing.

Greed is a bitch. You can get greedy and that can cause you to make a killing, or lose a LOT.

[NegativeNancy]

Absolutely not. I make every purchase I can in bitcoin...if I want to "save" my current amount, I buy more first.

It's nice to have an incentive to save, though. Back when I was a kid, banks used to pay this thing called "interest" on money you saved. Crazy, right?

[Stephen Gornick]

The question is this,  if everybody is thinking like me,  won't that mean the value will keep going up as more and more people hoard bitcoin?

Why would my spending using bitcoins be impacted by your decision to save your bitcoins?

Sure, fewer of your coins for sale on the market means the exchange rate is today higher but if I want to buy something, say ... a new laptop on BitcoinStore.com, why would I be more or less likely to do that just because you happened to not spend your coins?

Additionally, while not entirely a hassle for me to cash out my coins, it is an extra step.  So if I already have bitcoins or I receive bitcoins as income (e.g., dividends from some stocks I might own, or maybe a really good string of luck on http://bitZino.com) then I'm more likely to patronize a bitcoin merchant than to cash those funds out and use the cash proceeds to make my purchase.   If I want to replenish my stash of bitcoins using dollars, I can always do a trade using Coinlab or something like that so that I can spend my bitcoins yet at the same time maintain a level of savings of bitcoins that doesn't change much over time.

The only problem with "hoarding" is that if the exchange rate were to head the other direction, those whose only interest in Bitcoin is for speculation then start to bail out and dump their coins.  This introduces exchange rate volatility which isn't a desirable property of a currency.  

The thing is though, this increasing exchange rate is helping significantly to fund quite a few Bitcoin-related startups.   BitPay just raised another round of funding, for instance, in which investors include those who have benefited from a rising exchange rate (fueled by your hoarding).  As a result, the rising exchange rate is helping to build a stronger bitcoin economy.

Another way the rising exchange rate is helping is by creating liquidity as well.  A year ago, at a $120 million total dollar valuation (of all bitcoins combined) a company wanting to buy and send $25K USD worth of bitcoins to a supplier would have had an impact on the exchange rate -- order book depth was pretty thin and a $25K buy was a big deal.  Even worse, the supplier that received the coins would then go to cash out and that same $25K worth of coin would clobber the exchange rate in the other direction.    So a larger valuation allows larger transactions to occur efficiently (less of a whipsaw effect from larger transaction sizes).

So your hoarding helps bitcoin to gain traction.

Thank you for hoarding.

[DannyHamilton]

About a year ago I purchased a small number of Bitcoins, which, in theory I could sell for several times what I paid for them,  but I don't want to because there value (relative to other currencies anyway) might go up.  At least that's what my flawed monkey brain tells me.

The question is this,  if everybody is thinking like me,  won't that mean the value will keep going up as more and more people hoard bitcoin? 

Won't this mean Bitcoin is more like gold ( a store of value ) than a genuine currency ?

Hypothetical situation:

A week ago I received a small amount of USD in my salary, which in theory I could spend on the things I want to purchase, but I don't because bitcoin value (relative to those USD anyway) might go up.  At least that's what my flawed monkey brain tells me.

The question is this: If everyone is thinking like me, won't that mean that the value of the USD will keep dropping as more and more people exchange their USD for bitcoin?


The point of this demonstration is to show that choosing to spend USD isn't any better than choosing to spend bitcoin.  Every USD that you spend could have been converted into some value of bitcoin instead if you hadn't spent it.  Spending USD therefore has the exact same effect on your ability to hoard bitcoin as spending bitcoin.  Seeing as there are things I need for survival as well as things I desire for pleasure, it is obvious that I am going to spend.  Knowing that spending USD provides no benefit over spending bitcoin makes it easy for me to spend my bitcoin when I decide to make a purchase (especially when the bitcoin purchase carries a lower immediate cost or higher immediate convenience).

[nonnihilnitoris]

I have thousands worth of BTC that I bought back @ $6/coin, but I didn't write down my password, so... I *can't* spend it. Kinda glad, because I'm confident I can brute force it with some help from this forum. If I'd had access to those coins 12 months ago, would they still be there? Nah.

I guess what I'm advocating is, if you are impulsive, try forgetting your password completely and shaking your fist at fate as the value rises to $35 from $6. *facepalm* 

[pc163]

holding bitcoin means that u thing it is valuable ,just like us dollars. no one will holding something not worth to

[artgoodluck]

lots of interesting and insightful comments.  Thanks ! 

[bowen151]

I have thousands worth of BTC that I bought back @ $6/coin, but I didn't write down my password, so... I *can't* spend it. Kinda glad, because I'm confident I can brute force it with some help from this forum. If I'd had access to those coins 12 months ago, would they still be there? Nah.

I guess what I'm advocating is, if you are impulsive, try forgetting your password completely and shaking your fist at fate as the value rises to $35 from $6. *facepalm* 

Wow I don't think thats a good idea to advertise at all.

What if you cant brute force it?

Shit creek and no paddle comes to mind

[thebankofbitcoins]

Yes, I like to hold it

[zildjohn01]

I'm confident I can brute force it with some help from this forum.

Do you mean brute forcing a bitcoin-qt encryption passphrase, or something else?

[nonnihilnitoris]

Yeah, the pw for my wallet... I should probably correct myself: It's not brute forcing, I'm working with a small number of knowns and trying variations, iteratively. It could be a relatively long sentence of a password, so real brute forcing is out of the way.

[gradient vector]

About a year ago I purchased a small number of Bitcoins, which, in theory I could sell for several times what I paid for them,  but I don't want to because there value (relative to other currencies anyway) might go up.  At least that's what my flawed monkey brain tells me.

The question is this,  if everybody is thinking like me,  won't that mean the value will keep going up as more and more people hoard bitcoin? 

Won't this mean Bitcoin is more like gold ( a store of value ) than a genuine currency ?

This is probably truer in the short run. In the end, there are things you can do with Bitcoin that will almost guarantee it will be spent. Instant transfer of value is too valuable not to be used.

[Mikko]

I think that I have less than 100 bitcoins now, but I still use it to pay when possible.

[xumi]

I had some bitcoins from back when they was 8 USD worth (after the bubble). I just sold all my BTCs.

If it keep raising, I ahve already won money, and if they fall again, I'll reinvest in BTCs and wait.

[ryanAC]

I like the spend >> replenish concept combined with a recurring fixed dollar amount purchase every week.  That way you can hoard and spend... grease the wheels and put gas in the car... feed the dog and take out the trash...

[Massage4BTC]

I hope not! We're just getting our service up and running for BTC.

[Rincewind]

No. BTC is neither a currency nor a commodity. It is a token. Ultimately it's a zero sum game, unless somebody somewhere gained wealth out of thin air.

I think the idea that people will adopt BTC far and wide is a pipe dream, but for the tech-savvy there is no reason to forsee it difficult to someday convert USD to BTC, buy an item, then convert the BTC back to USD before the value has changed wildly. E.g., If the BitcoinStore gets $600 USD for a $600 USD laptop in the end, does it matter what the value of a bitcoin is? The coin served its purpose as a non-reversable payment for the transaction.