What is the deal with hoarding?

[bitcon]

just because a coin is minted doesnt mean it gets sold.

[herzmeister]

What's wrong with keeping the stored information of the value of my labor?

Why should I consume just for the sake of consumption?

Isn't consumption mania one of the problems of society today?

I use bitcoins wherever I can and whenever I really want something, or for donations. I convert most of my fiat to bitcoin anyway, so it doesn't make much difference to me what I actually spend.

[Junko]

I'm not hoarding, I'm saving.

[Beta-coiner1]

Seriously if you don't want your BTC anymore just send it my way if you're unhappy with BTC.

[mestar]

just because a coin is minted doesnt mean it gets sold.

So, miners are speculating as well?   

Unfortunately, miners costs still have to be paid in currencies other that bitcoin, and market will push the cost of each bitcoin mined to be close to one bitcoin.  Right now, the difficulty did not have the time to adjust due to fast price rise and ASIC scams, but that is not a permanent situation. 

Around 0.3 to 0.5 million dollars of fresh speculative money will be needed each day to keep the price this high.  And this is needed even if speculators do not sell at all.  When they do start taking profits, this will just add to the outflows.

[Elwar]

just because a coin is minted doesnt mean it gets sold.

So, miners are speculating as well?   

Unfortunately, miners costs still have to be paid in currencies other that bitcoin, and market will push the cost of each bitcoin mined to be close to one bitcoin.  Right now, the difficulty did not have the time to adjust due to fast price rise and ASIC scams, but that is not a permanent situation. 

Around 0.3 to 0.5 million dollars of fresh speculative money will be needed each day to keep the price this high.  And this is needed even if speculators do not sell at all.  When they do start taking profits, this will just add to the outflows.

Anyone can "take profits" by buying something with their Bitcoin (a new ASIC miner perhaps?).

I take profits every month by spending less on my hosting service (paid in bitcoins) than the previous month.

I am moving from hoarding dollars to holding a currency of value.

[Cluster2k]

This is so funny and sad at the same time. In recent months BTC has seemingly lost its true utility -- a currency -- and has become a speculative asset that provides no utility because if you use it, you'll potentially be leaving money on the table. Amazing Everyone start paying with Paypal and Dwolla again

we need more bitcoin merchants though. in time, there will be less hoarding or a combination of both.
I hoard for the time being because I see no real way to spend them. But I do believe that in the future I will, so when that day comes that I want a new vehicle, I can walk into the dealership and make my BTC transfer and be done. Until then, i buy and hold

I hoard because I see no useful (for me) way of spending the bitcoins.  But if people are hoarding then I as a business owner don't see much utility in supporting bitcoins as people are reluctant to part with them.  Chicken and egg.

Right now we have a problem.  Bitcoin's price is rising so fast, so high that you would be silly to spend any of them on goods and services.  Yes, downright stupid.  $15 in January, $60 in March, $160 in April.  At this pace we're looking at well over a thousand dollars before the end of 2013.  Parting with any bitcoins now is leaving a huge wad of money at the table and literally walking away.

One can look at the trade volume on MtGox as evidence that people are spending, but it must also be considered that people are rather speculating and trading.  One side wants to get out before a probable bubble pops, the other side wants to buy as many as possible and dump before the bubble pops.

[mestar]

I am moving from hoarding dollars to holding a currency of value.

So, no attempt at answering the question of who is paying $0.5 million per day so that your currency of value can hold value?

[Elwar]

Right now we have a problem.  Bitcoin's price is rising so fast, so high that you would be silly to spend any of them on goods and services.  Yes, downright stupid. 

What currency should we spend on goods and services then?


Follow up:
Why would anyone be silly enough to have dollars to spend right now?

[Elwar]

I am moving from hoarding dollars to holding a currency of value.

So, no attempt at answering the question of who is paying $0.5 million per day so that your currency of value can hold value?

When Google was paying their CEOs in the early days with stock options, were they bringing in the amount of money per day to pay for those stock options in order to hold value?

The inflation created by mining is already priced in.

[mestar]

One can look at the trade volume on MtGox as evidence that people are spending, but it must also be considered that people are rather speculating and trading. 

That's a funny way of saying "98% of trades at MtGox are speculation".

[ajk]

I am moving from hoarding dollars to holding a currency of value.

So, no attempt at answering the question of who is paying $0.5 million per day so that your currency of value can hold value?

the bitcoin economy itself, the price is going up right now because the demand is insanely high and the half million is not nearly enough to cover the demand hence why people are paying the current price.

even though some are not spending there are many who are, whether its because they need money right now or just want to cash out is at the discretion of the holder themselves but there are people who regardless of how much they spend it not really matter because in the end  its going to be a lot anyway,

there is just an insane amount of demand right now so much so that wealthy people are trading their cars and toys to get bitcoins because its difficult to get them in big numbers through exchanges and such, your lucky if you have bitcoins and i guess if you have only a small number hold but all the small numbers in the economy do not account for the bigger players,

[alexh]

Well, i can't get red of them cause then i'd beat myself when the prices go up.

[mestar]

I am moving from hoarding dollars to holding a currency of value.

So, no attempt at answering the question of who is paying $0.5 million per day so that your currency of value can hold value?

When Google was paying their CEOs in the early days with stock options, were they bringing in the amount of money per day to pay for those stock options in order to hold value?

The inflation created by mining is already priced in.

The inflation is not priced in.   It would be priced in if all the minig costs were in BTC.  They are not, electricity costs you must pay in a local currency.

There is a reason that they get stock options, and not actual stocks that they could sell on the exchange right away.  The reason being that in the early days those quite large amounts of stock would push the price down.

Miners are not paid in BTC options, they are paid in BTC.  It is not only that they can sell them right away,  they must do so to cover the running costs.  Otherwise it is them that are bringing in the fresh money.

So, any other answer attempts on who must pay a large chunk of those $0.5 million daily?

[bb113]

I am moving from hoarding dollars to holding a currency of value.

So, no attempt at answering the question of who is paying $0.5 million per day so that your currency of value can hold value?

When Google was paying their CEOs in the early days with stock options, were they bringing in the amount of money per day to pay for those stock options in order to hold value?

The inflation created by mining is already priced in.

The inflation is not priced in.   It would be priced in if all the minig costs were in BTC.  They are not, electricity costs you must pay in a local currency.

There is a reason that they get stock options, and not actual stocks that they could sell on the exchange right away.  The reason being that in the early days those quite large amounts of stock would push the price down.

Miners are not paid in BTC options, they are paid in BTC.  It is not only that they can sell them right away,  they must do so to cover the running costs.  Otherwise it is them that are bringing in the fresh money.

So, any other answer attempts on who must pay a large chunk of those $0.5 million daily?

The miners' parents obviously.

[Elwar]

So, any other answer attempts on who must pay a large chunk of those $0.5 million daily?

Saying that $.5 million is paid per day follows the same mistake that people who think we actually have over $1.5 billion worth of bitcoins make.

The money traded on the exchange is what determines cost. Out of almost 11 million bitcoins in existence, around 75,000 are traded daily or about .6% of all bitcoins determine the price.

Trying to say that the 3600 bitcoins created daily is part of that 75000 as opposed to that 10+ million is misleading.

Taking the trend of the Bitcoin economy as a whole, only about $3,500 of mined bitcoins need to be sucked up by buyers each day to simply maintain the current price.

As for miners needing to pay their own bills. Most people who hold bitcoins need to pay their bills. Most people who hold bitcoins are paid in cash. Bills can easily be paid without going through the extra steps of converting bitcoins to do so.

[eric345]

Right now we have a problem.  Bitcoin's price is rising so fast, so high that you would be silly to spend any of them on goods and services.  Yes, downright stupid.  $15 in January, $60 in March, $160 in April.  At this pace we're looking at well over a thousand dollars before the end of 2013.  Parting with any bitcoins now is leaving a huge wad of money at the table and literally walking away.

Less consumption is less polution.
We're saving the enviroment while getting rich. We also have to work less for our money, so I don't see the problem.

[mestar]

Trying to say that the 3600 bitcoins created daily is part of that 75000 as opposed to that 10+ million is misleading.

Taking the trend of the Bitcoin economy as a whole, only about $3,500 of mined bitcoins need to be sucked up by buyers each day to simply maintain the current price.

I'm assuming you got that $3,500 by taking the same percentage of 3600 BTC, as that 0.6% of total BTC that is traded.

But this is clearly wrong.  Holding 10 million BTC does not create those running costs.  Mining does, and market forces will always work in the direction where the end result will be that a large part of that 3600 BTC gets sold to pay for running costs.

And this gets worse if the price rises.  If BTC get to $10.000, it becomes $20 or $30 million daily.  And the power usage gets to be counted in the number of nuclear power plants needed.

So, the only way that the BTC price is sustainable is that the amount that miners get is the same as the value that the bitcoin network as a whole creates.  Right now the largest payment processor has $5 million per month volume.  No way this comes even close to 0.5$ million per day in "value creation" needed for the price to be sustainable.

[Elwar]

Trying to say that the 3600 bitcoins created daily is part of that 75000 as opposed to that 10+ million is misleading.

Taking the trend of the Bitcoin economy as a whole, only about $3,500 of mined bitcoins need to be sucked up by buyers each day to simply maintain the current price.

I'm assuming you got that $3,500 by taking the same percentage of 3600 BTC, as that 0.6% of total BTC that is traded.

But this is clearly wrong.  Holding 10 million BTC does not create those running costs.  Mining does, and market forces will always work in the direction where the end result will be that a large part of that 3600 BTC gets sold to pay for running costs.

And this gets worse if the price rises.  If BTC get to $10.000, it becomes $20 or $30 million daily.  And the power usage gets to be counted in the number of nuclear power plants needed.

So, the only way that the BTC price is sustainable is that the amount that miners get is the same as the value that the bitcoin network as a whole creates.  Right now the largest payment processor has $5 million per month volume.  No way this comes even close to 0.5$ million per day in "value creation" needed for the price to be sustainable.

Do you truly believe that if all Bitcoin users were to go onto MtGox right now and sell all 11 million bitcoins, they would walk away with a combined $2 billion?  That is the only way your $.5 million per day thing works.

Is that the current ask total these days? $2 billion?

I plan on buying an ASIC. To do so I will need to convert dollars to bitcoins. I will purchase my ASIC and run the ASIC to get bitcoins. I will then use those bitcoins as currency or hold them. Any electricity costs I accumulate will be paid with dollars like any other utility bill (until they take bitcoins).
What part of that process requires me to cash out my bitcoins?

[mestar]

Do you truly believe that if all Bitcoin users were to go onto MtGox right now and sell all 11 million bitcoins, they would walk away with a combined $2 billion?  That is the only way your $.5 million per day thing works.

Is that the current ask total these days? $2 billion?

Miners' costs are not 11 million bitcoins, what are you talking about?

Nothing depends on the price bitcoin has if all attempt to cash out, why are you thinking that?

When miners cash out, it is at max 3600 per day.  That is your $0.5 million per day.  Nothing to do with 11 million cashing out.  And this $0.5 million clearly follows price, the higher the price, the higher this number is.

I plan on buying an ASIC. To do so I will need to convert dollars to bitcoins. I will purchase my ASIC and run the ASIC to get bitcoins. I will then use those bitcoins as currency or hold them. Any electricity costs I accumulate will be paid with dollars like any other utility bill (until they take bitcoins).
What part of that process requires me to cash out my bitcoins?

Your decision to pay the costs with cash is the same as if you invested into bitcoins with that cash.

For mining to not add selling pressure on the exchanges, the amount of money to pay for the electricity must be the same as the amount of fresh "sucker" money entering the exchanges.   In your case, you just moved your newly invested money into the "fresh money" category, you still need others to top up to that $0.5 million.