What is the deal with hoarding?

[yvv]

Why are people so worried about people "hoarding" bitcoins?

The problem is that wealth can not appear from nothing.

Those who bought bitcoins for $1 a year ago can buy a porsche or yacht today just because those who want to adopt bitcoins today pay for it. And those who buy bitcoins today think that they will be able to buy a porsche with yacht next year, because somebody else will pay for it. An this is not going to continue forever. At some point this scheme will leave many bitcoin supporters broken. And, you know, greedy fools deserve it. Bad thing is that until hoarders get punished, this wonderful technology stays pretty much unusable.

[Crazy]

Well said.

[humanitee]

Why are people so worried about people "hoarding" bitcoins?

The problem is that wealth can not appear from nothing.

Those who bought bitcoins for $1 a year ago can buy a porsche or yacht today just because those who want to adopt bitcoins today pay for it. And those who buy bitcoins today think that they will be able to buy a porsche with yacht next year, because somebody else will pay for it. An this is not going to continue forever. At some point this scheme will leave many bitcoin supporters broken. And, you know, greedy fools deserve it. Bad thing is that until hoarders get punished, this wonderful technology stays pretty much unusable.

What a load of shit.

[Crazy]

He should probably clarify. It's ok to move in and out of rapidly for a transaction, but we will hold fiat because BTC is entirely too volatile. Better?

[humanitee]

He should probably clarify. It's ok to move in and out of rapidly for a transaction, but we will hold fiat because BTC is entirely too volatile. Better?

So more coins on the market somehow make it less volatile? This is what I don't want to happen. A bunch of noobs sloshing coins around in between bouts of fear and elation.

[Crazy]

But that's what you have right now. You're making his point.

[humanitee]

But that's what you have right now. You're making his point.

Hoarders will never get punished unless Bitcoin tanks significantly, which I sincerely doubt at this point unless there is a protocol failure.
Saving is hoarding is saving.

Furthermore, I, as a "hoarder", don't think I'll be able to buy a Porsche (even though I actually could right now), I just want to protect my money from Ben Bernanke and the organized theft of my savings. I've bought Bitcoin all the way up. It's a store of value just as much as it's a transactional currency. People seemingly forget this every moment of every day.

I see his point though, I read it wrong. It was that last sentence that threw me off, which is %100 incorrect.

[Crazy]

What hasn't really been addressed in this thread though, is where all that new daily inflows will come from. The higher the price goes, the more pressure it will face.

[humanitee]

What hasn't really been addressed in this thread though, is where all that new daily inflows will come from. The higher the price goes, the more pressure it will face.

Truth.
Hopefully there are more libertarians with deep pockets out there. 

[dg2010]

What hasn't really been addressed in this thread though, is where all that new daily inflows will come from. The higher the price goes, the more pressure it will face.

I know 5 individuals who buy BTC simply to purchase "stuff" from Silk Road.

They don't care how much a bitcoin costs...This is why trade is so important. and why bitcoin is so different. Unlike gold and almost every other kind of investment, you can actually spend your bitcoin directly so as long as that demand continues the price of bitcoin will continue to appreciate over the long term.

In the short term I think we are clearly in a bubble and there will be winners and losers as you say.

[yvv]

I see his point though, I read it wrong. It was that last sentence that threw me off, which is %100 incorrect.

I wrote it based on my experience. When I learned about bitcoins several month ago, I got a couple of BTC to test the technology. Technology is a piece of cake, but since then I did not find any use for my btc yet, except wasting some mbtc in online casino.

If you think that bitcoin is good for storage of wealth your are 100% wrong for a reason I mentioned above.

[Crazy]

I know 5 individuals who buy BTC simply to purchase "stuff" from Silk Road.

They don't care how much a bitcoin costs...This is why trade is so important. and why bitcoin is so different. Unlike gold and almost every other kind of investment, you can actually spend your bitcoin directly so as long as that demand continues the price of bitcoin will continue to appreciate over the long term.

In the short term I think we are clearly in a bubble and there will be winners and losers as you say.

Well, I meant moreso the inflows to pay for the 3600 new bitcoins minted per day at the current market value to maintain the current market value. Basically mestar's argument. I think he grew tired of the discussion hehe.

https://bitcointalk.org/index.php?topic=170462.0

No one confessed yet.. haha

Hm, now that's interesting. You think it's 1 individual/entity?

[humanitee]

I see his point though, I read it wrong. It was that last sentence that threw me off, which is %100 incorrect.

I wrote it based on my experience. When I learned about bitcoins several month ago, I got a couple of BTC to test the technology. Technology is a piece of cake, but since then I did not find any use for my btc yet, except wasting some mbtc in online casino.

If you think that bitcoin is good for storage of wealth your are 100% wrong for a reason I mentioned above.

Why? I can buy a house, car, any electronics device, anything on any website that Bitspend accepts, so pretty much anything besides groceries that can spoil.
At the moment I am gaining on my savings, whereas in any bank account in the US I would lose. Dollar averaging will make my savings fine all the way down to $20.

[Crazy]

Agreed. I've seen some very sharp moves that indicated someone was dropping $250-$500k into the pot, I believe from $120 to $140. And I believe someone does keep prices stable before bidding up again. This kind of money can manipulate such immature markets, and is very scary.

[yvv]

Why?

Because it will crash as soon as newcomers will stop bringing their money into system. It will not stabilize, but crash. This system was not intended to be a pyramid, but it acts like a pyramid. Early adopters are going to get rich because late adopters are going to lose money.

[piramida]

Early adopters are going to get rich because late adopters are going to loose money.

Why would they lose? Only if they cash out lower, but they don't have to. The guys who "get rich" now didn't cash out at $2. That's how it works.

[humanitee]

Why?

Because it will crash as soon as newcomers will stop bringing their money into system. It will not stabilize, but crash. This system was not intended to be a pyramid, but it acts like a pyramid. Early adopters are going to get rich because late adopters are going to loose money.

Deflation is a pyramid, honestly. The only difference being it benefits everyone with savings in that currency.

[Stephen Gornick]

So it appears that the impression is that hoarders are hurting Bitcoin because we are not using it as its intended purpose, as a currency.

Which is only a problem when instead of hoarding these speculators turn into dumpers.   If the coins were mostly used in commerce for purchases, then there would be less volatility based on whatever the response is to the next news article on Bitcoin.     But when the (temporary) price top is reached and the exchange rate direction turns south -- those hoarders all stop hoarding and race to the exits.  Some will have made it out with plenty of gains, others roughly break-even, and the last ones who bought will see losses, sometimes heavy.

Now if the merchant can set prices in dollars and uses a payment processor who converts all bitcoin revenues to dollars at the spot rate at the time of sale (less the conversion fee), then the merchant can be pretty much agnostic about the exchange rate (though 10% swings in a day mean delays simply in waiting the hour for payment to confirm before the coins can be sold is something that will eat into profits)

But if the exchange rate is dropping and the hoarders start dumping, they will also be using their coins making spend purchases.

So bitcoin wins either way thanks to hoarding.   When the exchange rate is on the way up hoarding causes the exchange rate to rise which attracts others to buy bitcoins causing them to become familiar with buying bitcoins and using them in transactions.   When the exchange rate is headed down bitcoins get spent with merchants causing it to gain traction as a payment method.

[Luckybit]

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.

WHY ON EARTH DO PEOPLE KEEP SAYING THAT NOBODY IS SPENDING BITCOINS?

It just keeps popping up... and I can't for the life of me figure out how we come to this conclusion.
Bitpay is getting a RECORD number of new merchants, and their sales figures are increasing at a record rate, so it's not just merchants signing up for an unused service... it doesn't even matter whether or not the merchant cashes out to USD; people are SPENDING BITCOINS. Sure, it sucks when you buy something with bitcoins when they're $24 and then at $150 you think of how much more money you could have... but what are you going to do, throw every single cent of FIAT at MT. GOX and live in a cardboard box on a hunger strike until bitcoin hits $1,000,000? DUDE, THAT'S SO TOTALLY NOT HOW IT WORKS. (Is anybody doing that? PLEASE tell me if you're doing that, so I can laugh at you, for being the one idiot that doesn't spend during deflationary opportunity)

Your theory is whack because it is based in a Paul Krugman wet dream fantasy world where people don't spend deflationary currencies since they will be worth more in the future. People are human, they have needs that must be fulfilled in the PRESENT MOMENT. When the need for something in the present moment surpasses any potential future benefit of putting off that need, the person will seek to meet the need in the present. Sure, I'll give you this: The faster the currency deflates, the saving:consumption ratio increases. But we're not at a point where nobody's spending bitcoins, because if that were the case, NOBODY WOULD BE SPENDING BITCOINS. By the way, the charts above say this a little better than my violent stream of arrogant language so I apologize. The problem you describe - we simply don't have this problem right now. When bitcoin starts going up 1000% a day then maybe people will start throwing every cent of fiat into bitcoin and living in cardboard boxes - then I'll concede to your superior logic :-P

People are spending bitcoins. So, Q.E.D. wipe Krugman's inflationary emission off your face and buy something with your bitcoins. 

Transaction fees = spending Bitcoins.

[christop]

Early adopters are going to get rich because late adopters are going to loose money.

I really wish that people would stop talking about loosing money. I, for one, intend to tighten my money. If it gets loose I'll use some duct tape.