Hoarding Vs. Spending

[uMMcQxCWELNzkt]

To open this discussion up I would like to ask, does Bitcoin's long term success depend of users spending/buying (goods, services, etc...) with the currency?

If the answer is yes, which I believe so then how do we overcome the following dilemma? I often notice posts from users who believe in Bitcoins long term potential, yet they follow the sentiment by suggesting that they are hoarding the coins as a result, for when they are worth $xxxx amount. I am personally guilty of this too, it is difficult enough for me to get Bitcoins in the UK, that subsequently I am also fairly hesitant towards spending them. I realize the market is new, commerce channels will slowly improve with new Bitcoin related features. The question is, do we need to start spending our Bitcoins before the ball starts to gain any real momentum?

Perhaps this is one of those catch 22 situations:

Bitcoin users waiting for Bitcoin to go mainstream before spending...
Bitcoin waiting for Bitcoin users to start spending before implementation into mainstream infastructure...

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[Birdy]

The only thing you need to do is to instantly rebuy the coins you want to spend.
The problem is that buying them is a hassle.

[skull88]

The smartest thing to do imho is, spend some and save some.
You can for example, keep a certain amount in a savings wallet (secure offline) and also have a spending wallet.

[keatonatron]

Birdy is right.

You can always buy more coins. And if the price is somewhat stable, it makes it easier to replace coins you've sent at a later day.

Also, you could keep a BTC savings and buy new coins whenever you need to make a transaction, instead of using your stash and kicking yourself when the price goes up a bit the next day

[uMMcQxCWELNzkt]

True, both spending and hoarding(saving) can be done at the same time and would levitate some of the pressure. I think the best way to encourage spending would be if employers started making payments in Bitcoin, the fact that I dont get a regular flow of BTC like I do with FIAT kind of makes every day purchases more cumbersome.

*
Do we agree hat this long term hoarding mentality is our there though, and is a problem worth addressing?

If so then perhaps simple things like mentioning your saving wallet & spending wallet in talks as separate entities would help, this would create a slight psychological division in other users minds that their own wallet can have multiple uses. I am not eliminating the fact I am the only one who has not applies this common sense logical to my Bitcoin usage. 
*

[wolverine.ks]

I think catch 22 is not exactly accurate.  Those two scenarios apply to different people at different times,  not the same person at the same time,  or all people at all times.

additionally,   animorphicizing bitcoin is going to cause problems trying to communicate clearly.  'bitcoin' itself cannot do anything or wait for anyone.  It might be more accurate to say bitcoin companies aren't making enough profit to justify the infrastructure that you mentioned.

also,  'success' is subjective and in the case not defined.  What do you consider 'success'?

I would consider bitcoin to be an outrageous success already.  

'success' might be considered additional companies offering additional products and services in exchange for bitcoin.  To the point where it might approximate the USD economy minus all the war and what not.

lastly,  it's important to realize that hoarding serves an economic function that is crucial for price and supply stability.

so what will 'get the ball rolling'? many people trying many things and the free market deciding which ones add value and which ones don't.  

[uMMcQxCWELNzkt]

I think catch 22 is not exactly accurate.  Those two scenarios apply to different people at different times,  not the same person at the same time,  or all people at all times.

additionally,   animorphicizing bitcoin is going to cause problems trying to communicate clearly.  'bitcoin' itself cannot do anything or wait for anyone.  It might be more accurate to say bitcoin companies aren't making enough profit to justify the infrastructure that you mentioned.

I realised "Bitcoin" was an incorrect term, out of laziness I used it is as a sweeping statement to encompass everything Bitcoin related, including services, freelance and so on as we are talking more that just business/companies. I guess the "Bitcoin movement" is more appropriate.

also,  'success' is subjective and in the case not defined.  What do you consider 'success'?

I would consider bitcoin to be an outrageous success already.  

In regards to success I was trying to not be overly specific in regards to what I feel should personally be measured as success, as you say that would be very subjective so I felt a general "long term" mention would suffice and would fit most most peoples desires for the future.

'success' might be considered additional companies offering additional products and services in exchange for bitcoin.  To the point where it might approximate the USD economy minus all the war and what not.

lastly,  it's important to realize that hoarding serves an economic function that is crucial for price and supply stability.

so what will 'get the ball rolling'? many people trying many things and the free market deciding which ones add value and which ones don't.  

True, saving does have a function, as does balance, I believe we are currently a little to one sided and that is what I am trying to get at. Once enough people start actively buying I believe a new phase of growth will occur, not so much in relation to attracting larger companies, but rather the attention of new every day users.

[Welsh]

I have a spending wallet & a savings wallet. I limit myself to how much I want to spend on a monthly basis, if I go over, then I have to go without that amount next month. It's working for me, and I think it's a good idea.

[QuantPlus]

The problem is that buying them is a hassle.

Until the Exchange Problem is addressed and alleviated...
Human nature is to hoard scare, hard to acquire commodities.

[Hawker]

The problem is that buying them is a hassle.

Until the Exchange Problem is addressed and alleviated...
Human nature is to hoard scare, hard to acquire commodities.

This is the fact.  Bitcoin will explode in value when the exchange problem is solved.  Until then, it makes no sense to spend them.  After that, the price will be stable and they will be offloaded in exchange for houses, cars, boats and all the other things a currency is useful for.

[uMMcQxCWELNzkt]

The problem is that buying them is a hassle.

Until the Exchange Problem is addressed and alleviated...
Human nature is to hoard scare, hard to acquire commodities.

This is the fact.  Bitcoin will explode in value when the exchange problem is solved.  Until then, it makes no sense to spend them.  After that, the price will be stable and they will be offloaded in exchange for houses, cars, boats and all the other things a currency is useful for.

Makes sense, so who wants to make an exchange?
...and who wants to fund with their capital?

[niothor]

The problem is that buying them is a hassle.

Until the Exchange Problem is addressed and alleviated...
Human nature is to hoard scare, hard to acquire commodities.

This is the fact.  Bitcoin will explode in value when the exchange problem is solved.  Until then, it makes no sense to spend them.  After that, the price will be stable and they will be offloaded in exchange for houses, cars, boats and all the other things a currency is useful for.

Makes sense, so who wants to make an exchange?
...and who wants to fund with their capital?

Nobody will fund this to have a profit margin of even 10 , 20% when they can get bitcoins for the usd and wait till next year when 1 BTC= 300K.

[Hawker]

The problem is that buying them is a hassle.

Until the Exchange Problem is addressed and alleviated...
Human nature is to hoard scare, hard to acquire commodities.

This is the fact.  Bitcoin will explode in value when the exchange problem is solved.  Until then, it makes no sense to spend them.  After that, the price will be stable and they will be offloaded in exchange for houses, cars, boats and all the other things a currency is useful for.

Makes sense, so who wants to make an exchange?
...and who wants to fund with their capital?

I'd love to.  But to do it in the UK, you really need to incorporate as a bank rather than just as a business with a bank account.  Otherwise you will keep having your accounts frozen.  It takes about £5 million in capital.  I don't have that

[niothor]

The problem is that buying them is a hassle.

Until the Exchange Problem is addressed and alleviated...
Human nature is to hoard scare, hard to acquire commodities.

This is the fact.  Bitcoin will explode in value when the exchange problem is solved.  Until then, it makes no sense to spend them.  After that, the price will be stable and they will be offloaded in exchange for houses, cars, boats and all the other things a currency is useful for.

Makes sense, so who wants to make an exchange?
...and who wants to fund with their capital?

I'd love to.  But to do it in the UK, you really need to incorporate as a bank rather than just as a business with a bank account.  Otherwise you will keep having your accounts frozen.  It takes about £5 million in capital.  I don't have that

According to an expert in this forum , this will be only 20 BTC next year so I think you can afford it.

[Hawker]

The problem is that buying them is a hassle.

Until the Exchange Problem is addressed and alleviated...
Human nature is to hoard scare, hard to acquire commodities.

This is the fact.  Bitcoin will explode in value when the exchange problem is solved.  Until then, it makes no sense to spend them.  After that, the price will be stable and they will be offloaded in exchange for houses, cars, boats and all the other things a currency is useful for.

Makes sense, so who wants to make an exchange?
...and who wants to fund with their capital?

I'd love to.  But to do it in the UK, you really need to incorporate as a bank rather than just as a business with a bank account.  Otherwise you will keep having your accounts frozen.  It takes about £5 million in capital.  I don't have that

According to an expert in this forum , this will be only 20 BTC next year so I think you can afford it.

Well I have over 2000 Bitcoin so if that really came to pass, I'd probably just buy Goldman Sachs and have my vampire squid minions do it all for me.

[uMMcQxCWELNzkt]

The problem is that buying them is a hassle.

Until the Exchange Problem is addressed and alleviated...
Human nature is to hoard scare, hard to acquire commodities.

This is the fact.  Bitcoin will explode in value when the exchange problem is solved.  Until then, it makes no sense to spend them.  After that, the price will be stable and they will be offloaded in exchange for houses, cars, boats and all the other things a currency is useful for.

Makes sense, so who wants to make an exchange?
...and who wants to fund with their capital?

I'd love to.  But to do it in the UK, you really need to incorporate as a bank rather than just as a business with a bank account.  Otherwise you will keep having your accounts frozen.  It takes about £5 million in capital.  I don't have that

According to an expert in this forum , this will be only 20 BTC next year so I think you can afford it.

Well I have over 2000 Bitcoin so if that really came to pass, I'd probably just buy Goldman Sachs and have my vampire squid minions do it all for me.

Out of interest do you spend too or just hoard, judging from your pic it seems you are a serious miner?

[niothor]

Well I have over 2000 Bitcoin so if that really came to pass, I'd probably just buy Goldman Sachs and have my vampire squid minions do it all for me.

Don't want to ruin your dream , or nightmare of rulling Goldman but
1) If bitcoins go over 300k , I doubt somebody (you)  will be interested in Goldman Sachs
2) I doubt he hasn't already bought 2000 coins himself
3) I can top that offer =)))))))))

[Hawker]

The problem is that buying them is a hassle.

Until the Exchange Problem is addressed and alleviated...
Human nature is to hoard scare, hard to acquire commodities.

This is the fact.  Bitcoin will explode in value when the exchange problem is solved.  Until then, it makes no sense to spend them.  After that, the price will be stable and they will be offloaded in exchange for houses, cars, boats and all the other things a currency is useful for.

Makes sense, so who wants to make an exchange?
...and who wants to fund with their capital?

I'd love to.  But to do it in the UK, you really need to incorporate as a bank rather than just as a business with a bank account.  Otherwise you will keep having your accounts frozen.  It takes about £5 million in capital.  I don't have that

According to an expert in this forum , this will be only 20 BTC next year so I think you can afford it.

Well I have over 2000 Bitcoin so if that really came to pass, I'd probably just buy Goldman Sachs and have my vampire squid minions do it all for me.

Out of interest do you spend too or just hoard, judging from your pic it seems you are a serious miner?

I stopped mining as GPU wasn't worth it.  Now I am strictly in the hoarding camp.  I did try to increase my holding through day trading but it looks like I don't have a talent for it.  I'm thinking of buying again.

[Hawker]

Well I have over 2000 Bitcoin so if that really came to pass, I'd probably just buy Goldman Sachs and have my vampire squid minions do it all for me.

Don't want to ruin your dream , or nightmare of rulling Goldman but
1) If bitcoins go over 300k , I doubt somebody (you)  will be interested in Goldman Sachs
2) I doubt he hasn't already bought 2000 coins himself
3) I can top that offer =)))))))))

It was a joke.  They aren't really squids either.

[uMMcQxCWELNzkt]

New user Whizz94 sent me this private message as he cannot reply, seems fair to share his post in case anyone wants to respond.

What I think is needed now is for more commodity trade prices to be defined in bitcoin, along rational lines, so that their purchase in BTC does not involve the hassle of going through a money changer and looking up what the speculators at Mt Gox are paying today for one BTC.

I am a landlord and solar panel operator.  Part of my income is from solar electricity.  I plan to define the 2014 price for electricity sold in BTC and based around the electricity costs of GPU mining then, which with the considerable difficulty expected by then might be an interesting challenge.  That would oblige my electricity customers to either make or buy bitcoin to pay the electricity bill.  Since not everyone has BTC, I'd give them the option in 2014 of looking up the Mt Gox price and paying me £ instead.  But the price of the goods will be defined in BTC.

Does the "hoard v spend" question depend less on what savers are doing and more on producers defining a BTC price for their output?  

I think you have a good point, at the moment my merchant store by default lands on a FIAT (GPB) pricing option, perhaps directing straight to BTC prices would encourage spending in BTC. Restricting only to BTC at present would only be sensible for a Bitcoin related niche but perhaps in the future producers/merchants could make BTC the primary payment option. I guess in relation to the last question it is a bit of both, both savers and producers play a part in the Bitcoin ecosystem but without some collaboration, coupled with failing exchanges we wont realize the full potential of Bitcoin. As a network circulation is key, transactions & exchanges need to flow freely between each node(point) in order to encourage new levels of growth otherwise we are just a bunch of strangers living in the same house.

Sorry about my abstract metaphors, I am a visual person lol.