Hoarding Vs. Spending

[BTConomist]

The power of fiat for them is the ability to endlessly print new money. This money they mostly just give to themselves, creating a disgusting system of corruption.

You can do that with bitcoin, provided you have the majority of the hashing power... Think "base units" per bitcoin (see "Output value"). This is only a hint, not an explanation.

[uMMcQxCWELNzkt]

Interesting thoughts, I guess hoarding is only an issue if everybody does it and the same principle applies to spending. I do still feel that more spending will boost the long term potential of Bitcoin though. I have found that people seem a lot more inclined to pay for services such as freelance with Bitcoin which is interesting, perhaps it is just the niche area I have been catering too. I have made perhaps 75% more from working on freelance projects then I have in the past using FIAT, has anyone else experienced this? The same goes for funding now that I think about it, people are always offering to fund random projects lol.

[BTConomist]

Interesting thoughts, I guess hoarding is only an issue if everybody does it and the same principle applies to spending.

Problem is not with hoarding per se, but with hoarding by miners (a.k.a. the central banks of bitcoin economy). It's everyday people who make a currency what it is, by using it to track the daily exchange of goods and services between themselves. Miners' only responsibility (aside from keeping the block chain alive and intact) is to seed enough bitcoins into circulation in order to grease enough of those daily exchange transactions between people.

I have found that people seem a lot more inclined to pay for services such as freelance with Bitcoin...

But are you charging in fiat-based prices, or BTC-based prices? By that I mean, are you relying on speculative exchange rates when setting your prices?

[Operatr]

The power of fiat for them is the ability to endlessly print new money. This money they mostly just give to themselves, creating a disgusting system of corruption.

You can do that with bitcoin, provided you have the majority of the hashing power... Think "base units" per bitcoin (see "Output value"). This is only a hint, not an explanation.

The printing of fiat currency is in no way like how the crypto economy works. You cannot simply "print" Bitcoins this way as you can't just create new physical gold out of nothing either. After 21 Million that is all the coins there will ever be, and no more can be created after that, ever. With the Dollar they just keep printing sheet after sheet of worthless money with zero intrinsic value or rarity. To have the majority of hashpower worldwide would be very difficult and VERY expensive to do, plus this is why the network is metered to combat anyone just plopping a million Mhash rig on it and cleaning house. The addition of more power just makes mining that much harder to do. Whether the network is a single CPU or a giant hashfarm, coins only come into the system every 10 minutes, and the amount of them rewarded per block only decreases over time.

But, should probably not hijack this thread....

This rarity and difficulty in creation is what gives Bitcoin an inherent value as it took a lot of work to make them. Even when they pass the stage of a commodity, they will still continue to appreciate as Bitcoins are destroyed, kind of like a built in savings account interest whether you spend it or save it. Not a bad idea to keep some for later at this stage. China is getting on board with their own government educating their people about it, The Push 2 is on the way I think. BTC is starting to rise once more, and slowly.

[uMMcQxCWELNzkt]

Interesting thoughts, I guess hoarding is only an issue if everybody does it and the same principle applies to spending.

Problem is not with hoarding per se, but with hoarding by miners (a.k.a. the central banks of bitcoin economy). It's everyday people who make a currency what it is, by using it to track the daily exchange of goods and services between themselves. Miners' only responsibility (aside from keeping the block chain alive and intact) is to seed enough bitcoins into circulation in order to grease enough of those daily exchange transactions between people.

I have found that people seem a lot more inclined to pay for services such as freelance with Bitcoin...

But are you charging in fiat-based prices, or BTC-based prices? By that I mean, are you relying on speculative exchange rates when setting your prices?

I use FIAT prices as a rough guide however I actually offer lower prices in return for Bitcoin so I would say that my FIAT and BTC quotes are separate. I tend to quote a price I feel is appropriate at the time, sometimes factoring in the direction I feel the market is heading. I do see the issue you are getting at though, it is also the basis for my questions in regards to the OP, until the community is spend and buy we dont really know the value beyond what is speculated. Once I know what my 0.4BTC is worth over extended periods, irrespective of FIAT I can the provide quotes without thinking about FIAT at all.

[BTConomist]

The power of fiat for them is the ability to endlessly print new money. This money they mostly just give to themselves, creating a disgusting system of corruption.

You can do that with bitcoin, provided you have the majority of the hashing power... Think "base units" per bitcoin (see "Output value"). This is only a hint, not an explanation.

With the Dollar they just keep printing sheet after sheet of worthless money with zero intrinsic value or rarity.

Every 100 new dollars that are put into circulation merely represent 100 new rows in the dollar block chain; just like the inclusion of additional 100 base units in every bitcoin would amount to 100x21MM new rows in the bitcoin block chain. The only difference is that new dollars are put into circulation through borrowing, and not through adjustments to an algorithm.

[BTConomist]

I actually offer lower prices in return for Bitcoin so I would say that my FIAT and BTC quotes are separate.

Just a thought, do miners sell BTC for less FIAT than it costs them to generate each BTC?

[uMMcQxCWELNzkt]

I actually offer lower prices in return for Bitcoin so I would say that my FIAT and BTC quotes are separate.

Just a thought, do miners sell BTC for less FIAT than it costs them to generate each BTC?

Selling at a lower price provides value to the client but in the long run I make up the difference and then some once the prices rise. I have made more from lower BTC quotes then I have my average FIAT prices so I am not in doubt of the strategy, I would not continue to use it if I was losing out. Remember the miners make profit too so they could sell their BTC lower (cutting into profits) but without cutting into the base cost of running the rigs, your proposition assumes anything lower is taken out of the running costs. If a miner was to sell lower this would give them a competitive edge over other sellers so I see no reason why a miner wouldn't also use this strategy.

Freelance services and mining are two very different income streams anyway, a good illustrator could spend an hour creating an image and sell it for upwards of £300, if he was to sell at 2BTC(lower) he still made a good amount considering he spent an hour working.

[BTConomist]

but in the long run I make up the difference and then some once the prices rise...

Not after today's sell out. Then it will be at least another 2 years of drought, as after the 2011 crash.

Don't undersell yourself, that's all I'm saying. We need to establish BTC prices the right way.

[Stephen Gornick]

The power of fiat for them is the ability to endlessly print new money.

You can do that with bitcoin, provided you have the majority of the hashing power...

That's false.   Bitcoin's issuance is fixed, so even with majority of the hashing power the only thing that attacker can do is be the recipient of the entire block reward subsidy.  But even with a majority of hashing capacity does that give the attacker the ability to issue more than the Bitcoin protocol allows (currently 25 BTC every ten minutes).    So "endless" in terms of no upper limit, is not possible with Bitcoin.

[ErisDiscordia]

I think "hoarding" has too much of a negative connotation to it nowadays. Might have something to do with the talking head rhetoric all over the media proclaiming spending and spending and spending some more is the way to prosperity.

The hoarding (aka. not spending your money on stuff you don't need, especially if you can get that stuff for currency inferior to Bitcoin) aspect of Bitcoin is brilliant in my opinion, because it pushes us from away from the exponential growth oriented economic models of today and towards sustainability.

That being said, I view spending some BTC here and there essential towards helping adoption and thus stability and arguably value of Bitcoin.

Personally I do it like this:

every month I buy BTC for a certain % of my (variable) monthly income. However many BTC I buy I divide them between a savings wallet and a spending wallet in a way where I put whole Bitcoins into the savings wallet and whatever fraction above a certain Bitcoin I bought into my spending wallet. For Example I end up buying 2.345BTC so 2BTC go into savings and 0.345 BTC go into my spending wallet. If I had a particularly good month and manage to buy lots of BTC I might put some extra BTC into the spending wallet. This way I always have some BTC looking to get spent (with the added benefit of generally increasing in purchasing power) as well as a growing stash of BTC in reserve.

[Birdy]

I think "hoarding" has too much of a negative connotation to it nowadays. Might have something to do with the talking head rhetoric all over the media proclaiming spending and spending and spending some more is the way to prosperity.

The hoarding (aka. not spending your money on stuff you don't need, especially if you can get that stuff for currency inferior to Bitcoin) aspect of Bitcoin is brilliant in my opinion, because it pushes us from away from the exponential growth oriented economic models of today and towards sustainability.

Yes, constant economic growth is declared to be always good and that's not true.
E.g. if everyone sells shitty fridges that have to be changed every year, you will have more "growth".

[BTConomist]

The power of fiat for them is the ability to endlessly print new money.

You can do that with bitcoin, provided you have the majority of the hashing power...

Bitcoin's issuance is fixed.

It was a reference to bitcoin base units, not bitcoins per se.

Here's an interpretation of why I said what I said.

Mind you, it's only a hint.

[jml]

I have to agree with the OP here. It is hard already to acquire bitcoins and there are already transaction fees involved in sending money to mtgox to their polish bank. The other alternative is in purchasing mining rigs which are itself liquid assets and thus mine bitcoins at a slow but steady pace.

I would like to see smaller communities in the UK embrace bitcoins to buy goods instead of using fiat GBP.

[uMMcQxCWELNzkt]

I think "hoarding" has too much of a negative connotation to it nowadays. Might have something to do with the talking head rhetoric all over the media proclaiming spending and spending and spending some more is the way to prosperity.

The hoarding (aka. not spending your money on stuff you don't need, especially if you can get that stuff for currency inferior to Bitcoin) aspect of Bitcoin is brilliant in my opinion, because it pushes us from away from the exponential growth oriented economic models of today and towards sustainability.

Yes, constant economic growth is declared to be always good and that's not true.
E.g. if everyone sells shitty fridges that have to be changed every year, you will have more "growth".

If I gave you the BTC would you be able to buy a fridge, even a shitty one? The problem is not enough merchants know about Bitcoin, and those who do probably don't see many people spending it. I have been suggesting that spending will be beneficial as more merchants will see it as a viable option worth implementing. This is not about supporting a consumer culture which I totally disagree with, this is about showing businesses that Bitcoin can be used as money and they will get earn new revenue if they start using it. Imagine if articles started popping up showing new businesses making a killing through the Bitcoin community buying their products, this would quickly encourage new merchants, new customers, new savers, new spenders and everything in between. The alternative would be a continued progression of some new merchants, some customers and a shit load of new hoarders lol.

[jml]

I think "hoarding" has too much of a negative connotation to it nowadays. Might have something to do with the talking head rhetoric all over the media proclaiming spending and spending and spending some more is the way to prosperity.

The hoarding (aka. not spending your money on stuff you don't need, especially if you can get that stuff for currency inferior to Bitcoin) aspect of Bitcoin is brilliant in my opinion, because it pushes us from away from the exponential growth oriented economic models of today and towards sustainability.

Yes, constant economic growth is declared to be always good and that's not true.
E.g. if everyone sells shitty fridges that have to be changed every year, you will have more "growth".

If I gave you the BTC would you be able to buy a fridge, even a shitty one? The problem is not enough merchants know about Bitcoin, and those who do probably don't see many people spending it. I have been suggesting that spending will be beneficial as more merchants will see it as a viable option worth implementing. This is not about supporting a consumer culture which I totally disagree with, this is about showing businesses that Bitcoin can be used as money and they will get earn new revenue if they start using it. Imagine if articles started popping up showing new businesses making a killing through the Bitcoin community buying their products, this would quickly encourage new merchants, new customers, new savers, new spenders and everything in between. The alternative would be a continued progression of some new merchants, some customers and a shit load of new hoarders lol.

At least not in UK. Not even academics that I know of, know what a bitcoin is because they think of it as a fluffy technology. My guess is there is a lack of education in economics in that people still think that fiat money is backed by the gold standard and regard bitcoins as something that can be created out of thin air. This is what I thought of 3 years ago when bitcoins was introduced to me.

I believe that to get people into the mode of using this alternative new currency, first they must understand the economics of fiat currency and how inflation affects their money. That is, money is created via loans (i.e borrowed money = debt money).

[BTConomist]

Imagine if articles started popping up showing new businesses making a killing through the Bitcoin community buying their products, this would quickly encourage new merchants, new customers, new savers, new spenders and everything in between. The alternative would be a continued progression of some new merchants, some customers and a shit load of new hoarders lol.

Well said, indeed!!!

[NewLiberty]

The power of fiat for them is the ability to endlessly print new money.

You can do that with bitcoin, provided you have the majority of the hashing power...

That's false.   Bitcoin's issuance is fixed, so even with majority of the hashing power the only thing that attacker can do is be the recipient of the entire block reward subsidy.  But even with a majority of hashing capacity does that give the attacker the ability to issue more than the Bitcoin protocol allows (currently 25 BTC every ten minutes).    So "endless" in terms of no upper limit, is not possible with Bitcoin.

Having the MAJORITY (51%) of the hashing power, more or less ends the currency, doesn't it?  The goal for sustainability is widely distribute the hashing power.

[Luckybit]

Everyone should do a bit of both. Save and spend.

[Foxpup]

Having the MAJORITY (51%) of the hashing power, more or less ends the currency, doesn't it?

No. The effects of a 51% attack are only temporary. As soon as the attacker stops attacking, or is overpowered by legitimate miners, the network will instantly resume normal operation. Some people may have been ripped off the attacker's double-spends, and everyone will be forced to temporarily stop accepting bitcoins to avoid becoming a victim of a double-spend themselves, and the exchange rate will likely take a massive hit as many people lose confidence in the currency, but apart from that it'll be as if nothing ever happened.