Debate with friend regarding bitcoin as a currency

[MitraC]

Hi there, I registered to get some thought on this debate me and a friend were having. His argument was that bitcoin is not a currency because a currency should have an incentive to use it and it is only an investment; bitcoins are simply hoarded which is a major pitfall as an unspent currency is effectively removed from the economy, which continues to drive up the price. I don't know much about economics, but I understand his point that hoarding bitcoins reduces the supply and increases the demand, thus raising the worth. However I made the argument that hoarding bitcoins causes the value to go up, which increases the amount of miners therefore increasing the amount of bitcoins extracted. Is that a valid point or does the fact that 21 million is the cap refute that argument? Do more miners=more bitcoins or simply more competition?

I understand his point about it being an investment. I heard a figure that 90% of bitcoins are hoarded. If that is true than investing seems to be the majorities intention. However my argument is that this doesn't hurt bitcoins as it makes no difference for those who use this as a currency. If i want $100 worth of bitcoins it makes no difference if I get 100 bitcoins or 0.2 bitcoins. Say in a year 95% are hoarded. They may cost twice as much but you will only need half as many so I don't see how hoarding is bad for those who use this as a currency, and it only helps all of the other hoarders or "investors". I would consider bitcoins a commodity as you really don't want to spend them as they will be worth more in the future.

This more I think of this currency the more I think the founder is a genius. 50% are extracted in the first few years and the miners hoard the majority of them. In the next years, less are released causing each bitcoin to be worth more as it can be divisioned an infinite amount. It really reminds me of the diamond industry. Artificial scarcity is one of the causes of the value of the diamond as 90%+ are in vaults. Is this accurate?

[Betcoin.AG]

21 million is the cap for coins but do not forget that it goes eight decimal points.  Therefore at some point 1 satoshi or 0.00000001 could equal $1.  Bitcoins can be used, bought or sold at various decimal levels. 

[Portender]

According to law it is not a currency

[Kiki112]

most of countries (if not all) state that bitcoin is an online commodity and not a currency

[dhavin]

I think it'll be funny when the first government starts accepting bitcoin for taxes owed...

[virtuexru]

Basically you are right in that some of the incentive is to hoard.. but also think about this. There will always be a price for someone to sell at. Also, people don't live forever. Say you bought 1 BTC about a year ago at $20.

A year passes and now BTC has reached $1,000! That's a crazy return on investment and now this year, your car happens to break down. You have no liquidity as you are living paycheck to paycheck, but now that your 1 BTC is worth a hell of a lot more, you can sell and buy the parts for your car.

This is kind of a silly example but you get my point. People will sell if the price is right. You also don't have to sell your whole stake, you can sell .25 of a BTC.. or .025.. or .0025.. the possibilities (are literally) quite endless. For each person, BTC is different.

[KoningSilk]

The Dutch governement just banned lawyers from accepting bitcoins as a payement:(

[virtuexru]

The Dutch governement just banned lawyers from accepting bitcoins as a payement:(

No government can "ban" people from accepting bitcoin lol.

[RodeoX]

According to law it is not a currency

Funny isn't it. I don't care if the law says the sky is purple. Bitcoin is the money I use all the time to buy things with. Of course it's a currency.