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Author Topic: Bitcoin Hoarding and Recessions  (Read 141 times)
bobthegrownup
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July 12, 2018, 06:58:04 AM
 #1

One of the main drivers of recessions in recent economic history (last 100 years) has been hoarding of cash. By removing money supply, real GDP decreases because prices are "sticky" and remain the same despite these changes in circulation.

Considering that Bitcoin has no new issuance, how can hoarding be handled correctly?

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July 12, 2018, 07:26:00 AM
 #2

One of the main drivers of recessions in recent economic history (last 100 years) has been hoarding of cash. By removing money supply, real GDP decreases because prices are "sticky" and remain the same despite these changes in circulation.

Considering that Bitcoin has no new issuance, how can hoarding be handled correctly?

Is hoarding the driver or a symptom? It is not clear.

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July 13, 2018, 06:55:54 PM
 #3

People with large amount of capital will try to manipulate the market by creating an imaginary shortage in the market., this will increase the price of the coins. in doing this it might harm the market as a lit of people will get discouraged and might not want to invest at all. If the fall and rise is organic it will benefit the market.
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July 13, 2018, 07:18:35 PM
 #4

One of the most infamous way to hamper the market is by restricting the supply. This causes a shortage I the market and creates an imaginary shortage. This causes a rise in price and allows the seller to sell at higher prices. This will eventually hamper the market prices and might as well damage the market for the future.
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July 14, 2018, 01:27:39 PM
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After inventions of crypto its really effective based on this people are investing their money in here based on this it have good value in the market based on this many transactions are happening though its know for digital currency for future so it it create the place soon I hope.
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July 14, 2018, 02:39:33 PM
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$20,000 has fallen to $6,000, down 70%, a time frame that should be called the decline of encryption, and if the BTC can break $20,000, a new bull market will follow.

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July 15, 2018, 05:14:42 AM
 #7

That's an interesting post. I think it's uncertain if the hoarding would be handled by Bitcoin, being an online based blockchain network with some existing technical problems.
bobthegrownup
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July 18, 2018, 06:30:42 AM
 #8

Yes im not convinced its the responsibility of the currency to rectify this problem, but at the same time, we have entered a whole new world with smart contracts.

Bitcoin is the first Gold 2.0, that much is certain. But maybe there is a way to add a decentralized economic layer on top of gold to ensure positive social benefits. Smart money instead of hard money


bobthegrownup
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July 18, 2018, 06:34:14 AM
 #9

One of the main drivers of recessions in recent economic history (last 100 years) has been hoarding of cash. By removing money supply, real GDP decreases because prices are "sticky" and remain the same despite these changes in circulation.

Considering that Bitcoin has no new issuance, how can hoarding be handled correctly?

Is hoarding the driver or a symptom? It is not clear.

Hoarding is a symptom of money in general. Bitcoin definitely isn't to blame anymore than gold or the USD would be. There will always be someone who wants to save for a rainy day, and that isn't necessarily a bad thing.

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July 18, 2018, 06:49:01 AM
 #10

One of the main drivers of recessions in recent economic history (last 100 years) has been hoarding of cash. By removing money supply, real GDP decreases because prices are "sticky" and remain the same despite these changes in circulation.

Considering that Bitcoin has no new issuance, how can hoarding be handled correctly?

Is hoarding the driver or a symptom? It is not clear.

Hoarding is a symptom of money in general. Bitcoin definitely isn't to blame anymore than gold or the USD would be. There will always be someone who wants to save for a rainy day, and that isn't necessarily a bad thing.

It becomes a problem, when everyone is doing this. You cannot have a fully functional system, without some balance between hoarding and spending of the tokens. The merchant network will stop accepting the token, if nobody is using it to pay for goods and services with it.

My solution is to hoard 80% and spending 20% of all the bitcoins I buy. This way, I still get good returns on my investment, when it spikes and I help to support the merchant network.

bobthegrownup
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July 18, 2018, 07:33:50 AM
 #11

One of the main drivers of recessions in recent economic history (last 100 years) has been hoarding of cash. By removing money supply, real GDP decreases because prices are "sticky" and remain the same despite these changes in circulation.

Considering that Bitcoin has no new issuance, how can hoarding be handled correctly?

Is hoarding the driver or a symptom? It is not clear.

Hoarding is a symptom of money in general. Bitcoin definitely isn't to blame anymore than gold or the USD would be. There will always be someone who wants to save for a rainy day, and that isn't necessarily a bad thing.

It becomes a problem, when everyone is doing this. You cannot have a fully functional system, without some balance between hoarding and spending of the tokens. The merchant network will stop accepting the token, if nobody is using it to pay for goods and services with it.

My solution is to hoard 80% and spending 20% of all the bitcoins I buy. This way, I still get good returns on my investment, when it spikes and I help to support the merchant network.

We are in agreement on that for sure -- not everyone can do it and not with extreme volatility.

I think its ok if everyone hoards a bit, but there will by fluctuations of money supply that will be influenced by things like death and disaster. If everyone used bitcoin, and savings was generally accepted at 80% -- the prices of goods would be normalized. The moment there is a large influx of money supply -- ie someone inherits a big BTC wallet and goes on a spending spree, the money supply increases but the prices of goods will not have changed. This is where the problem arises -- that prices, currently, are not dynamic.

This definitely isn't a BTC problem, its a money supply issue. Austrian economics think its not an issue and I lean towards that school of thought, but this just doesn't sit well.

Renai0925
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July 18, 2018, 08:03:34 AM
 #12

We can do much if people started hoarding coins short of creating a global rule as not to do so. But that in itself is improbable as we can't really force people to not hoard more so seeking out the ones who do. IN the end, it's really up to the market to decide.

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July 18, 2018, 08:19:09 AM
 #13

One of the main drivers of recessions in recent economic history (last 100 years) has been hoarding of cash. By removing money supply, real GDP decreases because prices are "sticky" and remain the same despite these changes in circulation.

Considering that Bitcoin has no new issuance, how can hoarding be handled correctly?

Is hoarding the driver or a symptom? It is not clear.

Hoarding is 100% symptom. It should not exist really because it can create plague of recession if not handled properly. We are literally locking up the bitcoin circulation by hoarding the bitcoins at one place. (example). And if it doesnt enter into the circulation and then there wont be healthy economic drive and thus we cant see the growth of the bitcoin world. This is how it work or should be looked at it that way only. Prices will change if there is circulation and it will grow to higher dimensions if they keep getting supplied all the time. This is my take on it.

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July 18, 2018, 12:07:56 PM
 #14

One of the main drivers of recessions in recent economic history (last 100 years) has been hoarding of cash. By removing money supply, real GDP decreases because prices are "sticky" and remain the same despite these changes in circulation.

Considering that Bitcoin has no new issuance, how can hoarding be handled correctly?

Hoarding bitcoins can`t lead to a crypto market stagnation,because bitcoin can be divided into 1 million parts.
If 95% of all bitcoins are out of circulation(kept in a secure place),the remaining 5% can handle the demand and transaction volume,because they can be divided into bits and satoshis.
You are wrong,hoaring of cash is not the main reason of every recession.Making wrong investment decisions and creating bubbles are the main reasons for every financial crysis.

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July 18, 2018, 12:31:49 PM
 #15

One of the main drivers of recessions in recent economic history (last 100 years) has been hoarding of cash. By removing money supply, real GDP decreases because prices are "sticky" and remain the same despite these changes in circulation.

Considering that Bitcoin has no new issuance, how can hoarding be handled correctly?

It might be fair to say "hoarding of cash" is an attempt to rationalize declines in consumer spending.

If spending by consumers decreases, economists explain this by saying "consumers are hoarding their money". One way this might be tested is by looking at personal savings. If consumers are hoarding cash, personal savings rates should increase. Looking @ economic data is this the trend we see? Does the reduction in consumer spending correlate with increased personal savings?

Another explanation for decreases in consumer spending are increases in personal debt -- credit card debt, car debt, home debt, student loan debt. Of course, this is an explanation that is unfavorable as it could hint @ recession or a stagnant economy in the future with consumers being too burdened by debt to spend and generate economic growth.

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July 18, 2018, 05:34:42 PM
 #16

One of the main drivers of recessions in recent economic history (last 100 years) has been hoarding of cash. By removing money supply, real GDP decreases because prices are "sticky" and remain the same despite these changes in circulation.

Considering that Bitcoin has no new issuance, how can hoarding be handled correctly?

Its outrightly out of place with my little knowledge or economics  that one of the main causes of recession is the  hoarding of cash. I could agree that it could be part but surely not one of the main reasons. Because that would contradict one of the characteristics of money which is scarcity. Rather what caused recession is the excess money being made available by way of debt without any basis for it.

In the case of bitcoin, I don't see any reason as to why hoarding will pose any significant problem for the reason that for that to happen it means the demand and supply will have to be on a great disproportion and the amount of bitcoin held in wallets that could cause such distortion, are only there because of the current market composition and by the time the adoption is rapid, it would be sold off.

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July 18, 2018, 05:39:00 PM
 #17

At the moment, I would advise you to scream and invest in your business, real estate and gold. If you have significant savings in cryptographic currencies, then wait for the rate to increase for a reasonable amount for you.
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July 18, 2018, 05:54:45 PM
 #18

People with large amount of capital will try to manipulate the market by creating an imaginary shortage in the market.
I'm not sure they try to do this intentionally.  Warren Buffett owns millions of shares of Coca-Cola stock, which is something like 6% of the company.  That creates a small "shortage" in the market, but that's not the reason he bought the shares.  He bought them because he saw great value in the company back in 1989 (?), and ultimately it doesn't matter how many shares or bitcoins are for sale in the marketplace if there's not enough buy orders to support them.  If everyone is trying to sell the bitcoin they have and there aren't enough buyers, the price will tank anyway.

What I'm saying is that people buy assets because they want to make money, not to manipulate the market in the way you described.  That's just a byproduct of them buying.

Now as far as hoarding bitcoin goes, it's a little different than hoarding cash.  People hoard cash in times of economic instability when they don't trust banks.  People hoard bitcoin because they see it as an investment more so than a currency.  That's pretty much what's happened from day one.  There are more people buying bitcoin to hold it than there are people spending it--and I agree with this.  There's no reason to buy bitcoin in order to spend it on something you could buy with fiat.

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July 18, 2018, 06:13:37 PM
 #19

I don’t agree with OP. In my opinion, the main driver of recessions during the past 100 years has been debt. What happened was that people acquired more debt than they could afford, this caused a raise in price of some assets, like stocks or houses, and there was a point where the bubble exploded so people had to repay their debts while their assets depreciated.

So, what OP calls “hoarding cash” is actually people having to repay their debts, instead of always having more money available due to more debt.

And I think this was the main reason bitcoin was created.

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July 20, 2018, 03:15:08 PM
 #20

One of the main drivers of recessions in recent economic history (last 100 years) has been hoarding of cash. By removing money supply, real GDP decreases because prices are "sticky" and remain the same despite these changes in circulation.

Considering that Bitcoin has no new issuance, how can hoarding be handled correctly?

I don't think people hoarding bitcoin would create a negative effect on the crypto-economy, not unless a whole nation is depending on it. Cash is different from bitcoin; no single nation uses bitcoin as its only means of payment/currency and as such, cannot be treated and analyzed in the same way. Hoarding cash, on the other hand, creates a 'shortage' in circulating supply, sometimes forcing the central bank to create more money, resulting in inflation and, if the formula for destruction is correctly mixed, recession. Bitcoin hoarding on the other hand is a way for people to create profit, seeing that bitcoin is treated as an asset rather than a payment system currently. There are a lot of recipes and ingredients for a recession to occur, hoarding might be one of them but not necessarily the 'key ingredient' of the said event.

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