Bitcoin Hoarding and Recessions

[Haoque89]

Bitcoins are not virtual currency but real money or other means of electronic money. Many people who are new to information or do not have enough information or call bitcoin is virtual currency, this way is easy to mislead people who do not know about bitcoin.

[thomaseco]

I hardly have idea about bitcoin recessions. I'm waiting for an elaborative answer to get.

[The_Dark_Knight]

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?

You are just pointing out to a symptom, the real question is why people begin to hoard cash and other valuables like precious metals and the answer is simple, because they lost the trust in the economy and when that happens people try to find a way to protect themselves from the effects of a crashing economy and there is not a way to avoid economic crashes as long as the economy of the world is based on fiat and fractional reserve banking.

[Buttermellow]

Money in for bitcoin investments is not being hoard in fact it is being used in crypto exchange. However, it will have a huge deposits probably since the system has catered from people around the world. And the money are not meant for holding because these money are meant for exchanging crypto whenever investors would like to have their money back.

[gowobonyok]

$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.

and the price will come back down again 70% can even lebuh, after experiencing an increase. this cycle will continue to occur, because the bitcoin fluctuates.

[bobthegrownup]

The velocity of money is paramount to a strong economy. Guess which currency trades hands faster than any other? Ask yourself why some of the strongest economies have a negative interest rate

But currently, the issuance of new supply has covered up the fact that money is being hoarded at increasingly alarming rates.

Yes, easy loans were a big problem, but those are symptoms of a relaxed money environment. If bitcoin were the defacto currency, I can assure you there would be no NINJA loans
 

[magneto]

I really doubt that hoarding cash would cause recessions. That's up for debate obviously.

Besides, the reason why people are hoarding bitcoin at the moment is because they see potential in bitcoin as an investment. Especially in a bear market like currently, they don't see much point in spending their coins for so cheap, especially if they bought at a higher price. That's completely logical.

Once volatility goes down due to merchant adoption going up, I'd say that the hoarding we see right now will be significantly lessened as people start to use bitcoin as a day to day form of exchange in their transactions.

Furthermore, I don't really see how holding bitcoins instead of spending them actively all the time can cause any recessions in a particular country - bitcoin is independent from any state, and decentralised. It's also not just a single country's population that is holding bitcoin.

[bobthegrownup]

I really doubt that hoarding cash would cause recessions. That's up for debate obviously.

Yes, even im not sure about this. Its Keynesian and lets be honest, most of us are tilting towards the Neoclassical/Austrian school of thought

The issue remains that Bitcoin can't be a "medium of exchange" or "unit of account" until price volatility stops.

If we justify hoarding as "the smartest thing to do" -- then we have bigger problems. Lets agree that its the ONLY thing to do instead of pretend this is a strategy that clever people are employing.

The issue will arise  -  the world has never worked with a non-inflationary currency before. Hoarding will affect circulation - the question is how will this be dealt with and is it the responsibility of the currency or the people.