On Hoarding

[Red]

Why does one cares about the relative wealth of another individuals versus our own, especially in a system where people can mutually gain from exchanges? If anything, one should be concerned about one's own absolute wealth over time, not one's relative wealth to another.

Are you kidding?

In a market based society there is only relative wealth. Bill Gate is not rich because he has 40 billion dollars. He is rich because we all don't have 40 billion dollars. If we did all did the "average" house would cost 100 billion dollars and we'd all still have mortgages.

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[kiba]

Why does one cares about the relative wealth of another individuals versus our own, especially in a system where people can mutually gain from exchanges? If anything, one should be concerned about one's own absolute wealth over time, not one's relative wealth to another.

Are you kidding?

In a market based society there is only relative wealth. Bill Gate is not rich because he has 40 billion dollars. He is rich because we all don't have 40 billion dollars. If we did all did the "average" house would cost 100 billion dollars and we'd all still have mortgages.

Nonsense. I have a house, a computer, fancy operating system, foods, medication and the like. Compared to the kings of old, I have more absolute wealth in many area you can measure.

[Gavin Andresen]

In a market based society there is only relative wealth. Bill Gate is not rich because he has 40 billion dollars. He is rich because we all don't have 40 billion dollars. If we did all did the "average" house would cost 100 billion dollars and we'd all still have mortgages.

Hah!  While I was typing this, Kiba said essentially the same thing...

We are all rich because we have computers and the Internet and Wikipedia and other wonders the world has never seen before.

There is absolute wealth.  We are healthier and wealthier and live longer than any previous generation, and that's a wonderful thing.

[Anonymous]

In a market based society there is only relative wealth. Bill Gate is not rich because he has 40 billion dollars. He is rich because we all don't have 40 billion dollars. If we did all did the "average" house would cost 100 billion dollars and we'd all still have mortgages.

Hah!  While I was typing this, Kiba said essentially the same thing...

We are all rich because we have computers and the Internet and Wikipedia and other wonders the world has never seen before.

There is absolute wealth.  We are healthier and wealthier and live longer than any previous generation, and that's a wonderful thing.

Sometimes you forget how wealthy you are relative to some of the poorer areas of the world.To someone living in somalia you would look like Bill Gates 

[Red]

Nonsense. I have a house, a computer, fancy operating system, foods, medication and the like. Compared to the kings of old, I have more absolute wealth in many area you can measure.

You absolutely have more bitcoins, but less gold than the kings of old.

But seriously, four guys discover the bitcoin system they all have $10,000 they want to trade for bitcoins, but they aren't sure about the system.

The first guy says what the fuck and trades his $1,000 for 200,000 BTC
The second guy decides a month later and trades his $1,000 but gets only 20,000 BTC.
The third guy is a little slower but says WFT a month later and trades $1,000 but gets only 2,000 BTC.

The fourth guy gets on twitter and says, "Screw bitcoin, it's a pyramid scheme. I'm trading for ฿ and spending them on Thai hookers. That's the way I want to be fucked!"

No one sees that as in obvious danger?

[bytemaster]

No danger there because it is not a pyramid scheme.   It simply means that people want BTC more than USD.  If that were not true then the ratio would not have changed.  It simply means that the early adopters recognized value before the late adopters.  This is the market auto-correcting. 

[Insti]

However for your metaphor, who is this very rich man? Why is he the ONLY one with money when we start the system? Why does this guy get to decide what the price for OUR services are? That doesn't seem very market based to me?

Isn't the 'problem' you are describing the problem with ANY monetary system?

[Red]

I'll repeat this question, as it's important: do you think Bitcoins would become popular if the supply was already fixed and no more minting could occur? I will assume you will say no (please let us know), but this will contradict your position - if you are going to fix the supply, it will have a similar (although less extreme) effect whether you do it now or in the future.

The point is, we all want monetary stability. By not increasing the supply with the user base, this will not be achieved though - that's my whole point.

Re-read the whole thread. I found lots of wisdom in it, and this unanswered question. So I'll go first in answering it.

No. I don't think Bitcoins would become popular if the supply of bitcoins was already fixed and no more minting was occuring.

Does anyone disagree? Because bitcoin's dreaded monetary inflation is trivial to stop right now.

[bytemaster]

Yes, I think bit coins would become popular even without mining because the supply of bit coins *is* fixed even now.  They are just contractually obligated to future block generation.

The creator of a currency initially owns 100% of said currency.  That is true with bitcoins as well. 

To add value to a bit coin requires CPU time and this costs money.  Thus, the creator of the currency is choosing to reward those who contribute with "shares" of his currency stock and thus early adopters are speculating on the future value by *investing* in bitcoin stock.  He could have found an investor who would accept payment in this bitcoin and provide a server farm to bootstrap the system and then allowed 3rd parties to run their own servers and everyone compete on transaction costs alone.   

I think it was a smart decision to pay people to provide the bootstrapping CPU time. 

So the question you have to ask yourself is, what other "means" could a creator of a bitcoin like system use to encourage adoption?   He could have auctioned the entire stock into existence and let speculators estimate the potential value of such an anonymous fixed supply currency.   These investors would then be motivated to see the currency adopted as it increases the value of their shares of the investment.  Some may choose to sub out compute farms, others may offer anonymous services and exchange systems.  In fact, it may have been better to auction it off because that would give more people incentive to see bitcoins grow.  I suppose investors could still buy bitcoins as they are generated. 

So one way to look at it is that the supply is fixed and the creator chose to reward "stock" based upon compute time instead of money.  A perfectly valid approach, but it is not the mining that makes bitcoin popular.   

I suspect that the porn-industry could take this technology to enable their customers to be more anonymous by having them by BTC from them and once bought allowing them to trade among themselves and others.  Thus, it is not the mining that makes BTC valuable or popular. 

[Red]

Yes, I think bit coins would become popular even without mining because the supply of bit coins *is* fixed even now.  They are just contractually obligated to future block generation.

I obviously disagree, but it is a point that can only be proven empirically.

Thus, the creator of the currency is choosing to reward those who contribute with "shares" of his currency stock and thus early adopters are speculating on the future value by *investing* in bitcoin stock. 

Your point is well made, but I want to suggest that talking about bitcoins as "stock" is risky semantically. There are lots of agencies that investigate fraud in such areas. It is common for scammers to tout their schemes as "shares" in an "investment opportunity". Metaphors show intention. It is intention that gets people locked up. I know you don't think of this as a scam. But it is wise not to share terminology with scammers.

If there was a bitcoin company and its goal was to make money by providing a service. And it sold shares that inherently increased in value based upon profit from customer's paying the company for that service. Then you could call justifiably call it stock. But you can't form a company whose business is SOLELY to sell the company's stock. And tout that if you buy the stock early, the people who come later will want to pay you more for that stock because it is a limited commodity.

Trust me. Doing that is "a bad thing." :-)

I think it was a smart decision to pay people to provide the bootstrapping CPU time. 

It was a brilliant decision! I've said that in another thread.

But sometimes brilliant bootstrapping decisions can lead to hamstrung growth decisions. We disagree about this, but the truth will eventually play out empirically.

So the question you have to ask yourself is, what other "means" could a creator of a bitcoin like system use to encourage adoption?   

I wrote on this in this post, but it got buried by a flippant comment about relative wealth. I would appreciate some comment on it.
http://bitcointalk.org/index.php?topic=75.msg7603#msg7603

I suspect that the porn-industry could take this technology to enable their customers to be more anonymous by having them by BTC from them and once bought allowing them to trade among themselves and others.  Thus, it is not the mining that makes BTC valuable or popular. 

I think the porn-industry could find value here. However, for that to benefit the bitcoin system as a whole, there needs to be something the porn-industry could spend their new BTC on BESIDES dollars. Maybe hosting. Maybe an associates program that pays for referrals in BTC. Then coins would be in the hands of more people in exchange for actual services rendered. More coin holders opens more possibilities for people to sell random commodities for BTC. That would create a real BTC economy of both coins and commodities/services circulating.

If the majority of people just buy BTC for dollars, then spend them anonymously on porn, and the porn industry sells the coins back for dollars; then you have "a money transfer service" which cries out for the regulators to attack.

[Boussac]

There is absolute wealth.  We are healthier and wealthier and live longer than any previous generation, and that's a wonderful thing.

Wealth is often defined as the ability to give. Bill Gates certainly understand this with his Foundation.
Wealth is ok as long as what is given is not taken from someone in need or from someone in the future.
It seems to me that today's wealth is partly borrowed from future generations.

Going back to the "hoarding" topic imho hoarding cannot be lethal for the BTC economy because bitcoins can be used as a meta-currency.
The value of bitcoins in this use case stems from the merits of the bitcoin network as a transaction processing network.
Goods can be sold in state currency with bitcoins being used just as a transaction vehicle (converted in real time at each end of the transaction).
Transaction fees over the bitcoin network can be competitive compared to card schemes.

[sukiho]

Can anyone show me charts with a timeline of *net* flow at the major exchanges? I'm not sure what it looks like in the USA, but certainly the GBP/BTC rate appears to be declining slowly with a spread suggesting a preponderance of sellers and not enough buyers.

not sure if this one helps http://www.bitcoinmonitor.com/

[Etlase2]

Not sure why this thread was bumped, but for those interested, I have proposed a system that unwittingly incorporated some of the ideas in this thread and I am trying to promote discussion.

https://bitcointalk.org/index.php?topic=44682.0

Based around a constant cost to produce (not simply giving money away to latecomers by reducing the value to earlycomers) and the destruction of currency via transaction fees, I believe it addresses many of the issues brought up in this thread.

[petercyr]

Here's my stance on Hoarding...

For bitcoin to have any value, you have to be able to spend them. If everyone is hoarding, no one is earning coins through the sale of goods and services. If merchants aren't making enough to justify using bitcoins then why would other merchants get on board? And with less merchants means less ways of spending your coins.. You don't make stupid business decisions on purpose normally so if people know there's no point, then they wont bother. If they don't bother then bitcoin goes nowhere, existing merchants will eventually get out since they're just wasting their time and bitcoin wont go anywhere.

People hoard because they want to make money. To make money, the value has to go up. If there's no reason to buy them then they wont be sold and the price wont go up.

Bitcoins can't keep on raising in value simply because everyone wants to make a quick buck... Not quite sure how anyone could get the idea that it'll just keep on going up just because "we want it to"?

[dunand]

Where can I spend my bitcoins ? I do not gamble, I'm not a drug addict. I'm a cheap ass. There is not a lot of good deals in bitcoin stores.

When I sell something in classified ads. I mention that I accept to trade in bitcoins but we are not legion.

[marhjan]

Bumping/Necroing one of the best threads in the history of this forum.  Recommended reading