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Author Topic: Am I misunderstanding this or?  (Read 6844 times)
Grouver (BtcBalance)
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May 16, 2012, 10:38:50 AM
 #1

Why would the majority of the people that have bitcoins spend them if they know bitcoins are becoming scarce (wich equals to more value) while time passes?
And to get the value of bitcoin raising you need a running economy right?
Doesn't these two things conflict with each other or am I misunderstanding something here?

Thanks for enlighting.

-Grouver-

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Matthew N. Wright
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May 16, 2012, 10:44:42 AM
 #2

Why would the majority of the people that have bitcoins spend them if they know bitcoins are becoming scarce (wich equals to more value) while time passes?
And to get the value of bitcoin raising you need a running economy right?
Doesn't these two things conflict with each other or am I misunderstanding something here?

Thanks for enlighting.

-Grouver-

Replace "bitcoin" with "gold" and you might be able to answer that yourself.

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May 16, 2012, 11:10:29 AM
 #3

Why would the majority of the people that have bitcoins spend them if they know bitcoins are becoming scarce (wich equals to more value) while time passes?

The appreciating value of the currency is not the only factor used when choosing which method to use when making a payment.  The cost savings from using Bitcoin more than offsets the cost to replenish the amount of bitcoins used for spending, thus protecting it from any deflationary spiral.

Described further here:
  - http://bitcointalk.org/index.php?topic=80018.msg887005#msg887005

Grouver (BtcBalance)
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May 16, 2012, 11:11:59 AM
 #4

Put another way, why would anyone keep their Bitcoins sitting around doing nothing when those coins could be put to work producing an economy and accruing interest?

Because the majority are not really into bitcoins and don't want to undertake any complicated investing proces with bitcoins.
They just bought bitcoins with only one reason. It's gonna get scarce and the value will rise. They see it as a long term investment.
I mean, for example why should I buy a steam game with bitcoins if I maybe can buy 10 steam games with bitcoins within 2 years.
Why spend today if I can spend the half of the ammount for the same thing tommorow?

Why sell your gold today if you know (have a feeling) the value is gonna increase tremendously?

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May 16, 2012, 11:24:33 AM
 #5

scarce (wich equals to more value)
Scarcity doesn't make something more valuable. If you can't buy anything with Bitcoin/gold/USD/whatever, it's useless as a medium of exchange.

Why would anyone buy something which has no use?

Being a "medium of exchange" is not the only utility of bitcoin. All "sound moneys" are also useful to store value. And for that, no commerce other than the exchange for other currencies needs to exist.

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Stephen Gornick
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May 16, 2012, 11:24:49 AM
 #6

Why spend today if I can spend the half of the ammount for the same thing tommorow?

Ok, so there will be some coins hoarded and others spent regardless if the value will go up or not.  What's the problem then?

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May 16, 2012, 11:27:35 AM
 #7

I mean, for example why should I buy a steam game with bitcoins if I maybe can buy 10 steam games with bitcoins within 2 years.

Because you may want it now.

The same question could apply to any high tech product. Why buy a computer if you know that in two years the same computer will be much cheaper, or with the same amount you'll be able to afford something better? And the answer again is the same: because you want the computer now.

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May 16, 2012, 11:28:16 AM
 #8

Why would the majority of the people that have bitcoins spend them if they know bitcoins are becoming scarce (wich equals to more value) while time passes?

The appreciating value of the currency is not the only factor used when choosing which method to use when making a payment. 

+1

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May 16, 2012, 11:37:19 AM
 #9

I am hoarding until Dec 2012 when the price is doubling. Kiss

Why use BTC when I can use USD Huh
Stephen Gornick
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May 16, 2012, 11:41:13 AM
 #10


What utility does Bitcoin have outside of being a medium of exchange? With PMs, they have utility as industrial goods.

Not $1,535 per ounce worth of utility it doesn't.

If Bitcoin can maintain value due to utility outside of being a medium of exchange, then so could all the Bitcoin clones,

Bitcoin very well could have been that one and only one to sneak through the vulnerable startup phase without being attacked.  There was plenty of computing power that could have messed with bitcoin but that never happened because it wasn't seen as a threat to anyone.

This might be remedied for an alternative chain though where it is centralized but still rewards miners with new currency to attract hashing capacity and to circulate the initial coins, and then switch over to a true decentralized, proof of work method at a certain block.


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May 16, 2012, 11:53:16 AM
 #11

scarce (wich equals to more value)
Scarcity doesn't make something more valuable. If you can't buy anything with Bitcoin/gold/USD/whatever, it's useless as a medium of exchange.

Why would anyone buy something which has no use?

Being a "medium of exchange" is not the only utility of bitcoin. All "sound moneys" are also useful to store value. And for that, no commerce other than the exchange of against other currencies needs to exist.
What utility does Bitcoin have outside of being a medium of exchange?

It's right in the text of mine you just quoted: store of value.

If Bitcoin can maintain value due to utility outside of being a medium of exchange, then so could all the Bitcoin clones,

The "clones" haven't managed to convince enough people that they are a good store of value. But, they've convinced a few, that's why they have some value instead of no value at all.

meaning Bitcoins should be worthless due to the lack of scarcity when it's cloned hundreds of times.

They are not actual clones. An identical clone would be a "fake bitcoin", which is impossible. They are different things, different "coins". The original bitcoins remain scarce, no matter how much equivalent implementations are done.

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May 16, 2012, 12:30:35 PM
 #12

"STORE OF VALUE" IS A SYMPTOM OF USEFULNESS!

It's an usefulness in itself. (and why the yelling? getting stressed so easily?)

If I make a sword out of bird shit and just build one -- and let's say nobody else can build it, does it necessarily have value because it's scarce?

If you convince other people it's a good store of value, it might. That's not easy at all, though.
By the way, if at least you value your shit sword, then it already has value - to you, at least.

If people quit using Bitcoins as a medium of exchange to purchase goods, other mediums of exchange, or services, then it would be worthless. It doesn't matter if everyone still has the same number of coins, because you can't buy anything with them.

If you can still trade them for currency at least, it can be used as a store of value.
It's true that if there really isn't any function at all to something, then it will not have value.
The only thing I'm trying to say is that this claim that bitcoin needs to be used in commerce (trading it for goods and services) to have value is false. It doesn't need to, although it helps a lot to have such utility.

Why are Bitcoins worth $5 now, but $.00001 a couple years ago?

Because prices change?

Bitcoins are multitudes less scarce than then, and it has the same ability to store values as it did when it was created (okay - arguably less because the network was less secured).

Prices are a function of scarcity and demand. A particular usefulness of a scarce resource won't necessarily translate into demand until this usefulness is perceived and desired by people.

Bitcoin is a fantastic medium of exchange. It's irreversible, extremely easy to send to someone else, doesn't require a clunky centralized payment processing systems to quickly use online or send internationally, and is pseudonymous. Those are all great, but that doesn't cause Bitcoins to be worth anything -- what causes them to be worth something is because originally, a few people saw potential in it.

Agreed.

Bitcoin doesn't inherently have value - people give it value

That's true for absolutely everything which has value. There's no such a thing as "inherent value".


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Grouver (BtcBalance)
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May 16, 2012, 12:33:41 PM
 #13

To say it simple.
How many people are selling there gold now?
Not alot I guess, since its a long term investment for the most right?
Why do they not sell there gold? Cause they believe its getting worth more in the near future right?

Doens't Bitcoin have the same thing right now?
Also, lets not forget that alot of people bought high when Bitcoin price was at its peak or above $10 and don't want to sell low.
They can just hoard it and wait till it gets high again some time around 2020.

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May 16, 2012, 07:04:39 PM
 #14

Doens't Bitcoin have the same thing right now?
Also, lets not forget that alot of people bought high when Bitcoin price was at its peak or above $10 and don't want to sell low.
They can just hoard it and wait till it gets high again some time around 2020.

I'm trying to suss why you see this as such a problem though.

I don't know the numbers but let's say in the past month, 8 million of the 9 million BTCs issued didn't move, and were not used in any commerce.  Only 1 million BTC were.  But bitcoin being sent electronically with settlement within minutes (e.g., 1 or 2 confirmations) and divisible to a tiny fraction of a penny worth of money, that economy can function no different with 1 million BTC than with 9 million BTC, right?

So what is the problem with people sitting on those 8 million BTC?

I presume the real problem with this is that the exchange rate could easily plummet with the percent of hoarding being such a significant amount of all the currency issued.  But I want to know if that's the reason you are seeing such a problem with the hoarding by some.

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May 16, 2012, 08:00:00 PM
 #15

Why spend today if I can spend the half of the ammount for the same thing tommorow?

So when tomorrow comes and 1 BTC only has the same (or slightly higher buying power) what then? To characterize all users as thinking the value is going to go up 100% daily is kinda silly.  Some users likely will never sell any of their coins or use them to buy anything.  However they aren't the only users.

Even if someone is hoarding for some future payday they all have a point they would cash out otherwise what is the point in hoarding to begin with.

Say hoarder Joe bought 1M BTC @ $0.01 ea.  Today they are worth ~$5.  He lives in an apt w/ his mom has almost no possession, no non-coin wealth, and yet has $5M in value in coins.  Do you think the utility of having his own place, car, life might be worth more than the future appreciation on his $5M?  Say hoarder Joe says "sell @ $5ea (a mere 50,000% gain no way suckers)".  In 10 years Bitcoin is worth $100 ea.  hoarder Joe has a net worth aproaching a quarter billion.  Is he going to sell/use/trade them?  By your logic no because they might keep going up.  In 30 years Bitcoin is worth $2000 ea so trader Joe now has $2B tied up in digital coins.  Does he sell?  Hell no.  He collects welfare and food stamps, but there is no reason to leave any future profits on the table.  In 85 years Bitcoin is worth $1M ea.  hoarder Joe finally did it he became the worlds first trillionaire (in dollars and likely the only remaining Bitcoin millionaire).  Er no he actually died 3 years prior and was buried in an unmarked pauper's grave because he wasn't going to be a sucker and sell out as a "mere billionaire".

Money is an abstraction.  It is an accounting system for what really matters: wealth.  If you never exchange it for any tangible wealth (goods & services) then it really doesn't make any sense to acquire it in the first place does it?  The idea that someone will hold and never ever ever trade/exchange/sell those coins doesn't even make common sense.
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May 16, 2012, 08:02:22 PM
 #16

To say it simple.
How many people are selling there gold now?

Every time someone buys gold, someone else sells it.  So there are as many ounces of golds sold as there are ounces of gold bought.
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May 16, 2012, 10:05:10 PM
 #17

If bitcoins are so valuable to you that you won't spend them near the market rate on stuff you want then you should buy more coins until they aren't so precious to you. If you never reach the point where you'd rather have a dollar or a thing than a bit more coin I'll be very surprised. But if you do, then you should just start working harder or smarter to get more coin. Working harder/smarter just -might- involve using your only asset (now some bitcoins) to get some other thing to improve your bitcoin getting ability.

Short answer: People actually want lots of things and balance them as they like.

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May 17, 2012, 06:56:44 AM
 #18

To say it simple.
How many people are selling there gold now?

Every time someone buys gold, someone else sells it.  So there are as many ounces of golds sold as there are ounces of gold bought.

Very true.  As a further note to the parent, who asked who would sell their gold now, well, lots of people would.  If everyone just sits there with their gold and thinks 'no point in selling, it'll only head upwards' that will only cause a bubble that inevitably pops.  The price can only rise so much before the early buyers think 'wow, great profit, time to sell'.  Remember that you only have a profit when you sell a commodity/share/etc.  Until then it's just a paper profit.

I sold some gold last year as I was applying for a mortgage and needed cash.  The gold had risen in value considerably since I bought it so it was a good investment.  Right now, a year later, gold's price is lower than where I sold it in my local currency.  Seeing as the mortgage costs over 6% (hint: I'm not in the USA), my gold would have had to rise 6%pa every year from last year to make sense keeping it instead of cashing out.


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May 17, 2012, 07:06:46 AM
 #19

I both horde and spend bitcoins...
I keep a 'savings account' of them, and spend maybe 20% of it infrequently.

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May 17, 2012, 07:10:17 AM
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Quote
Money is an abstraction.  It is an accounting system for what really matters: wealth.

I believe that Bitcoin shows this to be true better than anything else it does.  Just exactly what is a Bitcoin?  Where is it?  Do you really have them?  Where are they kept?  Etc.

The fiat currencies are the same but Bitcoin is better at showing exactly what money is.  As you state is is an accounting system.

Oh and another thing:  hoard or save, please explain the difference to me.  It seems to me that people use the word hoard when they want it to sound "bad" and save (or savings) when they want it to sound "good".  That is the only difference I can see between the two.

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