How to discourage hoarding - brainstorm

[MacFall]

Why would anyone want to discourage savings and investment?

Because they've drank the Keynesian kool-aid. But I'm willing to define hoarding, for the sake of discussion, as saving money to the point of a loss currency's usefulness as a medium of exchange. I'm aware of the extreme unlikelihood of that happening, but I do like to address people's concerns on level ground.

[error]

Why would anyone want to discourage savings and investment?

Because they've drank the Keynesian kool-aid. But I'm willing to define hoarding, for the sake of discussion, as saving money to the point of a loss currency's usefulness as a medium of exchange. I'm aware of the extreme unlikelihood of that happening, but I do like to address people's concerns on level ground.

If this were a reasonable concern, we would already see its effects with things that are already "deflationary" such as PCs and PC components. Yet people buy these all the time.

[MacFall]

It is an unreasonable concern. But seeing how people had already pointed that out in rare form, I decided to offer something that someone who worries about such a thing (however unjustifiably) can do to remedy it. Call it a placebo, if you want. But it isn't really, because encouraging more people to accept bitcoin is good advice even if nobody ever worried about hoarding.

[joewandy]

We need to do something about it and if they haven't woken up by now, we need to figure out alternate ways and means to get them to adopting BTC. This may happen anyway but I would like to speed up the process!

Saying we need is a lot different than doing. Yes, everyone would like the average person to adopt bitcoin. And we're working on solutions to problems anyway.

I believe that for this discussion to be productive, the emphasis would be on first identifying how we can 'help the average person to adopt bitcoin'. If this is accomplished, then the hoarding won't be that much of an issue as there's an active consumer economy based on Bitcoin market.

[kiba]

I believe that for this discussion to be productive, the emphasis would be on first identifying how we can 'help the average person to adopt bitcoin'. If this is accomplished, then the hoarding won't be that much of an issue as there's an active consumer economy based on Bitcoin market.

That what entrepreneurs are for.

[evoorhees]

People will hoard until the value of Bitcoin reaches a point where they'd rather spend. This is a self-correcting situation. Not a problem.

This! +1  "Hoarding" is just a slanderous term for "saving" and savers build capital reserves to fund investment. If money is "hoarded" and becomes scarce, interest rates rise and the incentive to lend is increased, thereby correcting the problem.

Hoarding is a non-issue in the long term. It is self-correcting. In the short term, Bitcoin speculators may hoard coins but they risk severe losses proportional to the extent of such hoarding. Free markets work - we just need to stay out of their way, and not concern ourself with the sometimes uncomfortable or even painful short-term fluctuations.

[tomcollins]

The biggest risk from hoarders is a severe panic that would wipe out the value of Bitcoins. 

[barbarousrelic]

The biggest risk from hoarders is a severe panic that would wipe out the value of Bitcoins. 

You mean, the biggest risk from hoarders is if they all stop hoarding at the same time?

[carriun]

In the event of massive hoarding couldn't we just establish a 2nd IRC channel and issue a 2nd genesis block?  That would start the chain for 21 Million more coins.  There would need to be an exchange between the two different coin generations but that isn't any different then the bitcoin to flat currency exchanges today.

[tomcollins]

The biggest risk from hoarders is a severe panic that would wipe out the value of Bitcoins. 

You mean, the biggest risk from hoarders is if they all stop hoarding at the same time?

Pretty much.  It can lead to a positive feedback loop.  If a few big hoarders decide to unload coins, then the value drops.  Then the other hoarders get scared and dump as well, causing a bigger drop, which causes more people to get scared until no one is willing to buy bitcoins (or only for super cheap).

It's just supply and demand.  The supply of Bitcoins is those that are actively participating in the economy.  That's far less than 6 million.  Say half the coins are being hoarded, and half are actively trading hands for goods and services (including USD).  If twice as many show up, the purchasing power of a Bitcoin gets cut in half.

[markm]

So, great, they drop to tiny cost to buy, is that simply going to lead to another round of the same due to only a few people buying up millions of coins at dirt cheap prices, or is it possible it could instead lead to many many people each dropping a centime or two on a few hundred or few thousand coins so that on the next upswing there will be many many many more "early adopters" as in people who got their coins dirt cheap the first time it tanked?

-MarkM-
 

[barbarousrelic]

I think we're 'what-iffing' a bit too much in this thread. Yes it can go up and down. No, we can't predict which will happen when or what will be the result.

[tomcollins]

So, great, they drop to tiny cost to buy, is that simply going to lead to another round of the same due to only a few people buying up millions of coins at dirt cheap prices, or is it possible it could instead lead to many many people each dropping a centime or two on a few hundred or few thousand coins so that on the next upswing there will be many many many more "early adopters" as in people who got their coins dirt cheap the first time it tanked?

-MarkM-
 

Who wants to catch that falling knife?  It would scare a lot of potential people from buying them if they are potentially worthless.  A lot of people cannot stomach losing 50% on something.  It's easy to throw money down like candy on an investment "that can only go up".  But when the reality of losses set in, people will sell sell sell!

It just makes things very volatile, which will scare off a lot of people.

[markm]

All the more reason to diversify into BitNickels and Britcoins and Martian Botcoins and so on and so on before that time comes.

There are plenty of people who will still find use for bitcoins and their variants even when they are worth less than a fiat-penny each.

In fact dirt cheap ones might be a lot more useful if they aren't zooming up in price as fast as bitcoins have lately been doing, as maybe people might actually spend some instead of just getting into a get rich quick bubble mentality.

-MarkM-

[samadamsbeer]

People will hoard until the value of Bitcoin reaches a point where they'd rather spend. This is a self-correcting situation. Not a problem.

This! +1  "Hoarding" is just a slanderous term for "saving" and savers build capital reserves to fund investment. If money is "hoarded" and becomes scarce, interest rates rise and the incentive to lend is increased, thereby correcting the problem.

Hoarding is a non-issue in the long term. It is self-correcting. In the short term, Bitcoin speculators may hoard coins but they risk severe losses proportional to the extent of such hoarding. Free markets work - we just need to stay out of their way, and not concern ourself with the sometimes uncomfortable or even painful short-term fluctuations.

+2. However I guess what I am saying is that although I will be buying BTC I see nowhere I would want to spend them at the moment. But that's just me.

[goatpig]

+2. However I guess what I am saying is that although I will be buying BTC I see nowhere I would want to spend them at the moment. But that's just me.

Coins are emitted by miners. Miners have costs and are competing against each other, it is very likely that most miners will sell their BTC. Coins issuances will stop circa 2140, by then Bitcoin will be dead or filled with vendors, at which point hoarding won't be a problem.

[tomcollins]

All the more reason to diversify into BitNickels and Britcoins and Martian Botcoins and so on and so on before that time comes.

There are plenty of people who will still find use for bitcoins and their variants even when they are worth less than a fiat-penny each.

In fact dirt cheap ones might be a lot more useful if they aren't zooming up in price as fast as bitcoins have lately been doing, as maybe people might actually spend some instead of just getting into a get rich quick bubble mentality.

-MarkM-

The price will eventually go up high enough the hoarders will start using them.  Or it will stagnate long enough they will start using them.  It's a self-correcting problem.

[markm]

I am finding myself that hoarding has a psychological barrier because I know I am not going to want to spend bitcoins once I have them. Strangely enough this has led not to pouring all my money into bitcoins until I want to spend some but rather to not putting any money into bitcoins that I think I might actually want to spend sometime in the next few years. So basically the rapid rise in price is leading me to consider bitcoins only for "savings" and look for other things to use for day to day transactions.

I wish I knew of an actually functioning ripple or open transactions or loom or something that has merchants I can look at to see what a given amount of whatevers will buy me, but none of those systems seem really to have merchants yet either even though in principle they ought to be providing units of account tha somewhat stably relate to goods I can buy instead of acting as a get rich quick bubble system.

I rather hope that Canadian Digital Notes that pretty reliably buy a CAD dollar per CDN catch on or something like that, so I can use an alternative to paypal and pecunix and liberty reserve and so on that can eventually become open like bitcoin but in the startup phase can have a reasonably reliable pricing for quite some time. This skyrocketing of prices is disconcerting, maybe it would have been better not to have used 1,0E8 units as "a coin" but instead used the raw units, so we would right from the start had a psychologically much vaster number of coins available, maybe short-circuiting the perception of rarity bitcoins have gotten at their present scale of how many base units are spoken of as "one bitcoin". The current "scarcity" seems somewhat aritificial or contrived or an illusion produced by cunning placement of the decimal point...

-MarkM-

[SgtSpike]

OP - You spelled "encourage" wrong in the title.

[Basiley]

direct bitcoin-bitcoin market would be best idea, but there is "chicked or egg" closed loop problem, cuz some people depend on traditional economics for living.
so i guess, until someone Invest something into make BTC more widely accepted/recognized, as well direct trading for BTX.
remember WebMoney, PayPal and few similar stories ? 1st step - most hardest.