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Author Topic: Rising value making BitCoiners tightfisted?  (Read 5479 times)
eMansipater
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May 23, 2011, 05:49:11 AM
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I was reviewing my tip history today and noticed something:  now that bitcoins have risen drastically in value, substantially increasing the wealth of most bitcoin holders, the amount of tips I receive has actually decreased rather than increased.  I don't mean in quantity of bitcoins, I mean in number of tips sent.  Before the rise I had received 15-20 tips in various amounts over the past few months, but since bitcoins passed 1 USD for the second time I've only received one regular tip and one tip for the Introduction to BitCoin post.  It's possible that I simply haven't been writing worthwhile posts, or that it's just random, but then I was noticing that I've been more tightfisted myself now that my coins are worth more.  It's almost like I feel that they're going to increase by the same percentage again, so it would be foolish to just give them away.

What do you think?  Has the rising value made you more tightfisted?  If so, I'm wondering if this might be something to guard against as somewhat counterproductive for a fledgling bitcoin economy.  I'm not really a believer in the whole "deflationary spiral" scenario, but the psychological impacts of rising btc values are worth thinking about.

The reason this came to mind today is that I'm launching a new website, bitSyndicated.com, where I hope to create quality content based around the tipping model, and especially using tips as a more effective form of feedback than merely site stats.  The first post is a comic where users can "vote" with their tips to decide which illustrator gets to share in the donations, and also support the Wikipedia translation bounties at the same time.  Feel free to check it out and let me know what you think about the idea!  To make this kind of model scalable, number of tips is going to be much more important than the value of the individual tip, which led me to notice that instead of simply reducing the size of my tips I've actually slowed them altogether.  It would be so cool in my mind if we could create a practical way to fund web content without advertising, and without any one person giving very much at all!



edit:  someone must have known I was typing this, because while I was posting I received another tip to the address in my signature.  What are the odds of that?  Crazy!

If you found my post helpful, feel free to send a small tip to 1QGukeKbBQbXHtV6LgkQa977LJ3YHXXW8B
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May 23, 2011, 05:54:35 AM
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I never received such a tip at all, and I finally just removed the address from my signature entirely.

I suspect this will be much less of an issue once the exchange rates become a bit more stable; but that could be a VERY LONG WHILE. (After all, it'll take some time for BTC to reach $5m USD, which is about where I think it will eventually stabilize).

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wumpus
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May 23, 2011, 06:06:28 AM
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I think the problem is that many people expect the value to rise again, and very quickly (see the $1000 topic for an extreme). So they're hard-nosed about giving even a few centicoins away, as they have a perceived value much higher than the current trading value on MtGox.

Yes this is indeed counter-productive.

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May 23, 2011, 06:11:11 AM
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Maybe people are getting tired of you?

I kid. I kid.

I know a couple times recently I went to throw a little to someone, did a little calculation, decided on ~.10BTC and then remembered that my damn version wants a .1 fee and gave nothing.

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May 23, 2011, 06:13:39 AM
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I know a couple times recently I went to throw a little to someone, did a little calculation, decided on ~.10BTC and then remembered that my damn version wants a .1 fee and gave nothing.
Yep the exorbitant fees for small transactions are also a problem.

Bitcoin Core developer [PGP] Warning: For most, coin loss is a larger risk than coin theft. A disk can die any time. Regularly back up your wallet through FileBackup Wallet to an external storage or the (encrypted!) cloud. Use a separate offline wallet for storing larger amounts.
eMansipater
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May 23, 2011, 06:14:46 AM
 #6

Maybe people are getting tired of you?

I kid. I kid.
lol! yes, maybe I should accept negative tips to be fair Smiley

If you found my post helpful, feel free to send a small tip to 1QGukeKbBQbXHtV6LgkQa977LJ3YHXXW8B
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0.009 BTC too confusing?  Use mBTC instead!  Details at www.em-bit.org or visit the project thread to help make Bitcoin prices more human-friendly.
Natanji
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May 23, 2011, 06:28:01 AM
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You all are aware that you do not *need* to give any transaction fees?
Sure, this might mean  that your transaction takes some time to get through, but it still works within ~10 blocks usually. I think the height of the transaction also plays into this: the lower the value, the easier it gets through even if no fee is paid.

Maybe I'm mistaken, but that's how I understood it so far.
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May 23, 2011, 06:43:49 AM
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You all are aware that you do not *need* to give any transaction fees?
Sure, this might mean  that your transaction takes some time to get through, but it still works within ~10 blocks usually. I think the height of the transaction also plays into this: the lower the value, the easier it gets through even if no fee is paid.

Maybe I'm mistaken, but that's how I understood it so far.

Some versions are insisting on a fee for small or new coins. I just need to get a different version.  

I think you have it backwards on the size though. Bigger is faster because it is less likely to be spam.

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luv2drnkbr
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May 23, 2011, 07:05:01 AM
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Standard psychology.  When the price goes down, people feel depressed and because they feel like their Bitcoins are worth less, they don't mind giving some away.  When the price rises, they get starry-eyed with dollar signs (or BTC signs) and envision them being worth even more, and are thus less likely to want to give any away.

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May 23, 2011, 07:11:55 AM
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Standard psychology.  When the price goes down, people feel depressed and because they feel like their Bitcoins are worth less, they don't mind giving some away.  When the price rises, they get starry-eyed with dollar signs (or BTC signs) and envision them being worth even more, and are thus less likely to want to give any away.

Yes, but shouldn't there be a wealth effect kicking in? "I'm rich bitch!" and share the booty?

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May 23, 2011, 07:19:51 AM
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Standard psychology.  When the price goes down, people feel depressed and because they feel like their Bitcoins are worth less, they don't mind giving some away.  When the price rises, they get starry-eyed with dollar signs (or BTC signs) and envision them being worth even more, and are thus less likely to want to give any away.

Yes, but shouldn't there be a wealth effect kicking in? "I'm rich bitch!" and share the booty?

If thats the case, I will make sure to ring up buffet and gates and ask them for some money right now.

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May 23, 2011, 07:20:38 AM
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Standard psychology.  When the price goes down, people feel depressed and because they feel like their Bitcoins are worth less, they don't mind giving some away.  When the price rises, they get starry-eyed with dollar signs (or BTC signs) and envision them being worth even more, and are thus less likely to want to give any away.

Yes, but shouldn't there be a wealth effect kicking in? "I'm rich bitch!" and share the booty?
partially.
without affecting majority of BTC holders.
carlerha
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May 23, 2011, 08:08:10 AM
 #13

I know I'm tightfisted with my bitcoins, and, for me, there are two reasons:

Firstly, I have quite few of them. So this one is trivial.

Secondly, and perhaps more important, what makes me comfortable about tipping someone or buying tangible goods with my fiat currency that I'm used to spending, is that I know I can earn them back later (what goes around comes around, in a positive sense).

However, with bitcoins, I feel like I'm giving them away for ever, since I don't run a business where I can accept Bitcoin (yet), and my monthly salary is paid to me in fiat currency. I assume this to be the case for many people. They treat bitcoins as they treat stock exchange shares, and not like a currency.

eMansipater
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May 23, 2011, 08:16:51 AM
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Secondly, and perhaps more important, what makes me comfortable about tipping someone or buying tangible goods with my fiat currency that I'm used to spending, is that I know I can earn them back later (what goes around comes around, in a positive sense).

However, with bitcoins, I feel like I'm giving them away for ever, since I don't run a business where I can accept Bitcoin (yet), and my monthly salary is paid to me in fiat currency. I assume this to be the case for many people. They treat bitcoins as they treat stock exchange shares, and not like a currency.
This is precisely the motivation behind this particular comic.  Until we can get the BitCoin economy rolling, the use of bitcoins for speculation is making it less useful for other things.

If you found my post helpful, feel free to send a small tip to 1QGukeKbBQbXHtV6LgkQa977LJ3YHXXW8B
Visit the BitCoin Q&A Site to ask questions or share knowledge.
0.009 BTC too confusing?  Use mBTC instead!  Details at www.em-bit.org or visit the project thread to help make Bitcoin prices more human-friendly.
interfect
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May 23, 2011, 08:48:09 AM
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This is precisely the motivation behind this particular comic.  Until we can get the BitCoin economy rolling, the use of bitcoins for speculation is making it less useful for other things.

It's making me sad. I use Bitcoin mostly as a toy (I happen to have a good GPU for gaming, so it's free fake Internet money for me). However, the recent rise in difficulty has made it hard for me to generate coins to play with, because some people (seriously, who pays $5/btc?) have suddenly decided they're actually worth a fair amount.
eMansipater
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May 23, 2011, 09:44:48 AM
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This is precisely the motivation behind this particular comic.  Until we can get the BitCoin economy rolling, the use of bitcoins for speculation is making it less useful for other things.

It's making me sad. I use Bitcoin mostly as a toy (I happen to have a good GPU for gaming, so it's free fake Internet money for me). However, the recent rise in difficulty has made it hard for me to generate coins to play with, because some people (seriously, who pays $5/btc?) have suddenly decided they're actually worth a fair amount.

Well, you can help get the BitCoin economy rolling and show your support for the comic at the same time by tipping some of them there; you'll be sending a message loud and clear to both an illustrator and a translator (not to mention me!) that people can do real work in exchange for bitcoins.  Personally, I think it's clear that speculation alone isn't enough to run a currency on.  So we will see some kind of a crash or backlash if speculation wildly outpaces actual economic growth.  Just remember to stick around and get back to the real work of economy building when that happens.  Rome wasn't built in a day! Smiley

If you found my post helpful, feel free to send a small tip to 1QGukeKbBQbXHtV6LgkQa977LJ3YHXXW8B
Visit the BitCoin Q&A Site to ask questions or share knowledge.
0.009 BTC too confusing?  Use mBTC instead!  Details at www.em-bit.org or visit the project thread to help make Bitcoin prices more human-friendly.
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May 23, 2011, 10:09:36 AM
 #17

Standard psychology.  When the price goes down, people feel depressed and because they feel like their Bitcoins are worth less, they don't mind giving some away.  When the price rises, they get starry-eyed with dollar signs (or BTC signs) and envision them being worth even more, and are thus less likely to want to give any away.

Yes, but shouldn't there be a wealth effect kicking in? "I'm rich bitch!" and share the booty?

If thats the case, I will make sure to ring up buffet and gates and ask them for some money right now.

Maybe you should. They bleed it by the billion.

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May 23, 2011, 10:12:44 AM
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This is precisely the motivation behind this particular comic.  Until we can get the BitCoin economy rolling, the use of bitcoins for speculation is making it less useful for other things.

It's making me sad. I use Bitcoin mostly as a toy (I happen to have a good GPU for gaming, so it's free fake Internet money for me). However, the recent rise in difficulty has made it hard for me to generate coins to play with, because some people (seriously, who pays $5/btc?) have suddenly decided they're actually worth a fair amount.

I'll pay $5/BTC.

I bet you tip generously since it's free fake money!

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gigabytecoin
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May 23, 2011, 10:47:28 AM
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I was just talking with a friend earlier today...

Basically we both agreed that "anybody who will currently spend their bitcoins on anything is an idiot"... (or not good with numbers, doesn't care about personal wealth, etc, etc..)

Which brings me back to one of my main arguments that bitcoin is simply a store of value, not a currency.

Bitcoin is a great tool for secretive billionaires to store their ill gotten gains.

Unfortunately at the moment it's not so great to use as a currency.

By the time I walk out of the bitcoin grocer whom I just paid 0.8 BTC for a gallon of delicious milk that you can only purchase from said bitcoin accepting grocer... the price of that same gallon has dropped to 0.79 BTC - because the buying power of my bitcoins has just increased.

I don't absolutely need that milk right now anyways I suppose... There is another old dummy of a grocer up the street who actually accepts USD in exchange for milk - LOL - I think I have a few of those left around somewhere...

The BTC value has risen... causing the people to hoard their BTC, which will cause the value to rise, which will lead to more press and cause people to hoard their BTC, which will case the value to rise, which will lead to more press and cause people to hoard their BTC....

Not sure yet if this is a good or a bad thing. But I am 99% sure this is a bad thing.
/rambling
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May 23, 2011, 10:52:13 AM
 #20

I was just talking with a friend earlier today...

Basically we both agreed that "anybody who will currently spend their bitcoins on anything is an idiot"... (or not good with numbers, doesn't care about personal wealth, etc, etc..)

Which brings me back to one of my main arguments that bitcoin is simply a store of value, not a currency.

Bitcoin is a great tool for secretive billionaires to store their ill gotten gains.

Unfortunately at the moment it's not so great to use as a currency.

By the time I walk out of the bitcoin grocer whom I just paid 0.8 BTC for a gallon of delicious milk that you can only purchase from said bitcoin accepting grocer... the price of that same gallon has dropped to 0.79 BTC - because the buying power of my bitcoins has just increased.

I don't absolutely need that milk right now anyways I suppose... There is another old dummy of a grocer up the street who actually accepts USD in exchange for milk - LOL - I think I have a few of those left around somewhere...

The BTC value has risen... causing the people to hoard their BTC, which will cause the value to rise, which will lead to more press and cause people to hoard their BTC, which will case the value to rise, which will lead to more press and cause people to hoard their BTC....

Not sure yet if this is a good or a bad thing. But I am 99% sure this is a bad thing.
/rambling

Are you saying that it's reasonable to spend your wealth on milk, but not reasonable to spend it on bitcoins, wait a day, then spend the bitcoins on milk? Is it more or less dumb to buy coins, wait a week, then buy milk?

Under your assumptions shouldn't you put all of your wealth in coins and then spend sparingly from them?

How is this a bad thing? Don't we all get rich if you are right?

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
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