Another potential problem is that hoarding bitcoins for long-term investment is so attractive that the flow of bitcoins becomes clogged up with very few people actually willing to use their bitcoins since the long-term investment prospect is so formidable.
Early on the cost of one bitcoin was 1 dollar. Today it's around $7 if I remember correctly. In the future, with billions of users, the price of a single bitcoin could be $100,000!
So people today may want to hoard bitcoins like crazy.
It certainly has an effect but in my opinion it's not as dangerous as it seems. When the BTC exchange value goes up, you can consolidate your profits by spending your money. That happened to me many times, the offers become more and more irresistable. You don't know if the value will go higher, maybe the market will crash soon. On the other hand, you can buy that diamond necklace with the bitcoins you've bought for only 100 bucks. Save some, spend some. At best, the deflation will make people more careful with their expenditures.
Good point. And in the early stages people willing to risk investing in bitcoins are worth the reward if Bitcoin becomes popular. I myself like the zero risk approach. He he. The long-term situation may look different. I haven't studied the concept much yet (I became aware of Bitcoin today) so there may exist some calculations about what will happen after all bitcoins have been generated.
