Topic: Hmm... is it time to crash BTC exchange rates yet? - page 4. (Read 8836 times)

Unfortunately this is what happens with a currency that has a limited amount of units. If btc was limitless, then there would be no need for hoarding and thus its value would plummet as there would be btc in abundance. As an example, communities in the US are starting to use time as a unit of currency which is itself limitless in supply, thus eliminating the need to hoard. See www.themoneyfix.org

Don't tell me what to do with my bitcoins.

Bitcoins are not universally "meant" for anything.

I spend some of my coins and I save some of them. Am I a spender or a hoarder? Sorry, did I make your brain explode? 99% of bitcoiners do the exact same thing. Is there a magic ratio of spending:hoarding that they need to meet in order to meet your personal criteria for being a spender?

I hope you're not one of those "people don't spend deflationary currencies" goons, if so; explain to me how gold and silver were used as currency for millenia if people don't spend deflationary currencies. I ask because usually the "hoarders r bad" people usually accompany their ridiculous beliefs with neo-keynesian bullshit.

Professor Fekete has some interesting things to say about hoarding. Hoarding is healthy for any currency, because the hoarders serve to regulate supply in the same way that miners do. Why? Because everyone has a price. If there is too much of a currency in circulation, hoarders will hoard it. If there is not enough, price will rise and hoarders will eventually meet "their price," introducing more into circulation. This is why bitcoin is not going to skyrocket to $10,000 in a single week. Take away the hoarders (or create a stupid post telling everyone else what to do with their coins) and there is nothing to slow down extreme spikes and extreme dips. What we have right now is a new economy with some very concentrated positions, and for that reason we cannot blame "hoarders" for the price manipulation; they are doing it because they have the power to do it and it makes them money. What are you going to do, whine about it? Instead, just wait for price to rise and concentrated positions will de-concentrate to a certain degree, because their holders are not robots.

Tell me what is the magic ratio of spending to saving that one must accomplish in order to not be considered a "hoarder?" That is the one thing I keep asking of the "lol stop hoarding" goons, and not one of them has been able to provide a definitive answer of what is a hoarder.
If I spend 10 coins a day and have a 100 saved while continually investing USD am I a spender or a hoarder
If I have a thousand saved and spend 7 per month, am I a hoarder or a spender
If I have 600 saved and spend .75 per day am I a spender or a hoarder.
How about I just stop telling other people what to do with their coins?

BTC is not actually serving those 3 functions well if at all, and your assessment that different groups provide these functions is quite silly, all those groups need to work in concert for any of the functions.  

BTC is not a real unit of account as prices in BTC are constantly altered to reflect a dollar price that both the buyer and seller actually evaluate a purchase upon, everyone recognizes that BTC is too volatile to serve as any kind of accounting unit.  Store of value is also poor in BTC, deflation is as antithetical to store of value as is inflation, a deflating commodity is absorbing value not storing it.  The value that BTCs are absorbing is from a combination of media driven growth of new users with a crippling shortage of coins, the deflation is essentially a tax being payed by everyone who uses or adopts BTC now and it is payed to the earlier adopters, speculators and exchanges.  What most people don't understand about store-of-value in currency is that it is not a prerequisite to HAVE a thing that's value remains constant merely for it to be currency, ALL currencies have fluctuated to some degree and some have been inflationary and some deflationary, all were capable of performing the role of currency.  Stable valuation is a prerequisite of FAIR currency, mildly unfair currency still gets the job done just like mildly unfair contracts or courts or marriages or any other imperfect human institution.  Now their obviously come a point ware some level of unfairness causes the system to break, and I'm of the opinion that hyper-deflation is just such an unfairness.

So all that left is medium of exchange.  Now here you could made an argument that BTC is fulfilling that but I think this not quite right.  BTC is acting more like a payment-service for dollars and other fiat money, virtually ever BTC purchase is really a dollar purchase that is 'tunneling' though BTC as an intermediate carrier of the dollars value.  So I'd say that BTC is a "medium for the medium of exchange".  If BTC could satisfy

High consumption and waste of resources steams from misappropriation of money. I'm not even remotely trying to suggest that miners go loose with their spending sprees and start financing government projects that the central banks are so in love with. The beauty of bitcoin is that those with the mining power behind them get to decide which projects to finance, be it all-inclusive resorts in the Bahamas, a lemonade stand on every 10 mile block along the favorite bike route, or a nanotechnology breakthrough.

I know what it means but it seems you don't understand the difference they make. People need something to store value they earned and are tired about forcing them to drive economy. Humanity don't need such high consumption and waste of resources only because some smart asses want to have nice economy growth charts. Time to change whole system and the way people are thinking about what they really need.
Like i said, the best we can do is to simply offer more services for bitcoin. I'm working on new game i will be selling for bitcoin only (and i am paying for everything using bitcoin where possible). And guess what. I am going to HOARD them. Get over it.

Yet the values of both are still driven by spending: one slowly looses its value as the money supply increases (i.e. more currency units in circulation), the other slowly gains its value as the money supply increases (i.e. more bitcoin base units in circulation; bitcoin base units are not to be confused with bitcoins — currently, there are 100,000,000 base units per each bitcoin).

Sorry but maybe i dont understand your wise statements but i suppose you are still in inflating money lovers camp. Stop forcing people to spend they coins if they don't want to do this. Deflationary  currencies works opposite to inflationary: you don't force people to spend they money but you encourage people to make better services so people want to buy them. And this is what you should be doing: create your own business that accept bitcoin or convince people to do the same. If they will be good enough quality, people will spend they bitcoins on them.

Given what goes behind the scenes, when relying on accounting principles instead of speculation for price discovery, your suggestion would chip away at BTC's value, whereas "save a little, spend a little more" would add to BTC's value. Try to play around with those two alternative approaches in your head, see if you can figure out why I tend to hold a different view regarding the BTC price discovery mechanism. This is still only a hint — not meant as an explanation.

That's precisely what's happening... It's a matter of bookkeeping activity, where as more BTC-based transactions take place the equity associated with each bitcoin in circulation (a.k.a. a line item in the general ledger) begins to pile up, since every party to a transaction would want to exchange their BTCs for something more valuable than what they had given up in order to acquire those BTCs. So, if the accounting books are never opened to record new transactions, no additional value hits the books — empty rows remain as empty rows.

Please treat the above only as a hint, and not as an explanation of what goes behind the curtain. As was stated in the OP, at this point I'm only interested in people reading between the lines, so not to cause a panic prematurely... There's still hope that miners would hear my plea for them to start spending while the exchange rates are still rather tasty.

Hoarding actually does very good for bitcoin:
- increases price making bitcoin useful*
- the higher bitcoin price the more press is writing about bitcoin and more people are wanting to hear about it

*you cant transfer big amounts of cash using bitcoin if price is low because it causes massive price volatility at exchanges. if you would like to transfer $1.000.000 you would have to buy 1000 bitcoins and sell it three hours later while at price $1.000.000 per bitcoin you would have to buy only one btc. And imagine if more than one transaction like this would have happend at once then most people would assume its another attack on exchange or whatever.

And what are people going to spend their coins on?

You say people should spend their coins, not hoard them.

But why not do both? Spend a little, save a little more.

If I am a speculator wishing to bet that the future exchange rate will rise, then BTCs to me are meant for saving (hoarding, if you prefer that term).  That's what their value is to me, if I'm solely a speculator.

But that doesn't mean my saving bitcoins prevents someone else from spending theirs.   Yes, I do understand that as Bitcoin gains traction as a currency then the current exchange rate value of a bitcoin is more justified but it isn't like everyone holding bitcoins today is preventing that traction from occurring.

I’ll be honest, the hoarding mania has got to go if bitcoin protocol is ever to support a fully fledged BTC currency.

Don’t get me wrong, I do agree that speculators are an essential part in building a bitcoin-based economy, but can we really rely on this trigger-happy group to provide our beloved BTC with the key functions of money: a medium of exchange, a unit of account, and a store of value?

Think about it for a minute, how do the key functions of money ever come into existence — what makes them tick, so to speak? In particular, what groups of money users are responsible for sparking and sustaining each of these functions? For example, would BTC have a “unit of account” function if it wasn’t for the miners keeping the block chain alive and intact?

It seems to me, the parties responsible for infusing BTC with the key functions of money are:

• Unit of account is a product of miners contribution;
• Medium of exchange is a product of consumers contribution;
• Store of value is a product of merchants contribution.

But what about the speculators, you may ask? Well, as it turns out, speculators merely help to grease the fourth function of money for the money changers (Mt.Gox et al.): a standard of deferred payment. However, as you may have already come to your own realization, when it comes to BTC, that particular function of money would soon be irrelevant, since BTC is truly a global currency. So, unless some of you (and especially miners) are planning on establishing trading agreements with the aliens any time soon, the money changers and their highly speculative worker bees shouldn't be your main focus.

So, let's use our speculator-driven bubbles wisely, shall we?... Update a mining equipment, bootstrap a new product/service, etc... BTC is meant to be spent, not hoarded! It's what makes it a real currency. I also hope that some of you will find time to read between the lines, as I wouldn't want a panic to ensue, if you know what I mean... Godspeed!