Topic: How to discourage hoarding - brainstorm (Read 4881 times)

On the op's question about finding ways to discourage hoarding:  It's unnecessary because these incentives are self regulating.  I also agree with other poster's takes on the word "hoarding", a negative connotation for "saving", which is actually vital to growth and investment, but for the sake of argument lets work under the assumption that it is actually bad.

"Hoarding" only pushes up the value of bitcoins remaining in circulation, as well as the demand for bitcoins.  At some point a hoarder will sell bitcoins or buy goods when he feels the value of the bitcoin has risen to his expected level. Hoarding for the sake of hoarding has no value whatsoever, because bitcoins themselves have no utility by themselves, only as a tool to facilitate transactions.  So yes a hoarder could change the value of coins, but the value fluctuations are necessary to create incentives to spend or save. 

Eventually as the economy grows, i see the value stabilizing, but right now things seem very volatile since the only real utility is speculation.

I think more people would be happy to invest their saved bitcoin, which is why we opened up glbse.com

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.

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

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-

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.

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.

+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.

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-

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.

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.

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-
 

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.

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.

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

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

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.

That what entrepreneurs are for.

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.

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.