Is the practice of holding bitcoins good or bad for it's growth?I had recently come across a statement that bitcoin is a settlement system rather than store of value/digital gold and holding bitcoins is somewhat making it accessible to rich people only.
Arguments in favor of hoarding bitcoins:
1. Since bitcoins are limited in numbers, holding would obviously increase the demand and thus the price.
2. Bitcoin as a commodity/hoarding, as a currency/spending. So once the price increases, what we earlier bought for 1 BTC can buy it now for 0.5.
3. Merchants would prefer BTC over USD. (In the hopes that prices would increase)
4. Bitcoin is divisible. Everyone cannot own 5 or 10 BTC, but still holding on to a few satoshis would be profitable in the long-term.
Now there are some arguments against holding:
1. Deflation.
https://en.bitcoin.it/wiki/Deflationary_spiral
Quote
The ‘deflationary spiral’ is a real condition that affects the popular fractional reserve backing system. Bitcoin is not affected by this because it is fundamentally different from popular currency.
2. If the elites gets hold of majority of bitcoins, the demand and price would be high, but since the common man would not be able to afford it, demand decreases, elites dump, price crashes, common man buys some, market stabilizes a bit, and elites buys back more. It kind of becomes a centralized holding affair.
3. Rather than hoarding, an environment where bitcoins are more used as a mode of payment for buying goods or services is more beneficial for it's growth.
So what do you think, is hoarding bitcoins good or bad for it's growth?
Edited the poll.