Limited coins and hoarding - page 8.

Giraffe.BTC

member

Activity: 70

Merit: 10

Quote from: Blinken on November 04, 2011, 01:16:47 PM

One of the most serious problems is hoarding. Whenever you have a commodity that has a fixed supply against an increasing demand, inevitably hoarding occurs.

This is one of the key reasons why currencies are designed to expand: steady expansion of a currency improves liquidity.

I agree with you 100%, but don't expect much traction on this issue here. Many of the hard-core Bitcoiners are too blinded by their own ideology to recognize the basic fundamentals of economics in the real world. All you'll get is analogies to gold, which is the heart of Bitcoin's problems as a currency. Bitcoin isn't gold, neither Bitcoin nor gold are a currency, and neither would work as a global medium of exchange without major disruptions to world economies.

But all they see is that the coins they hold would get really valuable if everybody started using them. Plus they aren't evil "fiat" money printed by the CIA and used to control their thoughts and therefore automatically good.

cbeast

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Activity: 1736

Merit: 1014

Let's talk governance, lipstick, and pigs.

Quote from: Blinken on November 04, 2011, 01:16:47 PM

One of the most serious problems is hoarding... The natural way to do P2P currency expansion is to award new coins proportionately to those who hold existing coins.

I see. So the way to solve hoarding is to reward folks that hoard coins is to give them more coins?

Blinken

sr. member

Activity: 338

Merit: 253

I have said it before, but asymptotically limiting the number of bitcoins has bad repercussions.

One of the most serious problems is hoarding. Whenever you have a commodity that has a fixed supply against an increasing demand, inevitably hoarding occurs.

This is one of the key reasons why currencies are designed to expand: steady expansion of a currency improves liquidity.

Bitcoiners complain about non-use of coins and liquidity, but I think it is largely their own fault for capping the bitcoin supply, an elementary design blunder. Not only that, the closer we get to 21 million and the more users there are, the more intense the hoarding will become. This is basic economics stuff. Seriously, people around here need to read Adam Smith. (Hey, I know its a fat book, maybe your mom can help you with the big words.)

Also, as long as I am ranting, the procedure of giving bitcoins to people who run computational server farms is totally off the wall. The natural way to do P2P currency expansion is to award new coins proportionately to those who hold existing coins. Duh.

Topic: Limited coins and hoarding - page 8. (Read 8882 times)