Topic: Optimum Bitcoin Spending (Read 861 times)
After some more consideration, now I'm thinking the average rate should be proportional to the inverse of the block reward curve, ie. less now and more later. Perhaps 2% is even too high. I'll probably try to calculate an exact number in a few hours.
Some have proposed that spending half your Bitcoins every year is a good idea. Others think that Bitcoins should only be hoarded.
So, today, on the first Bitcoin Black Friday, I'd like to ask the question, "What is the optimal rate of Bitcoin spending versus savings?"
I'll also put forth a speculative answer. I would guess that the optimal rate of Bitcoin spending should be around 2-3% of your Bitcoins per year. It should be obvious that, if no one spends Bitcoins, the economy doesn't grow and Bitcoins will eventually lose value. Yet spending at even a moderately high rate incurs huge opportunity costs. So it seems difficult to justify any figure higher than a nominal amount.
What do you think?
So, today, on the first Bitcoin Black Friday, I'd like to ask the question, "What is the optimal rate of Bitcoin spending versus savings?"
I'll also put forth a speculative answer. I would guess that the optimal rate of Bitcoin spending should be around 2-3% of your Bitcoins per year. It should be obvious that, if no one spends Bitcoins, the economy doesn't grow and Bitcoins will eventually lose value. Yet spending at even a moderately high rate incurs huge opportunity costs. So it seems difficult to justify any figure higher than a nominal amount.
What do you think?
Spend whatever amount you would normally spend to support the lifestyle you want and can afford, except spend bitcoins rather than fiat whenever possible, and use your fiat income to buy more bitcoins. For the bitcoin super-rich, they should spend/invest a certain amount each year, I would suggest 5 percent, into philanthropic causes or non-evil business ventures, thus strengthening the bitcoin economy by increasing circulation velocity and redistributing it in a way that will draw more people and economic activity into the bitcoin sphere.
My very rough personal guidelines are:
Spend 25% per year depending on on current market (ATH = spend!), how long you've held and more importantly - what difference it would make in your life to not have to pay cash for it.
Then again the first time to spend or cash out should be to pay back your initial investment, that way you know that everything else is profit to be taken at a future date or lost.
Don't just spend because you're scared it will crash, actually buy something you would have paid cash for. If there's something you really can't buy in BTC just buy gift cards with it. In the US there's Gyft for that, in Europe sadly we don't have anything similar.
But hey, nice problem to have
Spend 25% per year depending on on current market (ATH = spend!), how long you've held and more importantly - what difference it would make in your life to not have to pay cash for it.
Then again the first time to spend or cash out should be to pay back your initial investment, that way you know that everything else is profit to be taken at a future date or lost.
Don't just spend because you're scared it will crash, actually buy something you would have paid cash for. If there's something you really can't buy in BTC just buy gift cards with it. In the US there's Gyft for that, in Europe sadly we don't have anything similar.
But hey, nice problem to have
Some have proposed that spending half your Bitcoins every year is a good idea. Others think that Bitcoins should only be hoarded.
So, today, on thefirst second Bitcoin Black Friday, I'd like to ask the question, "What is the optimal rate of Bitcoin spending versus savings?"
I'll also put forth a speculative answer. I would guess that the optimal rate of Bitcoin spending should be around 2-3% of your Bitcoins per year. It should be obvious that, if no one spends Bitcoins, the economy doesn't grow and Bitcoins will eventually lose value. Yet spending at even a moderately high rate incurs huge opportunity costs. So it seems difficult to justify any figure higher than a nominal amount.
What do you think?
So, today, on the
I'll also put forth a speculative answer. I would guess that the optimal rate of Bitcoin spending should be around 2-3% of your Bitcoins per year. It should be obvious that, if no one spends Bitcoins, the economy doesn't grow and Bitcoins will eventually lose value. Yet spending at even a moderately high rate incurs huge opportunity costs. So it seems difficult to justify any figure higher than a nominal amount.
What do you think?
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