Topic: The best way to Hoard coins - page 3. (Read 4827 times)

I very much agree with the op, hence Im only holding on to a small precentage of the coins I recieve. My thinking is that this way the coins I hold on will be worth more in the unforseeable future. In oppose to if we all hoard every bitcent we get, bitcoin fails.

Well, not quite true.  

Let's say an item I need is priced in dollars, and the price is $10.    So if I prefer to pay for that purchase in bitcoins, I then buy $10 worth of bitcoins.  It doesn't matter what the exchange rate is.   If BTC/USD is $10, then I need 1 BTC.   If BTC/USD is $2 then I need 5 BTC.  Either way, I am exchanging $10 of fiat to get $10 worth of bitcoins.  

So in that context, you are correct.  Hoarding does nothing for the bitcoin economy -- it doesn't hurt nor help.  

Now if I am a Bitcoin-related entrepreneur I might hold bitcoins.  And I might be looking to raise funds for my entrepreneurial ambitions.  
If there is hoarding of coins and the exchange rate rises quite a bit, my coins have more buying power as the result of others hoarding.

Thus hoarding helps the undercapitalized risk-taking entrepreneur who bought or mined bitcoins for speculation earlier.

At the same time, an increase in the exchange rate due simply to hoarding increases the risk of a price collapse.  If that demand isn't due to those bitcoins being used in commerce for buying and selling, then many hoarders have greater control over the exchange rate.  There was a nearly 30% drop in the exchange  from the October high to October low.   During that time there probably wasn't a 30% decrease in the use of bitcoins for commerce transactions so the bulk of that move was speculative buying and selling (mostly selling).     If there wasn't hoarding the price probably would never have reached $13, and thus the drop wouldn't have been as dramatic.

This exchange rate volatility, which can be attributed to speculative activity (hoarding) then actually does do something for the Bitcoin economy -- it hurts it, at least from a merchant's perspective.  A merchant doesn't want to see the profits from a sale vaporize because the currency rate took a turn south.  As a result the merchant will use a payment processor to convert those coins to fiat, which add costs (which  makes Bitcoin less favored for commerce) and also lessens the likelihood that the merchant in turn will use those coins for its purchases.

The thing is, ... there's no "right" way.  Bitcoins function as a store of value, and they will be held for speculative purposes by those willing to take that risk.

No matter what payment method is used, a merchant -- especially one starting with no customer base, has a very tall hill to climb.  That some investors are holding onto bitcoins should really be of little concern to that merchant.

I happily spend BTC when it rises in value above what I originally paid for it...  
if I happen to find something that I want/need that I can pay for with BTC...
and especially if the merchant offers a discount in BTC over other forms of payment.  

Those latter things are fairly lacking at the moment so I just save that BTC for
when I can make good use of it.  And I see that as being more beneficial to the
BTC economy than harmful.

/edit btw I do let my customers know that I take BTC and I offer them a discount
over cash or cheques and a greater discount over paypal.  Oh my gosh... now
that I am editing this post I see that I have to press that "save" button... I am
somewhat reluctant to do that now that it appears there is a negative stigma
against such practices... oh well I will get over it...  thank god it doesn't offer the
option to "hoard" my post...    

and another btw... in regard to the OP...  what good is happiness which isn't shared?  

I've learned in my economics 101 class that a good economy is one that saves and spends equally...whatever that means.

Hoarding: http://en.wikipedia.org/wiki/Hoarding_%28economics%29

Saving: http://en.wikipedia.org/wiki/Saving

What is the problem with that?

I'm also not spending all my BTC immediately, I'm saving them to when I need them.

There really is no difference economically between 'hoarding' and 'saving'. They are both words for a person's demand for money (http://en.m.wikipedia.org/wiki/Demand_for_money#section_1).

If you read in that wiki some of the demand for money is its transaction value and some is because of its value as an asset. Because of the fixed supply model for Bitcoin, there is more asset demand for Bitcoin compared to print-all-you-want fiat money.

The only difference in the terminology is that 'hoarding' is deemed to be bad but 'saving' is good. Both reflect demand for money, to project to future usage.

There is a small but important difference between Hoarding and Saving.

Saving is, put aside what you don't need today for future use.

While hording is to acquire as much as possible of something, therefore short its availability and artificially increases the value. This is indeed damaging the BTC economy.

Edit: When I read the threads title, I came here to troll state my opinion that hoarding damages Bitcoin, but I was just lured in. I totally agree with the OP.

'Hoarding', which is identical to 'Saving', is the act of giving a 'future-you' what you do not need to consume today.

Aesop's fable: the Ant and the Grasshopper

On the newbie forum there was a thread about how to safely stash bitcoins for long term storage. I wrote a response, and realized that hoarding is a big deal for bitcoin users, and this might be worth its own thread:

----
Simplest way to stash bitcoin - don't do it!

Bitcoins are ment to be spent! All this hoarding does nothing for the bitcoin economy.

If everyone just stashed bitcoins away forever, do you know what bitcoins would be worth once you did take them out again - squat.

You may be dead in 10 years - and all that investment in bitcoin will vanish with your squishy brain wallet.

Buy some alpaca socks and enjoy your bitcoins today.

One day, when a super-quantum computer cracks the encryption to all of the bitcoin addresses in 5 minutes, and everyone cries about their lost coins, you will have warm and comfy feet.

This advise applies to hoarding of all monies - including precious metals (I heard that there is enough gold in the earth's core to cover the earth with 1 meter deep of gold (probably exaggeration)).

 Happiness is the only thing you should hoard.