Topic: The current Bitcoin economic model doesn't work - page 12. (Read 96539 times)

No, the distinction between saving and hoarding does not rely on statistic deviations away from the group average under the definition I proposed.  

It has to do with deviations away from the historical price averages.  

A hoarder accumulates because they expect price to increase significantly.  

A saver does not accumulate because they expect price to increase significantly over time.  Rather, a saver saves to preserve an asset for future use, and possibly to benefit from appreciation in the asset (but again, does not expect significant price increases, as defined statistically).    

Another element of hoarding (but one that does not necessarily distinguish it from saving) is that the hoarder accumulates a significant amount of the asset.  You can argue that this definition relies on personal preference but this is not the case.  You do not have to have a preference for the asset in order to hoard, you merely need to accumulate a significant amount of it, and do so because you expect that the price will increase significantly.  Measuring the deviation from the mean also does not mean the definition relies on society's collective preferences, society's average level of acquisition could be based on factors other than the collective preference of individuals for the asset, people could be accumulating ugly smelly icky pond goo, because they believe that it is a store of value.  One person could be accumulating a significant amount of ugly smelly icky pond goo, expecting that it will not merely be a store of value in the future, but actually increase in value significantly, i.e., the person could be hoarding.  

Personal preferences for an asset be correlated with the level of accumulation, but they are different measures.  The definition's reliance on level of accumulation is entirely agnostic as to people's preferences for the asset (or society's).  

The definition distinguishes saving from hoarding in an objective manner that does not rely on personal preference.  It looks at two objective measures that can both be analyzed using statistical tools (price increase expectation and level of accumulation).  

I hope people don't find this discussion too insanely technical or boring, I actually think it's pretty interesting, I had never thought about the distinctions between hoarding, speculating, and saving until today.  I do think, though, that I have met the task set forth.  Although I definitely would like to hear if anyone has any other arguments against what I proposed?

I'm pretty sure you've defined all of the terms as statistic deviations away from the group average.

Post your complete theory in one place, just for clarity.

Except the factors don't look at personal preferences at all. 

Expectation of significant price increases certainly has nothing to do with preference.

And as to the first point, simply because preference might be correlated with amount of acquisition does not mean the two are measuring the same thing.

As the examples given above show, I may have little or no personal preference for an item, and accumulate a significant amount of it because of my expectation for future price increases, or tremendous personal preference for it, and accumulate an average amount of it because of an expectation of future price stability. 

The definition I gave is agnostic with respect to group or personal preference, although it may be correlated with it.  I am more likely to acquire significant amounts of things I personally prefer, but not guaranteed to, as is society as a whole. 

The definition is measuring two objective measures, the expectation of future price increases and the amount of acquisition, not the preference of the acquirer or of the society, which could be all over the map and diverge from personal (or collective) preferences. 

The task was to come up with a definition of hoarding that did not "rely on personal preference and is demonstrably different than 'saving'".   Task accomplished, no? 

Except that the objective factors you are looking at are such things as the number of standard deviations away from the average personal preferences of society.  You have taken your own personal preferences out of your system, but only by including everyone else's.

I do not see where I suggested that nobody should own more than the average number of something?  The definition I proposed is completely objective.  It has nothing to do with whether anybody prefers to own the asset in question, only whether they acquire significant amounts of it and expect significant price increases.  The definition simply distinguishes between hoarding and saving without regards to personal preferences, by focusing on other attributes of the acquisition. 

Example: I may have a personal preference for collecting rare earth metals, and I accumulate an average amount of them and also believe they will maintain price stability, my accumulation of rare earth metals is an example of saving, not hoarding under the definition.  But if I have a personal preference for rare earth metals and I accumulate a significant amount of them and expect the price to increase significantly because of scarcity or catastrophe, under the definition I proposed this is hoarding.  So the distinction is without regards to my personal preference for rare earth metals, or any asset.  It is rather an objective test that looks at actions and expectations, not preferences.  I can prefer something and acquire an average amount, or not prefer something and acquire a significant amount.  The definition I proposed looks not at personal preference but rather the objective factors noted.

are you asking for a theory of value that doesn't rely on preferences?  that's pants on head retarded.

It's because you're defining hoarding based on the preference of others. If nobody prefers to own guns, but I do, then I own a statistically significant number of guns.

It's essentially saying that nobody should own more than the average number of something. Completely and utterly subjective.

How so?  My definition, and the distinction between saving and hoarding, is completely agnostic about personal preferences, whether anybody has a personal preference for the asset being saved or hoarded is of no consequence.  What was asked for was an economic definition that distinguishes between the two, this has been accomplished.  According to the definition proposed, all that matters is expectation of future value increase and divergence from the mean in amount of acquisition.  As I stated above, I could hoard guns and liquor in anticipation of the apocalypse, and have absolutely no preference for either.  

Except that you haven't removed the personal preference part.  You've merely moved it from the individual to the group.

I think that was his point, but it's clearly not impossible.  There is a definable economic difference between saving and hoarding, as one other poster has acknowledged, and as even BitterTea appeared to acknowledge above at one point.  It hinges on both the amount of assets accumulated (hoarding requires a significant amount of accumulation, saving does not) as well as the expectation of price increases (hoarding requires an expectation of significant price increases for the accumulated asset, saving does not). 

I probably should just stick with the term "significant", as abnormal is probably not technically correct.  I am not a statistician, but if you google "statistically significant increase in price", you will see that this is a commonly used term in research.  My definition incorporates the notion that the hoarder expects that prices will increase significantly.  Statistical significance can also be used to measure divergence from the mean in population samples (like whether a particular person's holdings of bitcoins are significantly greater than the average holder).  I can go research how statisticians document statistical significance and report back, but why?  Is there anything in my definition that does not meet your criteria?  

He sent you off to search for argyle paint.  I think his point was that it was impossible, not that you needed to try to split your hairs more finely.

So, is this your definition?

The acquisition of a statistically abnormal amount of a resource, due to a belief that the resource will gain a statistically abnormal amount of value in the future.

My problem is that "statistically abnormal" is subjective.

What is a "statistically abnormal" amount of bitcoins, and what is a "statistically abnormal" expectation of value?

As I stated above, speculation requires a significant risk of loss, per the dictionary definition.  Hoarding does not.  I can expect an increase in value more than the statistical norm for a non-risky asset, like guns or liquor as discussed above, and be hoarding, but not speculating.  I also proposed that hoarding incorporates a statistically abnormal amount of acquisition, so holding one gun or one bitcoin would likely not qualify as well. 

"Holding an asset expecting an increase in value more than the statistical norm" is a definition of speculation, not hoarding. By this definition I could hold one gun or one bitcoin, expecting the value to skyrocket, and I would be hoarding. Do you agree with this?

Bittertea, where did you go?  I have answered every one of the criticisms you threw at my definition, so far I have defined hoarding, distinguished it from saving (and distinguished it from speculation, too, which was not even required), and done so in a way that is measurable outside of personal preference (using a generally accepted statistical test of significance for the amount of acquisition as well as the expectation of price increase).  Do you have anything else to throw at it?  If you don't want to pay, don't sweat, but at this point I am curious as to whether you concede or have some other angle to attack my definition. 

What good does it do for someone to horde all the bitcoins? If someone gets all the bitcoins everyone would leave the network and the hoarders coins would be worthless. Who would he spend them with? Whats the advantage of hording them? They are only valuable if people are buying them which means someone has to be selling them. Has anyone been able to horde ALL the gold in 5000 years? Not yet. I don't see how something do divisible and liquid as bitcoins could be horded anymore than gold.

Money must originate from a commodity with intrinsic value - ideally, one that is durable and divisible. Money starts out as a commodity with utility value, then, through demands which it satisfies alone, becomes a common medium of exchange, i.e., money. Even the fiat dollar derives its purchasing power from when it was backed by gold. We went from gold, to a paper substitute for the gold, to the acceptance of the paper notes themselves, to paper that is now completely divorced from gold, but has a purchasing power that descends from when it was originally backed by gold. This is best explained by Ludwig von Mises' Regression Theorem.

If I were to make cute little paper certificates and call them, say, Anderson notes, nobody would just accept them. Money originates as a commodity with utility value, and the dollar had to descend from something with a pre-existing demand.

 Since money is a commodity, then paper money is supposed to be a substitute for, not an addendum to, the money supply, redeemable in a fixed amount of specie.

Contrary to popular thinking, money is not supposed to be an abstract unit of account, nor is it imputed with value through some other good, but is, itself, a valuable commodity. Paper money should function much like that of a check, which does not add to the supply of money, but is a stand-in for cash.

This is what Bitcoins does. But it is better than gold because of how divisible it is.

Bitcoins durability comes from the electricity, hardware, software, and its divisibilty  come from the decimal places on the computer much like gold.

the problem is a lack of savings. Encouraging consumption and penalizing saving, which is what inflation does, is the antithesis of what we should be doing. Producers need to consume in order to sustain production. Encouraging everybody to run off and spend their cash balances only lengthens the process of production. Our problem is more like over consumption, which leads to capital decumulation and erodes savings. It was once widely understood that people cannot borrow in excess of available capital, since credit is the trading of future wealth for current wealth.


http://www.american-partisan.com/cols/2003/anderson/qtr2/0422.htm

The "hoarder" must trade something in exchange for "other"'s bitcoins. Either some sort of work, a finished product, or another medium of exchange (money). Since he is hoarding (saving) the bitcoins, as he gathers them the supply is still effectively reduced, increasing their purchasing power. That means that the "hoarder" must trade more goods or services in exchange for the same number of coins over time. He will eventually be doing an infinite amount of work for an infinitely small number of bitcoins.

In the real world though, he will quit long before that since there is no point to trying to own all the coins.

I'm sorry. "Stable" was not the right word.

You said that "other" will become rich in the other currency. What if that other currency doesn't exist?

What do you mean by "stable"?