Topic: The current Bitcoin economic model doesn't work - page 13. (Read 96539 times)

So a system with 2 currencies would be more 'stable' than a system with just 1?

Yes. As the "hoarder" attempts to acquire all the coins, the exchange rate rises (supply diminishes, demand stays the same). The "other" becomes rich in the other currency, while the "hoarder" becomes rich in bitcoins. Essentially, nothing changes.

Trivial case: 2 people. The "hoarder" and the "other".

The "hoarder" gets all the bitcoins. The prices fall to zero. The "hoarder" can get anything by spending nothing. The "other" then becomes a slave.

Am I wrong?

You guys seem to forget that the kinds of people that buy irrationally are also the same kinds of people that sell irrationally. If they can't afford to keep buying up the new coins as they are issued/minted/mined at the same rate in which they purchased their last coins, the price will eventually fall. Once it does, it falls heads over heels because these same fools raised their cost average over time as they bought every week or day while the price was rising.

The real people you sound like we should worry about are the ones who bought massive amounts three months ago and have been sitting on it all while the price increases. But these individuals then aren't really hoarders, they are savers. If your only beef with them is that they purchased "too much Bitcoin" then you're basically saying we should despise people who had a lot of capital they wanted to translate into legitimacy of Bitcoin.

I first heard about Bitcoin in 2009 when I was looking for a way to generate money idly by running a Prime Number generator. I found the community and even downloaded a cruddy client. The community was so small then that no one offered money at all for coins. I even forgot the name (or it was never really called Bitcoin). I never took it seriously and left, finding it again well over a year later.

It took a lot of people taking Bitcoin seriously to get it to where it is today. It's going to take a lot more people taking it seriously to get it where it competes with government-backed fiat currency on a global scale. That means larger and larger investors and custom mining ASIC in large datacenters.

The best thing all of us have going for us right now is that we were the pioneers.

"Hoarding" is a moot concept. It's not important. It's a bogeyman.

As money is "withheld" from circulation, interest rates rise as the demand for money increases. As these rates rise, it becomes increasingly attractive to loan out "hoarded" funds and thus it's a self-correcting problem. ie- not really a problem at all.

Hoarding tends to be a loaded term implying possible wrongness or something a bit off.

A community might save up lots of stuff to build a big project, but a dragon does not save up oodles of gold and jewels to any purpose other than to have the largest hoard er I mean savings.

People might save boxtops or someting to some purpose but although I don't watch the television show "hoarders" I get the impression much of the so called hoarding is not to any particular purpose it is just sheer accumulation.

People might save eggs or a nice roast or something for sunday dinner but in wartime the longer they save rationed items for more sunday dinners they never actually have the more likely they are to be accused of hoarding.

-MarkM-

hoarding means your expected price appreciation/depreciation is entirely in the market price for the object itself.

saving covers everything that involves investing in a productive venture to receive more of that item in the future.

hoarding you have X of some item and expect that to be worth more in the future.
saving you have X of some item and try to make it grow by some percentage over time.

hoarding is stuffing your mattress
savings is making loans

There are different ways of measuring significance using statistics, but that does not mean it can not be done in a manner that does not rely on personal preference.  

Also, I really didn't think there were any value judgments expressed in the definitions I offered.  In popular discourse hoarding may have a negative connotation, but I thought you were looking for an economic definition that distinguished it from saving, which I think I provided.  

With the exception of the crazy person, the definition I offered had nothing to do with personal preference.  I could hoard guns and liquor and have no personal preference for these items, I could be someone who never drinks and never shoots.  

The definition of hoarding simply refers to the acquisition based on an expectation of significant future price increases.  Again, this is something that could be measured statistically, you could look at historical price variance for these assets, and if I was buying them with the expectation that their prices would increase beyond the normal distribution, I would probably be hoarding, regardless of my preference for the items.  

With savings, on the other hand, there is no requirement that the saver expect that his savings will increase beyond the normal range of increase based on historical data and variance.  

What is significantly more? Twice as many as normal? Ten times? What is an extreme price increase? Double? Ten times? Fifty times?

This all subjective and is no different than "you are saving more than I think you should, thus you are hoarding".

The problem with your logic is that the only person who can tell what is the correct amount of anything to save is that person, no one else.

I don't think it does.  Significance can be measured statistically, and can be defined as "observations that are unlikely to occur by chance and that therefore indicate a systematic cause."  Someone that amasses significantly more guns and liquor than the average Joe, as measured statistically, and does so because of the expectation of extreme price increases in times of anarchy or scarcity, is hoarding. 

Your definition requires the subjective valuation of a personal preference and does not qualify for my bounty.

I think the language I used originally is probably clearer, that hoarding involves an expectation that the future price will become "extremely valuable compared with current value" (for the non-crazy hoarder).  The distinction between hoarding and saving is that saving does not require an expectation of significant or extreme price increases, while hoarding does.  The distinction between hoarding and speculating is that hoarding does not require a significant risk of loss, while speculation does.  These definitions can overlap depending on the circumstances, but that does not mean they are the same. 

As for your examples, I would think that neither involve hoarding.  In the first case while you do have an expectation of significant price increases, you just hold 1, whereas hoarding probably requires amassing significant quantities.  In your second case, while you have amassed significant quantities, there isn't the expectation of significant future price increases.  The first case may be an example of speculation (because the value of the BTC is currently around $9 USD and could drop significantly), and the second may be an example of saving. 

"Windfall profits"... that is a subjective valuation essentially meaning "too many profits". Rather like "hoarding" = "saving too much".

If I hold 1 BTC with the expectation that it will someday buy me a house, is that hoarding?

If I hold 5,000,000 BTC with the expectation of a mild increase in value, is that hoarding?

The difference between hoarding and saving is the expectation of windfall profits, or (in the case of the crazy person) the "saving" of items that have no value in the market.  Saving doesn't entail expectation of windfall profits.  That's not to say it can't happen, and of course when you put money into the bank you hope it increases in value, but the proper definition of saving does not involve an expectation of windfall profits in the future.  Amassing a storehouse of guns and liquor in anticipation of the apocalypse, however, that is hoarding. 

Ok, I agree with you on this point, but what is the difference between "hoarding" guns and liquor and "saving" guns and liquor? Can I save something with the expectation that it will increase in value, or is that always hoarding?

Does that mean that putting aside an asset is only saving if you expect it to stay the same or decrease in value?

I think in most cases you are correct.  The dictionary definition, however, generally looks at speculation as a risky investment.  Most of the time an asset that may appreciate significantly might also decline in value significantly.  But this is not necessary for hoarding.  For example, I could "hoard" guns and liquor on the belief that anarchy will break out and these assets will become incredibly valuable.  But I don't think this is "speculation" because these are not high risk assets, and they generally maintain their value over time.

If you are saving something in order to capitalize on anticipated future increase in value, you are speculating on its future value. You can speculate over any time period... minutes or years. Would you consider it hoarding to buy one bitcoin expecting that its value will increase in the next two minutes?

Speculation is defined as "investment involving high risk but also the possibility of high profits"  My definition did not focus on risk, hoarding doesn't necessarily involve high risk, it merely involves an anticipation of windfall profits due to either scarcity of the resource or external catastrophe (or both).  You can hoard something that is not a high risk asset, speculation requires a high risk of loss. 

No, not really.  That is the function of speculation, as a predictive market.  If the speculator is correct in his predictions, then he profits while the market has stored resources that it needs during the crisis.  If he is wrong, he loses money.

1) the market values it as excessive, that's the point.  Yes, the crazy person may value paperclips a lot more than the market, but the point is that the crazy hoarder's subjective valuation of the item is out of sync with the market. 

2/3) may also work for a definition of speculation, but I think 2 more specifically defines hoarding, no?