Saving, or "hoarding" as it's derogatorily labeled, also provides an additional benefit to the community which is rarely considered.
By buying and holding these assets, the price is driven up toward what the holders of the coins believe to be the "true value"... whatever that means. By driving the price up in the present, the price signals to all the various components of the Bitcoin economy that there is significant interest in this thing. When entrepreneurs see the $100m market value of all btc, it gets their attention. They start projects which they may otherwise not have started had the price been lower.
Speculating on coins' value brings pricing signals into the present from the future (whether buying long or selling short). Having these price signals in the present is a huge value to the market participants, and helps fosters the progression of the market.
Consider the counter-factual... if everyone was -only- using btc as a currency and not as an investment. The price per coin would be much lower because supply would be higher. Many people who are developing the infrastructure and businesses behind the scenes may never have been interested if a Bitcoin was still worth $1.
tl;dr - speculation in any direction serves an important role in any efficient market. Be careful about demonizing it.
Topic: Why do you hoard bitcoin? Would you spend them if they were easier to obtain? (Read 2904 times)
July 25, 2011, 09:23:25 PM
July 25, 2011, 09:11:56 PM
It's called opportunity cost. And yes, the threat of opportunity cost DOES cause people to not spend money. This is why I do not believe an inherently deflationary currency will ever work.
People keep saying that a deflationary currency cannot work... I still don't get it.. WHY? what am I missing???
I'm glad SgtSpike called BS on the claims that lost gains are not losses. I happen to disagree with the comments about deflationary currency.
Bitcoins are undeniably inflating monetarily (about 30% annually). The deflation is based on current demand. Despite rapid monetary inflation, demand is high and prices are relatively stable or declining. Bitcoin is strong. Too strong?
The majority of people who are currently buying bitcoins do so because they believe in a its future value, otherwise the prices would fall. (I admit its more complicated than this as miners do not nec. sell and exchange markets represent only a fraction of the total economy).
But within a few years, the inflation rate will be lower than any national central bank's current targets. Because the population of the Earth is finite, the popularity growth will necessarily slow down as well. So, I don't see any deflation at all, except that produced by real demand, which is not a bad thing and will slow down eventually.
July 25, 2011, 07:57:22 PM
It's called opportunity cost. And yes, the threat of opportunity cost DOES cause people to not spend money. This is why I do not believe an inherently deflationary currency will ever work.
People keep saying that a deflationary currency cannot work... I still don't get it.. WHY? what am I missing???
July 25, 2011, 04:20:42 PM
No, the guy who bought the pizza was the chump, still.
Any arguments against buying the pizza in BTC apply equally well to buying the pizza in USD instead of buying more bitcoins. The guy had to eat something.
July 25, 2011, 04:09:06 PM
It's still a $125,000 pizza and climbing.....
No, it's not. 10,000 BTC was what pizzas were worth back then. It's like saying a car you bought in the 50s that's appreciated well was a $250,000 car back then. It wasn't.
Or more pertinent to this crowd, it's like thinking the guy you bought gold off of 10 years ago was a chump. No, he had his reasons for selling just like you had your reasons for buying.
No, the guy who bought the pizza was the chump, still.
July 25, 2011, 04:02:45 PM
It's still a $125,000 pizza and climbing.....
No, it's not. 10,000 BTC was what pizzas were worth back then. It's like saying a car you bought in the 50s that's appreciated well was a $250,000 car back then. It wasn't.
Or more pertinent to this crowd, it's like thinking the guy you bought gold off of 10 years ago was a chump. No, he had his reasons for selling just like you had your reasons for buying.
July 25, 2011, 03:48:50 PM
The 10,000 BTC pizza never cost anyone $140,000. The guy who bought it spent an appropriate amount at the time. He didn't lose money by spending it.
I always view lost profit as ....losses. Maybe I should not. But I do. The guy who bought Pizza did in fact lose a great "potential" which could definitely be called a "loss". I can see that reasoning very well.
I just call it "potential loss".
It's silly to hoard bitcoins. Just spend it if you have something to spend it on and replace the spent bitcoins by converting USD. The fact that bitcoin value can go up is besides the point. Just put however many bitcoins you want to save/hoard aside and get more that you will spend to actually help the bitcoin economy.
And to those people who think that the person who bought the 10,000 BTC pizza was stupid, what if because he was able to make a real world transaction with his mined bitcoins, he figured that bitcoins was worth the investment. So he decided to triple his mining hashrate and made 20,000 BTC more than before. Now tell me if that purchase was worthwhile.
It's still a $125,000 pizza and climbing.....
July 25, 2011, 03:34:04 PM
The 10,000 BTC pizza never cost anyone $140,000. The guy who bought it spent an appropriate amount at the time. He didn't lose money by spending it.
I always view lost profit as ....losses. Maybe I should not. But I do. The guy who bought Pizza did in fact lose a great "potential" which could definitely be called a "loss". I can see that reasoning very well.
I just call it "potential loss".
It's silly to hoard bitcoins. Just spend it if you have something to spend it on and replace the spent bitcoins by converting USD. The fact that bitcoin value can go up is besides the point. Just put however many bitcoins you want to save/hoard aside and get more that you will spend to actually help the bitcoin economy.
And to those people who think that the person who bought the 10,000 BTC pizza was stupid, what if because he was able to make a real world transaction with his mined bitcoins, he figured that bitcoins was worth the investment. So he decided to triple his mining hashrate and made 20,000 BTC more than before. Now tell me if that purchase was worthwhile.
July 25, 2011, 02:47:18 PM
I haven't reached my target level of savings yet, so I'm reluctant to spend money in general. Once I get there, I'll be more inclined to spend both BTC and USD.
July 25, 2011, 02:11:16 PM
Many people are complaining these days about people hoarding bitcoins in speculation and not spending them as they should with any normal currency and this being a bad trend for bitcoin.
I have a suspicious feeling myself that if bitcoins were easy and fast to obtain, then people would not hoard them nearly as much. I think because of Dwolla and the 3 day wait, and then the transfer to Mt Gox or Tradehill, that we wait too long, and worry that bitcoins could skyrocket overnight.
Does this make sense, and how do you feel about it?
I have a suspicious feeling myself that if bitcoins were easy and fast to obtain, then people would not hoard them nearly as much. I think because of Dwolla and the 3 day wait, and then the transfer to Mt Gox or Tradehill, that we wait too long, and worry that bitcoins could skyrocket overnight.
Does this make sense, and how do you feel about it?
I doubt it.
As long as Bitcoin is competing against inflationary alternatives (and not broken), I expect that it would be a pretty tempting place to park some value. Particularly when interest rates one can get from mainstream are near zero, and the regulatory and enforcement agencies are captured by the large financial players and assisting them in screwing everyone else.
A monetary system which was highly inflationary and/or highly taxed would be a more suitable one if high liquidity is desired. Bitcoin could be re-implemented to enhance some of these features...but I'm not sure how popular that would be. From what I can understand of the Bitcoin project, it seems unlikely that the designer(s) of the system were not prescient enough to have anticipate the phenomenon you are unhappy about
When a lot of money is flying around, it is easier to reach out and grab a piece if one is positioned well do do so. I suspect that is part of the reason for the current fiscal policies in the US.
This same security issue could be applied to the reason people are not spending bitcoins as easily, too. Maybe wallet security has something to do with it, too.
July 25, 2011, 02:06:23 PM
A single bitcoin was worth what, a dollar just in April? and just pennies last year. I think Ill pass on buying some silly little nicknacks which could ultimately end up costing me thousands of dollars, thanks.
Look at this people. This is the intelligence of the bitcoin community.
That's right, it's fucked.
I think the problem with this statement, being more polite than smexytimez, it that the idea that buying something now costs you money is a logical fallacy.
If I sell silver now at $40 an ounce, and it goes up to $50 next year, did I lose $10? No. Did doing the deal now cost me money? No.
If I buy stock at 50, it goes up to 100, I sell, it goes up to 200, then back down to 25, how much money did I make? How much did I lose? What did I earn? What did if cost? I made a $50 profit. It doesn't matter that I could have sold at 200. I still made a $50 profit.
The 10,000 BTC pizza never cost anyone $140,000. The guy who bought it spent an appropriate amount at the time. He didn't lose money by spending it.
Better wording would be that I expect to profit more if I hold it, not that I expect it to cost me by buying stuff now. But then that gets us back to the argument that if no-one spends bitcoins, and everyone hoards, they won't be worth anything in the future, because they're useless.
July 25, 2011, 02:01:20 PM
Many people are complaining these days about people hoarding bitcoins in speculation and not spending them as they should with any normal currency and this being a bad trend for bitcoin.
I have a suspicious feeling myself that if bitcoins were easy and fast to obtain, then people would not hoard them nearly as much. I think because of Dwolla and the 3 day wait, and then the transfer to Mt Gox or Tradehill, that we wait too long, and worry that bitcoins could skyrocket overnight.
Does this make sense, and how do you feel about it?
I have a suspicious feeling myself that if bitcoins were easy and fast to obtain, then people would not hoard them nearly as much. I think because of Dwolla and the 3 day wait, and then the transfer to Mt Gox or Tradehill, that we wait too long, and worry that bitcoins could skyrocket overnight.
Does this make sense, and how do you feel about it?
I doubt it.
As long as Bitcoin is competing against inflationary alternatives (and not broken), I expect that it would be a pretty tempting place to park some value. Particularly when interest rates one can get from mainstream are near zero, and the regulatory and enforcement agencies are captured by the large financial players and assisting them in screwing everyone else.
A monetary system which was highly inflationary and/or highly taxed would be a more suitable one if high liquidity is desired. Bitcoin could be re-implemented to enhance some of these features...but I'm not sure how popular that would be. From what I can understand of the Bitcoin project, it seems unlikely that the designer(s) of the system were not prescient enough to have anticipate the phenomenon you are unhappy about
When a lot of money is flying around, it is easier to reach out and grab a piece if one is positioned well do do so. I suspect that is part of the reason for the current fiscal policies in the US.
July 25, 2011, 01:57:31 PM
I've got more than I can spend right now. I'm not hoarding them as a speculative investment but rather because opportunities for buying things I want are still limited.
This is what I think is going on! If you think too many people are hoarding, then offer a compelling service or attractive goods for sale that will compel them to spend! The other way to look at this is that there is nothing worthwhile to spend bitcoins on, so people hold on to them passively, without really thinking about it.
This is definitely the other side of the coin. Very truthful, indeed.
July 25, 2011, 01:51:52 PM
I've got more than I can spend right now. I'm not hoarding them as a speculative investment but rather because opportunities for buying things I want are still limited.
This is what I think is going on! If you think too many people are hoarding, then offer a compelling service or attractive goods for sale that will compel them to spend! The other way to look at this is that there is nothing worthwhile to spend bitcoins on, so people hold on to them passively, without really thinking about it.
July 25, 2011, 01:45:01 PM
A single bitcoin was worth what, a dollar just in April? and just pennies last year. I think Ill pass on buying some silly little nicknacks which could ultimately end up costing me thousands of dollars, thanks.
Look at this people. This is the intelligence of the bitcoin community.
That's right, it's fucked.
I think the problem with this statement, being more polite than smexytimez, it that the idea that buying something now costs you money is a logical fallacy.
If I sell silver now at $40 an ounce, and it goes up to $50 next year, did I lose $10? No. Did doing the deal now cost me money? No.
If I buy stock at 50, it goes up to 100, I sell, it goes up to 200, then back down to 25, how much money did I make? How much did I lose? What did I earn? What did if cost? I made a $50 profit. It doesn't matter that I could have sold at 200. I still made a $50 profit.
The 10,000 BTC pizza never cost anyone $140,000. The guy who bought it spent an appropriate amount at the time. He didn't lose money by spending it.
Better wording would be that I expect to profit more if I hold it, not that I expect it to cost me by buying stuff now. But then that gets us back to the argument that if no-one spends bitcoins, and everyone hoards, they won't be worth anything in the future, because they're useless.
I always view lost profit as ....losses. Maybe I should not. But I do. The guy who bought Pizza did in fact lose a great "potential" which could definitely be called a "loss". I can see that reasoning very well.
I just call it "potential loss".
July 25, 2011, 01:33:15 PM
A single bitcoin was worth what, a dollar just in April? and just pennies last year. I think Ill pass on buying some silly little nicknacks which could ultimately end up costing me thousands of dollars, thanks.
Look at this people. This is the intelligence of the bitcoin community.
That's right, it's fucked.
I think the problem with this statement, being more polite than smexytimez, it that the idea that buying something now costs you money is a logical fallacy.
If I sell silver now at $40 an ounce, and it goes up to $50 next year, did I lose $10? No. Did doing the deal now cost me money? No.
If I buy stock at 50, it goes up to 100, I sell, it goes up to 200, then back down to 25, how much money did I make? How much did I lose? What did I earn? What did if cost? I made a $50 profit. It doesn't matter that I could have sold at 200. I still made a $50 profit.
The 10,000 BTC pizza never cost anyone $140,000. The guy who bought it spent an appropriate amount at the time. He didn't lose money by spending it.
Better wording would be that I expect to profit more if I hold it, not that I expect it to cost me by buying stuff now. But then that gets us back to the argument that if no-one spends bitcoins, and everyone hoards, they won't be worth anything in the future, because they're useless.
July 25, 2011, 12:06:06 PM
I've got more than I can spend right now. I'm not hoarding them as a speculative investment but rather because opportunities for buying things I want are still limited.
Me too, it would be great to use them in online stores, but there's hardly anything interesting available. I've tested the waters by getting a LED bulb from bitcoingadgets, it was a nice experience, but so far the only item I needed/wanted that could be paid in BTC.
July 25, 2011, 10:45:18 AM
A single bitcoin was worth what, a dollar just in April? and just pennies last year. I think Ill pass on buying some silly little nicknacks which could ultimately end up costing me thousands of dollars, thanks.
Look at this people. This is the intelligence of the bitcoin community.
That's right, it's fucked.
July 25, 2011, 09:55:54 AM
I save some, i buy some, i spend some.
Why do i save some? Because i can see bitcoin skyrocket and become a big boy eventually, just as an investment, same with the silver i bought.
Why do i buy and spend them? Because i want to stimulate the economy, after all that is key to the success of bitcoin pure hoarders are killers of their own investment. (or at least, by doing so they increase the risk of their investment turning around on them)
Why do i save some? Because i can see bitcoin skyrocket and become a big boy eventually, just as an investment, same with the silver i bought.
Why do i buy and spend them? Because i want to stimulate the economy, after all that is key to the success of bitcoin pure hoarders are killers of their own investment. (or at least, by doing so they increase the risk of their investment turning around on them)
July 25, 2011, 06:02:25 AM
I've got more than I can spend right now. I'm not hoarding them as a speculative investment but rather because opportunities for buying things I want are still limited.
I don't use my credit card every day either. So Bitcoin merchants are competing for a slice of my commerce that wasn't all that big to begin with, and the goods on offer in Bitland are much more limited.
This is something that will resolve itself with time, I think. I want to buy. It's just not easy enough right now. Things like searchbitcoin help a lot. A good replacement for ClearCoin would help.
I don't use my credit card every day either. So Bitcoin merchants are competing for a slice of my commerce that wasn't all that big to begin with, and the goods on offer in Bitland are much more limited.
This is something that will resolve itself with time, I think. I want to buy. It's just not easy enough right now. Things like searchbitcoin help a lot. A good replacement for ClearCoin would help.
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