[Houshalter]

>And in the end, all currencies are tokens of account. Meaning that they exist in the end to make sure nobody double spends. But to be effective in doing so, the token material must the worth less then the face value. If not, people will have an incentive to hoard. And that will drive an economy into the ground.

Lots of goods tend to increase in value over time. Land, gold, stocks, etc. How is bitcoin any different? If people want to hoard, nothing is stopping them. They will just hoard, nothing has ever been stopping them.

And hoarding isn't a bad thing. If you aren't spending your money, then you aren't taking resources out of the economy. That means more resources for everyone else. Spending money, consumption, is what should be discouraged.

[digi_owl]

Hoarding is a bad thing when we are talking about a currency.

The main function of a currency is exchange, not storage.

Without a currency you are back at the barter stage, or move to IOUs (that may ironically turn into currency if allows to pass from person to person).

[oppositelock]

Hoarding has a price - the marginal utility of each remaining token of value increases, so it becomes much more expensive to hoard. Some amount always circulates.

Hoarding in a mattress represents a lost opportunity cost. Most hoarders put their money into something that yields interest, that gets it circulating, and it is in fact, how our entire banking system works.

Also, let's call hoarding something else, namely "saving". In a healthy economy, you need saving and spending. Saving is a way of deferring spending to the future. When lots of people save, it means it's a good time to borrow money because it's cheap due to the nature of the banking system and lending and because it means that people have money to spend on whatever you're producing with the credit. You really can't have spending without saving and vice versa, otherwise you risk some kind of credit crunch or collapse of the currency. (The USD is in a scary place, BTW).

If you're trying to argue against Bitcoin as a currency because it's used as a store of value, then you have to be against the USD or Euro too. The ratio of saving to spending is different among these, and in Bitcoin-land the ratio is particularly skewed to saving due to the early adopter advantage, but there's still a healthy amount of churn for a currency that's so young, despite profound technical encumberance to its usability.

[digi_owl]

There can always be made more USD or Euro, the bitcoin had a fixed amount from day one. That makes it a commodity like gold, not a currency.

[Houshalter]

I don't see how you get that conclusion. For one thing, it's not even true, people don't actually hoard currency. They put it in a bank, which invests 90% of it back out into the economy. They've done that even since currency was backed by gold.

Second, even if people literally did fill vaults full of cash, it doesn't hurt anyone. It's not like all the currency is going to actually disappear and people will have to go back to bartering. The remaining currency just becomes worth more.

The bitcoin economy doesn't collapse everytime someone loses a wallet. It never will, because the remaining coins can always be divided further, and always increase in value further.

Lastly it's not like people will literally never spend that money again. They of course intend to spend it at some point. At some point the number of people saving vs taking out of savings will stabilize and everything will be normal. And saving for the future isn't a bad thing. In fact it should be encouraged.

[aserafini]

The remaining currency just becomes worth more.

This is the key point that addresses why hoarding makes no difference to Bitcoin's utility as a currency.

[digi_owl]

No people do not hoard currency, but they do hoard commodities. As such, bitcoin is at present more a commodity (its setup pretty much use math to emulate gold) than a currency. And the situation will only get worse with time.

[Houshalter]

As I said in the parent comment, there's nothing different about bitcoin vs other commodities that people can hoard.

[digi_owl]

Except that everyone is trying to used bitcoin as currency.

[jacobwcarlson]

> And hoarding isn't a bad thing. If you aren't spending your money, then you aren't taking resources out of the economy. That means more resources for everyone else. Spending money, consumption, is what should be discouraged.

I'm usually pretty good at detecting irony, so I apologize if I've been bested here. But are you honestly suggesting that reductions in consumption and spending are favorable to nation's economy?

If you are being ironic, I don't think I understand your message. Would you mind explaining it to me?

[Houshalter]

>are you honestly suggesting that reductions in consumption and spending are favorable to nation's economy?

Yes absolutely. All the economy does is just allocate resources. If some area of the economy is consuming more, than that is coming at the expense of other areas of the economy. Likewise if spending in one area is cut, that leaves resources available for other things.

That's all supply and demand is. Prices increase or decrease with demand until the supply is stable.

[JumpCrisscross]

Economics, like physics, scales messily. If the whole world decided to save everything for one year starting today, the economy would free fall. Since nobody is consuming, nobody need produce. Factories grind to a halt and deteriorate, social bonds and casual knowledge fade, and the world returns a year later materially worse off.

[Houshalter]

Yes and it should. The economy isn't a static thing. It should adapt based on demand. If suddenly demand went down, then prices would fall until they were low enough that the remaining supply can be sold off.