[betterunix]

It is perfectly rational when you know that there are deflationary trends with the money. Sitting on it means you are becoming wealthier.

Of course, if everyone does this, the currency will collapse, but that is just the beginning of Bitcoin's problems.

[oleganza]

It will not collapse. It's just the price will stabilize.

[betterunix]

If nobody is willing to trade a currency, the currency is worthless -- also known as a collapse.

[eru]

Why? People are still perfectly willing to buy. Just not willing to sell. That will just lead to higher prices, not collapse.

[betterunix]

If nobody is willing to sell, then there is no trade. That makes a currency worthless. Bitcoin is even more vulnerable that gold in that regard, because if Bitcoin stops being used as a currency then there will be no incentive for anyone to run the Bitcoin software -- and then Bitcoin will just die.

[oleganza]

You are confusing two causes for "no trading".

Collapse will come when no one is willing to buy (e.g. crypto is broken or there is no way to spend/use it). As people anticipate this coming, they'll start selling to anybody who is still willing to buy. The price will drop until no one is willing to buy, at which point the value of commodity will become zero.

On the other hand, if many people are willing to buy (in expectation of future increased usefulness), then the price will go up until no one is willing to sell. At which point every holder anticipates some future benefit, cannot buy more from anybody, but has plenty of people willing to buy from him for some price. This situation will stay like that until anyone decides to "use" money by selling it (e.g. to buy a dinner because people need to eat sometimes). No collapse here.

[betterunix]

History has shown that when people start hoarding currency, a new currency arises to replace the one being hoarded. A currency is not useful if it is not being traded -- if the benefit of saving your money outweighs the benefit of whatever you would have purchased with it, you'll save it and find something else to trade. In the case of Bitcoin, there is an even greater risk, which is that people will stop bothering to run the Bitcoin software as fewer and fewer people trade their BTC.

The problem with your argument is that it ignores the utility of the currency. A currency that nobody is willing to trade is not useful, which is harms the demand for that currency. Bitcoin's only utility is as a currency, and so without people willing to trade BTC for something else, Bitcoin is useless, which makes it worthless. Another way to put it is this: your argument only accounts for speculation, which is not the whole story.