undefined | Better HN

0 pointsdragontamer13y ago0 comments

But that is only one side of the coin. If people are hoarding BTC, then they aren't spending them on goods / services.

IE: Deflationary Spiral. It becomes hard to be a merchant who accepts bitcoins, because everyone expects BTC to keep rising in prices.

People who bought a domain name for 1 BTC a few weeks ago from Namecheap lost a lot of money. They should have instead "saved" that BTC. Therefore, people are discouraged from using BTC as a transaction vehicle.

Currently, hoarders are the ones benefiting from BTC, but no one else is. No merchant knows how to value their services in BTC, not when there is this much volatility around.

0 comments

12 comments · 3 top-level

kiba13y ago· 5 in thread

But that is only one side of the coin. If people are hoarding BTC, then they aren't spending them on goods / services.

Sure they are. BitPay reports 2 million dollars in sale this month. The rate of transaction is accelerating too.

What you meant is "they will horde more and spend less on goods / services", but sales and transactions are clearly accelerating. How do you account for this?

saalweachter13y ago

Is $2 million really significant? BTC famously passed $1 billion in the money supply recently. That means that about 0.2% of the money supply is turning over each month, and 99.8% being hoarded from month to month.

The US GDP is about $15 trillion, so about $1.25 trillion in transactions happen in a month. If you take M2 of about $10 trillion as the US money supply, about 12.5% of the US money supply turns over each month and 87.5% is being hoarded. If you take M1 of about $2 trillion as the money supply, about 62.5% of the US money supply is used in a transaction each month, with only 37.5% being hoarded.

Compared to 62.5% or even 12.5%, 0.2% seems pretty unhealthy.

mapt13y ago

$2M and growing is significant, although it's only one of many companies. Every other day another business sets up with Bitcoin as a medium of exchange that is a low-fee, no-chargeback transactional currency. The fundamental value of such a currency, with a quasi-fixed money supply, scales as some multiple of real circulation. The momentary value is proportional to that fundamental value multiplied by short-term expectations of the BTC as an asset, which is driven by growth in usage and hype.

It's entirely possible that 99% of the value of a bitcoin is a self-reinforcing set of asset-bubble expectations, but this is something that really didn't exist before, that we don't have great paradigms to explain, that is undergoing massive daily shifts in its usage. It is explicitly not a stable national floating fiat currency with people who circulate the money their banking system provides & pay their taxes in those notes & denominate their salaries and grocery bills in sticky quantities of those notes, and so it's not directly comparable.

kiba13y ago

It's one company's business. I didn't cite any other businesses such as silk road, transactions on bitmit, and businesses that's outside bitpay's sphere of influence.

dragontamerOP13y ago

https://news.ycombinator.com/item?id=5473508

I don't have to. The fact is, no one prices their goods in BTC. Its absolutely ludicrous to price goods in BTC in the current market.

I think BTC has utility as a currency for exchange however. But on that side, you don't want to be in the position of hoarding BTC. You hoard dollars, and then use BTC to transfer dollars between people. Services like Bitpay allow you to keep most of your money in hard cash.

philwelch13y ago

The size of the Bitcoin economy in general is growing, so both hoarding and spending will increase. By the time spending actually starts going down it's too late.

nawitus13y ago· 4 in thread

"Currently, hoarders are the ones benefiting from BTC, but no one else is."

That's not true, BTC has many benefits to bitcoin users. There's plenty of bitcoin-only services, but more importantly, it provides freedom for many people who are facing government regulation. In the long run, bitcoin enables all kinds of innovation (good example is reddit's bitcointip service, which wouldn't really exist without bitcoins).

dragontamerOP13y ago

And tell me, what is a good BTC tip today?

1BTC used to be a decent tip at $5. Today that is a $100 tip I'm giving someone. Anyone who gave money to Bitcointip is suffering from the volatility in the marketplace.

A true BTC enthusiast will be happy when BTC stops moving. It doesn't matter what value BTC has, as long as it is constant. Only hoarders want BTC to keep going up and up in value.

gnaritas13y ago

> . It doesn't matter what value BTC has, as long as it is constant.

That'll never happen, bitcoin is doomed by math and economics to be forever a deflationary currency, worth ever more and more over time as the economy grows while the supply of bitcoins doesn't.

DennisP13y ago

If it were to stop moving in the near future, BTC would be stuck at minor-currency status with a $1 billion valuation. I'll be happier if it stops moving with a $1 trillion valuation, so lots of people can use it instead of just a few geeks and druggies.

drivebyacct213y ago

Huh? Just... don't tip 1 BTC? For example, the bitcointip bot on reddit will take USD values, use the current mtgox price and then tip the equivalent amount in BTC. Of course the person receiving the tip is affected by volatility compared to USD. For now, it's certainly in their favor, and again, it's no different than other currency except BTC's high current volatility.

1 more reply

indrax13y ago

By that logic anyone who didn't buy bitcoin a few weeks ago lost a lot of money. No one should buy anything but bitcoin.

Anyone who buys with bitcoin can replace their bitcoin with dollars, if they want to stay invested in bitcoin.

j / k navigate · click thread line to collapse

0 comments

12 comments · 3 top-level

kiba13y ago· 5 in thread

But that is only one side of the coin. If people are hoarding BTC, then they aren't spending them on goods / services.

Sure they are. BitPay reports 2 million dollars in sale this month. The rate of transaction is accelerating too.

What you meant is "they will horde more and spend less on goods / services", but sales and transactions are clearly accelerating. How do you account for this?

saalweachter13y ago

Compared to 62.5% or even 12.5%, 0.2% seems pretty unhealthy.

mapt13y ago

kiba13y ago

It's one company's business. I didn't cite any other businesses such as silk road, transactions on bitmit, and businesses that's outside bitpay's sphere of influence.

dragontamerOP13y ago

https://news.ycombinator.com/item?id=5473508

I don't have to. The fact is, no one prices their goods in BTC. Its absolutely ludicrous to price goods in BTC in the current market.

philwelch13y ago

The size of the Bitcoin economy in general is growing, so both hoarding and spending will increase. By the time spending actually starts going down it's too late.

nawitus13y ago· 4 in thread

"Currently, hoarders are the ones benefiting from BTC, but no one else is."

dragontamerOP13y ago

And tell me, what is a good BTC tip today?

1BTC used to be a decent tip at $5. Today that is a $100 tip I'm giving someone. Anyone who gave money to Bitcointip is suffering from the volatility in the marketplace.

A true BTC enthusiast will be happy when BTC stops moving. It doesn't matter what value BTC has, as long as it is constant. Only hoarders want BTC to keep going up and up in value.

gnaritas13y ago

> . It doesn't matter what value BTC has, as long as it is constant.

That'll never happen, bitcoin is doomed by math and economics to be forever a deflationary currency, worth ever more and more over time as the economy grows while the supply of bitcoins doesn't.

DennisP13y ago

drivebyacct213y ago

1 more reply

indrax13y ago

By that logic anyone who didn't buy bitcoin a few weeks ago lost a lot of money. No one should buy anything but bitcoin.

Anyone who buys with bitcoin can replace their bitcoin with dollars, if they want to stay invested in bitcoin.

j / k navigate · click thread line to collapse