Replying to Avatar Enki

Heres one for the hording NGU types.

TL;DR if we want Bitcoin to really suceed we need to be using it as money. Not hording it. This is partly why I dont give a shit about corpos "having Bitcoin on the balance sheet". It means jack shit if they dont use it. This dosent mean one can't save in Bitcoin but we also cant hord it ad infinitum.

"Lunar Fallacy

There is a theory that hoarding bitcoin guarantees to perpetual profit. The theory is based on the following economic laws.

• One money is better than two (Metcalfe’s Law)

• Better money displaces other monies (Thiers’ Law)

• At fixed supply, price rises with demand (Law of Supply and Demand)

• Potential increase in demand is unbounded (trade is positive sum)

Hoarding is purely speculative, with all returns constituting profit or loss. The money is not lent to another for interest and so is always available for exchange, a benefit that offsets interest forgone.

A corollary to the theory is that no investment in production is required to profit from it. Capital is required for all production. Lenders (investors) earn interest in exchange for time without their capital. Production is the source of trade and therefore all economic activity results from investment. A hoard is defined by its lack of consumption in production. If all people hoarded their capital, there would be nothing to trade and therefore no demand for the money

It seems that the theory is irrational, supporting the idea that Bitcoin is indeed Magic Internet Money. When a theory results in a contradiction, the theory is flawed. A fixed supply market money can only increase in purchasing power due to:

1. economic growth – creating more demand for use of the money is exchange

2. monetization – people transferring demand from another money

Yet economic growth is strictly the result of investment. Growth is necessarily less than the return on investment (interest), and full hoarding is no investment at all. And of course monetization has a limit. Finally, the theory fails to recognize the stability property of Bitcoin. For these reasons the theory is invalid"

#bookstr #Cryptoeconomics
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( -_-) 2y ago

You sound like a Keynesian. I'll save my money if I want to, and spend it when I need to. The free market "economy" is an abstraction that emerges from individuals making decisionns that are best *for themselfves*. Not listening to others who presume to know their circumstances better than they do.

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( -_-) 2y ago

*themselves

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Enki 2y ago

I think you misunderstand a little bit. This comment isn't to disincentivize saving. There's nothing wrong with saving, in fact bitcoin is great to save due its long term appreciation vs a keynesian method disincentivizing saving via inflation.

This is specifically a comment towards hoarding. We (as Bitcoiners) won't hodl a parallel economy into existence. There has to be some signal to merchants that people actually want to use bitcoin as a medium of exchange instead of fiat.

End of the day people will do what they want but for myself Bitcoin has the most value as a money that cant be fucked with. If people dont use it as money and only treat it as a speculative asset then IMO we will never reach a "hyper bitcoinized economy" that I hear a lot of maxi types sqwaking about.

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Enki 2y ago

I'm by no means an economist and there is context missing from other parts of the book im re-reading Mostly just thinking out loud here.

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( -_-) 2y ago

I don't see a distinction between saving and hording, other than hording sounds bad. People accumulating bitcoin increases it's value relative to everything else. It sends a signal to people who don't yet understand, that this thing is important and valuable and they should pay attention.

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( -_-) 2y ago

Vijay Boyapati, has a good framework for how think about bitcoins's monetization path

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Enki 2y ago

Ah I had to look him up. Thats the bullish case for bitcoin guy correct? Ive haven't read that.

I guess I can understand that perspective a bit. Up to a point, I can see how accumulation can be a signal to others and Ill admit there is a lot of subjectivity in the term horde. Ill have to think on it more.